With Covid-19 all but demolishing the hospitality sector overseas, the New Zealand meat export industry has scrambled to find new markets to replace lucrative sales. Back home, that means Kiwis are snapping up cheaper prime cuts. Jane Phare reports.
Meat-eating Kiwis with a taste for prime cuts are benefiting from Covid-19's affect on the export market, with cut-priced product finding its way to butchers, supermarkets, restaurants, online sales and GrabOne deals.
On the whole, the New Zealand meat industry has done well, exporting $9.4 billion worth of meat in the year ending June 2020, up 7 per cent on last year, a result that reflects a strong global demand for protein.
But with the overseas food sector – cafes, restaurants and hotels – in Covid disarray, Kiwi producers of meat normally exported to the hospitality industry have been hard-hit. Prices and volumes have dropped, and some of that meat has found its way onto the New Zealand retail market.
This year local shoppers won't have had to look hard to find specials on French racks (rack of lamb), normally too expensive for a family meal, veal fillets once destined for export, whole eye fillets and cuts like sirloin and scotch fillet on special. Even well-priced venison fillets and mince are appearing in New Zealand supermarkets and online.
GrabOne has also seen a surge of customers buying food offers – packs of premium lamb, grass-fed sirloin, eye fillet and scotch, venison fillets and mince, free-range chicken, and seafood – snapper, tarakihi, frozen oysters, minced paua and crayfish.
The Covid-19 buzzwords "agile" and "nimble" are particularly relevant to the export food market. When the coronavirus reared its heard in China and subsequently spread across the globe, exporters were suddenly faced with a wall of problems.
Processing plants closed, sea freight was held up in ports, freight flights were limited and expensive, the food-service sector was suddenly closed for business, and waves of coronavirus shut off export destinations without notice.
As one country or customer closed off, meat exporters were forced to move quickly to find another market. And in that race for survival, retail sales – both in New Zealand and overseas - have taken on new importance.
Exporters, used to selling their produce in bulk for the hospitality market, have had to think more about grocery and online sales, presenting meat in smaller packs or in different forms for the domestic consumer.
Silver Fern Farms has launched an e-commerce partnership with Gourmet Direct to sell red meat direct to New Zealand customers while other suppliers have started online sales and home deliveries as a way of plugging at least some of the gap left by the overseas hospitality sector. For example, the farmer-owned co-operative Alliance Group now has its own online shop, puresouthshop.com.
Just how much prices have dropped is evident from a graph supplied by data analysis company AgriHQ that shows the dramatic effect Covid-19 has had on lamb exports to the US. With the food service sector mostly closed, demand for chilled meat plummeted and so did prices.
In October last year, New Zealand exporters were getting around $35 a kg for French racks. By June this year that had dropped to around $22 a kg.
Mel Croad, senior red meat analyst for AgriHQ, says a combination of Covid-19 factors have hit the high-end food service market, including restaurant closures, the lack of cruise ships and tourists, empty hotels and lack of flights.
As a result, suppliers turned to retail outlets and online sales in an effort to recoup some of the losses, taking advantage of consumers preparing meals at home during various stages of lockdown.
"But in many cases that increase in retail hasn't offset the loss of the lucrative hospitality and hotel sector, that lack of high-end restaurant dining," she says.
"Overseas markets are prepared to pay good money for those high-end cuts. It's great we've still got that ability to move product through our local domestic market but it's at half the value and that value is set by what overseas markets are prepared to pay."
Worst-hit has been the venison industry, with Covid-19 playing havoc with traditional markets including Europe – particularly Germany – the US and, to a lesser extent, China.
Between January and August this year, venison exports dropped to $100m compared to $130m in the same period last year. Volume was down by almost 700 tonnes, from 8270 tonnes to 7594 tonnes during that period, some of which was sold on the domestic market.
As the hospitality sector in Europe and the US closed, exports of premium chilled venison dropped by 40 per cent between March and May this year. Frozen exports were down by 33 per cent.
Prices paid to deer farmers dropped by 20 per cent, with further reductions expected to come as Europe and the US battle Covid-19 reappearing in waves. Meat marketers talk about a "disruption" in the market but in reality much of that market has disappeared.
With those countries heading into winter and the traditional hunting season, New Zealand venison usually sells well. But the approaching colder weather means diners will move indoors, restricting the number of customers restaurants can accommodate under social distancing.
And because Covid-19 is so unpredictable, the food sector is unwilling to order large quantities of premium chilled meat from overseas in case of a new lockdown.
This week restaurants in New York were permitted to allow indoor dining at 25 per cent capacity, with the prospect of moving to 50 per cent in November. But at the same time, New York reported a spike in the rate of new coronavirus cases this week, throwing the city's hospitality sector into doubt.
New Zealand's venison industry relies heavily on the overseas food sector, which it earns good returns on premium cuts. By comparison, the domestic market is negligible, with Kiwis viewing venison as expensive and difficult to cook compared to a scotch fillet which, with its marbled fat content, is more forgiving and more flavoursome.
Little marketing of venison on the domestic market has been done since the Cervena branding push in the mid 1990s. Cervena is sold in Europe and the US, but has all but disappeared in New Zealand.
Now venison processors and exporters are turning their attention back to Kiwis, with plans for well-priced venison fillets and mince to compete at supermarkets and butchers, increased online sales and more options like venison racks on restaurant menus.
In addition, venison will increasingly feature in home-deliveries from the likes of My Food Bag and Hello Fresh.
Hugh Signal, managing director of Alpine Deer in Wanaka, knows the decades-old venison industry is facing perhaps its toughest era, saying it will need to be innovative to quickly find new markets. Part of that will be to reconnect with Kiwi consumers to encourage them to buy and try venison.
He admits a lot of awareness has been lost since the days of the Cervena push, those 90s messages of high protein, low fat, cook hot and fast.
Kiwis will need to be persuaded to take the risk and try cooking venison at home, Signal says. That means prices will need to drop to match good cuts of beef and mince. Alpine Deer is working with Foodstuffs to introduce a wider range into supermarkets.
"It's about people buying and trying multiple times. It's too much to expect people to buy it and get it perfectly right the first time."
But, Signal says, the venison industry needs the export market in order to be viable in the future.
"New Zealand is not going to be a long-term replacement for the food service markets abroad."
Although prime cuts of New Zealand meat will struggle to find a reliable market overseas in the face of Covid-19, cheaper cuts are taking their place in the export schedule. With fast-food and takeaway outlets remaining open and needing ground beef, and people buying meat to eat at home, beef exports have reached record highs.
In March 2020 New Zealand's monthly red meat exports topped $1b for a single month for the first time.
The US paid a premium for New Zealand beef to keep up with demand after its own processing plants were shut down as a result of Covid-19 earlier in the year. China, too, looked to New Zealand beef as a replacement protein after the African swine fever virus decimated its pig stocks. China remains New Zealand's largest market, accounting for $3.7b of the country's annual red meat exports.
Japan is also a growing market, with exports to that country 15 per cent higher than last year. In the first six months of this year, 4000 more tonnes of beef were exported to Japan than the first half of last year.
New Zealand exporters are scrambling to make the most of those markets, including forging new business connections to the overseas retail sector.
Sirma Karapeeva, chief executive of the Meat Industry Association, says the export industry has done well to adapt, having struggled with a drought earlier in the year and the effects of Covid-19 on export markets.
The fact that the industry exports to 120 countries had given companies some flexibility to quickly divert product to other markets when Covid-19 restrictions closed one off.
When the Chinese market closed, meat was diverted to other countries including Korea, Japan, Taiwan, Malaysia, the UK and the US. Demand for both sheep meat and beef from China is now growing, she says.
However the ongoing disruption caused by Covid-19 would have an impact on prices. Beef and lamb production is set to climb after the winter period and New Zealand farmers and exporters need the overseas markets to improve to absorb the extra quantities, Croad says. Until the food sector recovers and Covid-19 is more under control, the industry will be "hamstrung".
"We need these high value markets to exist so that we getting those strong export returns and it is filtering through the economy here. I don't think anyone has the answers as to when that's going to occur."
Back home, demand for red meat from Kiwis remained high during lockdown and afterwards. Rod Slater, CEO of Beef + Lamb New Zealand, says the number of searches for recipes on the organisation's website was "unbelievable" during lockdown.
"It was just a vertical increase." The numbers have since tailed off but are still well ahead of pre-Covid levels.
"It's telling us that people have turned to cooking at home more and we're hearing that in anecdotal feedback from retailers who are all saying business is relatively strong."