IBC2000-5 Marketing

Chinese Gooseberries or Kiwi Fruit, Venison or Cervena? 
Two Case Studies of Marketing Fresh Products from New Zealand with Implications for the Bison Industry?

Hillary Brick
New Zealand Source
3420 Terry Point Drive
Fort Collins CO USA  80524

The following article was originally presented at the International Bison Conference in Edmonton, Alberta in August 2000.  The conference covered a wide array of bison topics including production, marketing, genetics, history and much more.  This article has been reprinted with the permission of the IBC2000 Chairman.

Abstract

Growers of both kiwifruit and venison made quality, promotion and innovation cornerstones to the success of their industries.  

Kiwifruit plants were first introduced to New Zealand from China in the early 1904.  Plant breeding research continued for many years and in the 1930’s the first commercial plantings were developed.  Early on, growers felt their interests would be best served if they joined forces in developing the market for their fruit. In the early years, kiwifruit was a specialty item and the marketing plans recognized this.  The focus was on foodservice and public relations.  In the 1980’s, as the supply of fruit grew, it became necessary to move into the mainstream and shift the focus to retail.

The venison industry began in the 1970’s with the capture of feral Scottish red deer and North American Wapiti Elk.  As in the case of kiwifruit, New Zealand growers early on decided that their interests would be best served by cooperating in the development of the export market for their product.  Farm-raised deer are very different from their feral counterpart, so the name Cervena was adopted as a specific appellation to be used only for the highest quality farm raised venison from New Zealand.  Growers put in place a plan to introduce Cervena to the market and position it as the venison or red meat of choice for chefs at white tablecloth restaurants.

Introduction

This paper presents two case studies of marketing fresh agricultural products from New Zealand.  The first of these is from the horticultural industry – and is arguably one of the products for which New Zealand is best known overseas – Chinese Gooseberries, or kiwifruit.   The second is New Zealand farm-raised venison or Cervena. 

There are many factors that have had a considerable bearing on the path New Zealand farmers have chosen to bring their products to world markets:

·        New Zealand is small and fits into an area about the size of Oregon

·        New Zealand has excellent growing conditions - fertile soils, plentiful rainfall a temperate climate that is very suited to growing grass, the basis of the livestock industry, including cattle, sheep and deer.  But farmers also do very well with horticultural items such as kiwifruit and apples.

·        The lack of any government subsidies and rapid adoption of new technology has meant that New Zealand growers are now some of the most cost efficient farmers in the world

·        The population of New Zealand is only 3.8 million.  There is no domestic market to speak of so growers must export in order to survive.

·        Distance from world markets and the cost of freight means that New Zealand farmers must produce the highest quality and market effectively or they will not survive

·        Distance from world markets has also meant that farmers must be very resourceful – in the early days of both the venison and kiwifruit industries a “can do” attitude greatly assisted in bringing about the innovations and cooperation that were required to survive in the world market.

Kiwifruit

The first seed material was introduced from China in 1904.  A breeding program continued in New Zealand for many years, but the first commercial plantings did not take place until the late 1930’s.  It was not until 1959 that the first exports were sent to the North America.

Growers early on realized the need for cooperation in developing the export markets. It is expensive to market and promote and no grower, or even group of growers, could afford to do it on their own.  In 1959 an importer in the San Francisco market gave them the following advice:

“We Californians resemble New Zealanders in many respects; one predominant characteristic being our individualism – our desire to go it alone.  Generally this is an admirable trait, although occasionally it carries one away from reality… after many months of promotional work my considered opinion is that the effort at your end must be industry wide…  trade cannot be developed by individual growers and/or shippers attempting to "go “it alone"…the USA offers an unlimited market, but individuals or small groups working against each other cannot successfully reach our public”

Thus in 1970 the growers and exporters formed the Kiwifruit Export Promotion Committee.  Growers contributed $0.06 per tray, while exporters contributed $0.04.  In 1978 this evolved into the New Zealand Kiwifruit Authority whose role included:

·        Licensing exporters

·        Coordinating worldwide promotion

·        Establishing and enforcing quality standards

·        Establishing packaging standards

·        Research and development

In 1950 there were only two commercial growers and in 1961, the total crop amounted to no more than a few thousand trays.  However, in 1964 the Hayward variety was introduced.  Between 1980 and 1990 production grew from 4.1 million to 62.7 million trays – an increase of some 1500% within 10 years.

There were many factors that contributed to the success of New Zealand growers in selling increased volumes of fruit:

·        A great product – healthy, nutritious, “fuzzy and cute” and riding the consumer trend toward a healthy diet

·        Innovation in growing and post harvest techniques

·        A slavish adherence to quality

·        Growers appointed professional promotion agencies in every overseas market, and even when returns plummeted, they did not veer from the path of promoting their fruit.  This meant that demand for their product continued to grow and as they took the cost out of their growing operations, they returned to profitability

·        An aggressive distribution system wherein the early exporters played an extremely important role in developing distribution channels and appointing dedicated receivers and marketers.

Early on, however, growers were advised to change the name Chinese Gooseberry.  The same gentleman, who had given advice on promotion, also noted that nothing Chinese was going to sell in the USA market, as this was the McCarthy era.  His best advice was to change the name.  The Chinese gooseberry was therefore renamed the kiwifruit, after New Zealand’s flightless bird, the kiwi.  The mistake New Zealand made was not to register the name, for now any country in the world may use it.   The deer industry did not make the same mistake – the name Cervena may be used to apply to only farm raised venison from New Zealand that meets certain quality standards.

In the early years kiwifruit was definitely a specialty item and the promotions focused on foodservice and specialty retail.  Before 1985, the program was largely public relations – both foodservice and consumer.  The charts attached as Appendix I show the type of activities in which the New Zealand Kiwifruit Authority was involved at the trade, consumer and foodservice levels.

Activities included press releases to magazines and newspapers, food editor visits to New Zealand and direct mailings to the media personnel and supermarket consumer affairs advisers. In conducting this campaign, kiwifruit became the darling of the nouvelle cuisine – it was a brilliant emerald burst with the fuzzy brown exterior. 

Appendix II demonstrates the success the product enjoyed with the foodservice trade.  In 1989, 79% of distributors carried kiwifruit. The high was iceberg lettuce at 94%, the low blueberries at 51%. By 1989, kiwifruit was carried by more foodservice distributors than avocados, cherries or blueberries.

As kiwifruit supply increased, the focus of the promotion shifted to include a larger retail component in order to move the fruit from specialty to everyday.  In 1985, the New Zealand Kiwifruit Authority hired a merchandising force of five people in the USA and Canada.  It was the task of these individuals to call on corporate retail and wholesalers to introduce the kiwifruit story.  The program was designed to increase advertising and display space on the retail shelf.  Appendix III demonstrates how the Authority began to focus efforts at retail and by 1989 kiwifruit had 100% distribution.

Appendices IV through VIII demonstrate the increase in supply of kiwifruit and the effect of the promotion program in the North American market:

IV.  The history of New Zealand kiwifruit exports from 1980 through 1990.

V.   The value of the New Zealand and California promotional spend in the USA market from 1986 through 1991.

VI.   The percentage of consumers who sighted specialty produce items at retail and who ever purchased these items in 1991.

VII.  The percentage of USA consumers purchasing specialty fruit items for the first time in 1991.

VIII.  The growth in per capita consumption of kiwifruit in the USA 1983 through 1991. 

In 1991, market conditions prompted the Californian kiwifruit growers to file a dumping suit against New Zealand growers. California growers won the suit.  Within a year, shipments of New Zealand kiwifruit to the USA dropped from 6,000,000 trays annually to 300,000. This coincided with very difficult financial times for the industry.  Many growers with inefficient operations and/or too much debt went out of business.  For two years, growers collectively (through the New Zealand Kiwifruit Marketing Board) carried a debt of several million dollars.

The dumping suit was lifted in 1999 and New Zealand kiwifruit sales to the USA are once again increasing.  In the year 2000, New Zealand expects to ship 3 to 4 million boxes of fruit to the USA.  This is half the volume of the peak year, but a very good result considering New Zealand has been excluded from the market for eight years.  In the early part of the 2000 season, New Zealand kiwifruit was selling for $16.00 per box, while Chilean fruit was $8.00 to $10.00.

Quality promotion and innovation are the key attributes that enabled New Zealand to re-enter the market and recapture the high ground.

Venison

Deer were first introduced to New Zealand around the turn of the century.  The herds were made up of Scottish red deer and North American wapiti or elk.  The New Zealand environment was so conducive to these animals that they rapidly multiplied and in reality became a pest.  Deer stalking was a very developed sport in New Zealand and hunters in the 1950’s began to see export potential in their game.  The first export of venison from New Zealand was to the East Coast of North America in 1953.   Unfortunately, this early consignment of product was not welcomed at the time.  However, by 1959 New Zealand had cemented a continuing market in the USA and the venison industry was born.

In the 1960’s, a group of practical, far-sighted farmers, often with a high country and deer stalking background, began experimenting with deer in captivity.  Capture and relocation commenced in 1968 with the first feral captured deer being dispatched to the research institute at Lincoln College. The New Zealand Game Industry and Exporters Association funded the project.  After four years, Lincoln had established that feral deer bred in captivity were able to be yarded and handled, although with some difficulty.  The real discovery was that the stocking rate was comparable to sheep.  One deer equates to 2 sheep. 

By 1980, the farm-raised deer industry had reached a critical mass and the deer farmer's conference held in Auckland that year was attended by 1000 people.  Those present turned their minds to the need for marketing and promotion for the products of their new industry, both antler velvet and venison.  Although this paper focuses on venison, velvet was and still is a very important product from the deer farming industry.  It plays an important role in the profitability of the industry.

Those present at the conference in 1980 realized that they would need funds to market their industry and they felt that the best way to raise money was through compulsory levies.  It is important to realize that the New Zealand farming industry has a history of legislation that levies growers for the development of the total industry. Beef, lamb, dairy, kiwifruit and apples have all followed this path, each adjusting the interpretation of the legislation to suit the requirements of their individual industries.  The check-off systems in the United States are of a similar philosophy.  The United States horticultural industries have marketing orders that fund research and marketing. 

The game industry board was formed in 1984 and its representation was 5 farmers, 4 industry representatives (exporters and processors) and 1 government appointee.  By convention, the chairman is always a farmer.  The early levies were around $0.20 per kilogram on farmed venison and $3.00 per kilo on velvet.

Early efforts in foreign markets focused on attending food shows such as

·        The National Restaurant Show in the USA

·        Foodex in Tokyo

·        Anuga in Europe

In 1988 the Game Industry Board supported the New Zealand chef’s team that participated in the world Culinary Olympics, an event held only once every four years.  The New Zealand team, headed by Graham Brown, won the gold medal. 

In 1991, Graham Brown became the executive chef exclusive to the New Zealand Game Industry Board and he has traveled extensively introducing New Zealand farm raised venison to top chefs around the world.  He is one of them, he speaks their language, he is passionate about the product and he gives New Zealand farm-raised venison instant credibility.

In a speech to growers in 1991, the marketing executive said of these early efforts in overseas markets:

“We absorbed the lesson that consumers have to try venison for themselves and chefs can make or break the product”.

However, New Zealand growers needed to differentiate their product from feral venison.   New Zealand farm-raised venison is neither gamey nor tough.  It is a tender lean meat in ready supply, offering the best in taste and nutrition.  The agreed solution was to develop an appellation strategy modeled on that used by champagne growers in France.  This would ensure that the industry would be New Zealand owned and protected, through brand ownership.  A new name would form the basis of the marketing strategy, which would be aimed to break down venison's old barriers, misconceptions and reach out to a whole new market with news of an exciting, new product.

Thousands of names were considered and the one chosen was Cervena

                                    {cer} vidae

                                    {ven} ison    + a

                                    Cervena

Cervena reaches back to venison’s heritage.  Cervidae is the Latin for deer.  Venison takes its name from the Latin origins for hunting, but over time has evolved to mean deer meat in general.  The “a” is the premium standard bearer.

Importantly, for the deer farmers learned from the mistake made by the New Zealand kiwifruit growers, Cervena was registered as the trade mark to be used for only the highest quality farm-raised venison from New Zealand. 

The Game Industry Board moved quickly to promote the new appellation in the USA market and an office was established in New York in 1993.  The appellation strategy has thus far been confined to the USA.

The decision was made that in order to give the new product credibility in the market, it was important to win the support of leading chefs who were setting food trends and influencing cuisine in the USA.  The independent chef was therefore the early target of the promotion efforts.  However, as with so many products in agriculture where margins cannot be guaranteed, there was not enough money to advertise.  The strategy was therefore to rely on a carefully targeted public relations program. 

1.      The Cervena office developed a chef network built through personal contacts and referrals.  They worked with very well known chefs who would give the product credibility and these included Charlie Palmer from the Aureole in New York and Kevin Rathbun from Nava in Atlanta.  These chefs were trained in the product and were believers. These chefs were recognized professionals in their field and rapidly gave the product credibility at the white table cloth level.

2.      At the Culinary Institute of America in Hyde Park, New York, Cervena was a regular part of the curriculum and New Zealand supplied the product.

3.      The Cervena office worked with the American Culinary Federation, the largest chef trade association in the USA.  Cervena sponsored both the annual convention and the regional conventions, giving seminars training chefs in the use of Cervena.

4.      Cervena representatives attended distributor seminars teaching the sales people about the product and assisting them in introducing Cervena to their customers.

5.      Public relations were a large part of the program, but because the independent chefs were the target audience, the program was aimed at consumer magazines as much as foodservice. For the independent chefs look to magazines such as Wine Spectator and Food and Wine for their ideas.

6.      Food editors were invited to New Zealand so they could see the industry at first hand.

Appendices IX though XII demonstrate the growth in the sales of Cervena over the past seven years.

Appendix IX shows the results of research conducted in 1996, 1997 and 1998.  The proportion of venison meals served in restaurants with a check average of $15.00 or more increased from 3.8% in 1996 to 6.2% in 1998.

The chart in Appendix X shows the value and volume of New Zealand venison exports to the USA from 1995 through 1999.  The figures include both Cervena and non-Cervena.  The latter accounts for 25% to 30% of volume.  In this period, total venison volume moved from 830,000 kg to 1,050,000 kg. Value moved from $12,500,000 to $20,000,000.

Appendix XI sets out the size of the promotion budget for the USA for the past 7 years.  If venison exports to the USA were $20,000,000 in 1999, a promotion spend of $1,200,000 represents 6% of value.  However, a more true measure is the promotion spend as a percent of the value of worldwide exports.  The value of worldwide exports in 1999 was $169,000,000 of which $1,2000,000 is approximately 0.8%.  This is approximately the percentage spent on promotion by the Californian table grape and strawberry growers.

Appendix XII shows the price of saddle meat going into the USA (Cervena) and Europe (venison).  The lower curve is the European price, while the upper level is the USA price.  The shaded area could therefore be interpreted as the premium paid in the USA market enhanced by the Cervena strategy and the promotion put behind this appellation.

So where to now for Cervena?  The next challenge for the industry will be to broaden their distribution.  Options under consideration by the various exporters include chain restaurants, mail order, retail, etc.  The challenge is to find a way to increase volume and maintain price against a relatively low consumer awareness background. 

Conclusion

The New Zealand kiwifruit and Cervena industries have survived and flourished because they shared:

·        A commitment to the highest quality standards.

·        Joint promotion – kiwifruit and Cervena growers both followed the advice of the importer in San Francisco who in 1959 said, united we conquer, divided we fall 

·        The industries funded the promotion at a level sufficient to make a difference in the market. 

·        They targeted the promotion to the appropriate stage of market development.  Both started as specialty foodservice items.  Kiwifruit is now mainstream, Cervena is only just getting past the level of the white table cloth restaurant.

Both industries have experienced difficult times, and no doubt they will do so again. However, growers believed they could be more successful together than apart, they believed in marketing and they realized they could not compromise on quality. These attributes played a large role in their respective successes.

Appendix 1  Click blue icon below for full view

Appendix 2  Click blue icon below for full view

Appendix 3  Click blue icon below for full view

Appendix 4 & 5  Click blue icon below for full view

Appendix 6 & 7  Click blue icon below for full view

Appendix 8 & 9  Click blue icon below for full view

Appendix 10 & 11  Click blue icon below for full view

Appendix 12  Click blue icon below for full view