COMMENT:

The world's biggest marketer of kiwifruit — Zespri — is seeing it. So is AgriSea, New Zealand's largest seaweed company: evidence of a major shift in what global consumers want, driven by Covid-19.

Facing a worldwide health and economic crisis consumers are now putting renewed emphasis on their health. A major part of that is ensuring the food they eat is authentic, natural and is produced sustainably.

In recent years, there have been growing expectations by consumers about the standards of their food; where and how it is produced.

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While it's early days, the experience of some New Zealand companies suggests Covid-19 is hastening that process.

New Zealand was already well-positioned to take advantage of this shift in consumer preferences. As a market, our reputation as a producer of healthy and authentic foods is one of our greatest export assets.

Now, the qualities that set New Zealand produce apart and enable our exporters to command a premium, look set to be even more valuable and will create a once-in-a-generation opportunity for New Zealand businesses.

Other markets will also see the opportunity, but New Zealand is already warmed up and ready to go. As well as producing top quality exports, our businesses understand that social and economic ecosystems around food production are also a major part of consumer decision-making.

From how we use fertilisers on the farm, to the way our financial sector incentivises positive social and environmental outcomes — it all matters, and is only going to matter more.

What's been startling is how quickly these changing expectations are being felt.

On the BeachesAt the end of March, as the country went into lockdown, the owners of Paeroa-based seaweed business sent their 28 staff home.

But instead of their office falling silent, to their surprise, their phones and internet site were busy with new orders.

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After registering as an essential service, they got their plant back up and running and in early April there was relief when a shipping container of product reached a major customer in Italy, despite their lockdown.

Then came a surprise order of another two containers from the same customer, followed by further orders from Australia and the United States.

The resulting sales saw AgriSea record twice their previous year's export revenues in June 2020 quarter.

As a producing nation, our commitment to sustainability needs to go beyond the wrapping and become integral to what it means to be New Zealand-made.

The company harvests brown kelp from beaches, which is dried and processed into a range of organic-certified seaweed concentrates are used by many sectors as a substitute to traditional fertilisers.

Domestic demand also jumped — sectors such as Dairy, Drystock and Horticulture all increasing by a third in April and May — the company puts this down to customers wanting to support local.

It also saw an increase in the number of lifestyle block owners at home for the lockdown, looking for organic substitutes to their normal fertiliser.

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The surge in demand has confirmed to the company's owners the value they have long placed in environmental and economic sustainability.

Even in their changing times, from how they gather seaweed, to a strong commitment to their workforce and community, their wide-angle view of sustainability and their ability to tell the story of their products is continuing to underpin success.

On the Vines During the same period, in the Bay of Plenty hundreds of millions of kiwifruit were hanging on vines, ready for picking.

The lockdown saw many seasonal workers forced to stay home, with growers and the industry considering how they would get the fruit off the vines.

Fortunately, the harvest was deemed essential and was able to continue under additional safety protocols, the workforce boosted by local recruits from the hospitality and tourism sectors.

Agrisea's Clare Bradley in front of shipment of Dried Beach Cast NZ Kelp.
Agrisea's Clare Bradley in front of shipment of Dried Beach Cast NZ Kelp.

As the pandemic swept the world, exporter Zespri saw strong demand for kiwifruit.

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Early in the season, it recorded its highest ever sales in Covid-19 hit Europe, and recently released its 2019/20 season results showing it sold more than 5 billion kiwifruit last season, with its operating revenue increasing 7 per cent.

Zespri noted one of the most popular recent searches on Google has been for food high in Vitamin C and focused its marketing message on kiwifruit's health benefits.

In launching its refreshed brand earlier this year, it recognised that consumers want to know more about the products they buy, how the fruits are grown, the health benefits of eating them, and the values of the company they're purchasing from.

Zespri is also highlighting its efforts to become carbon positive, to improve the industry's impact on waterways and to support its people and communities.

Enabling the shift The recent experience of both AgriSea and Zespri suggests a major shift in consumer expectations.

Their willingness to pay for quality products they can trust, that are healthy and have sustainability at their core, will help support our primary sector during the recovery.

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But as a producing nation, our commitment to sustainability needs to go beyond the wrapping and become integral to what it means to be New Zealand-made.

As the country's largest rural lender, ANZ NZ has an important role to play in supporting and enabling this transition.

Our involvement with the Aotearoa Circle's Sustainable Finance Initiative has meant we are developing new products that recognise environmental, social and governance risks, and mobilise capital 'reward' good practice. We are also exploring a range of ideas from "green" bonds to the use of on-farm data to ensure we recognise the sustainability value of productive assets.

One such sustainability-linked loan was signed last year between ANZ and dairy manufacturing company Synlait Milk.

The $50 million four-year loan incentivises Synlait to continue to improve its environmental, social and governance performance.

ANZ NZ was also a founding partner in Mohio — The Climate Innovation Lab.

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We see an increasing number of social- and climate-conscious investors wanting their capital to do well by doing good.

Through our involvement with Mohio, we have been able to make a significant contribution to the development of new financial products for the forestry sector that aim to produce positive social and environmental outcomes in addition to financial returns.

An important part of any work in this area is developing sustainability standards that, along with reporting and verification, ensure any claims of sustainability, food safety and traceability are provable.

These standards will form the basis of any trust with consumers and are essential for any financing based on sustainability metrics.

From the experiences of Zespri and AgriSea over the last few months, Covid-19 is changing consumer priorities in a way that's positive for New Zealand exporters.

The other lesson is that it's happening very quickly, which underlines the importance of responsiveness by individual businesses, and the economy as a whole.

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In taking advantage of this opportunity, we can not only serve consumers of our products better, but also use sustainability, health and wellbeing as a basis for building a stronger and more resilient future

- Mark Hiddleston is Managing Director Commercial & Agri, ANZ NZ Limited.