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Food and beverage sector experts are expecting significant growth opportunities in 2021 for New Zealand and Australian companies trading with China.

In 2021, strong relationships with in-market partners will be key, alongside greater levels of investment in customer experience. Investment and advisory firm Jarden brought together a trans-Tasman line-up of more than 30 speakers including Government officials, consultants and a range of ANZ listed companies to share insights on the year ahead.   

Jarden Head of Research Arie Dekker says, “Industry experts noted that the China market opportunity remains strong for Australian and New Zealand food and beverage products, but the approach to doing business continues to change. They also discussed Environmental, Social and Governance (ESG) considerations and highlighted the importance of placing sustainability at the centre of their strategies.”

Here are three key takeaways for the rest of 2021.

  1. Demand for ANZ products remains strong in China.

Ben Gilbert, Head of Research for Jarden Australia, says ANZ companies continuing to invest and do business in China are seeing strong results, most recently with Alibaba’s Singles Day where Australia ranked as the fourth best-selling country to China and New Zealand seventh.

“In many respects, Australia, New Zealand and China are among those leading the way in managing and exiting the Covid-19 crisis. There is evidence that economic activity is returning to normal, or at least improving considerably in these countries.

“While there has been some recent geo-political uncertainty and Covid-19 has created its own challenges, including with the diagou channel disruption as well as more general border challenges, ANZ corporates remain optimistic and excited about the opportunity to continue to grow with China.

“The cost of doing business in China is increasing, distribution channels are changing and growth will be more complex, but that doesn’t mean that the opportunity is smaller – companies just need to be more targeted in the way they expand and this includes innovating to keep reaching consumers in new ways.”

Andrew Borland, Managing Director of Scales Corporation, says that now is a good time to be exporting to Asia. 

“Based on what Scales does and is looking to do in terms of growth, the thematic of growing safe and high-quality food in New Zealand and selling it into the rising middle-class population in Asia is a great business opportunity. 

“Through our shared office in Shanghai, Primary Collaboration NZ, it has been invaluable having someone on the ground in China, particularly through Covid-19, and especially as successful selling moves to a very fluid omnichannel approach of finding the consumer in a mix of online and in store. 

“Having an in-market manager representing your business on the ground ensures that you’re doing business properly, abiding by the rules and respecting the great opportunity to export and trade in the China market.”

  1. Companies must continue to invest in their brand amid increasing global and local competition.

Ben Gilbert says it’s clear that Australia and New Zealand have big advantages in terms of premium product offerings in the food and beverage space, with our unique health and safety track record, but he sounded a note of caution about taking a traditional approach to simply trading on the Australasian brand. 

“When it comes to nutrition, consumers in China are willing to pay a premium for health and safety but we cannot rest on our laurels and must continue to promote those areas.

“Companies should be doubling down on the value proposition and really leveraging being from Australasia with our high-quality ingredients, attention to food safety, great soil, green grass…but companies also need to be smarter in that communication because if every ANZ company is trading on provenance they need to be able to explain why they are unique – and this requires increased effort and investment.

“If you can keep finding that premiumisation, it’s a good time to be exporting from Australia and New Zealand.”

Grant Rosewarne, Chief Executive of New Zealand King Salmon (NZKS), says branding is an important part of their story.

“Trading on the New Zealand brand is important and always in the mix, but we also position our brand across a range of other dimensions. For example, our most prestigious brand is positioned around being a unique breed of salmon.

“The other big thing for us is that aquaculture is a relatively new industry and not well understood, so it’s also important that we effectively communicate how unique the industry is, particularly from a sustainability perspective.”

  1. Investor focus on ESG continues to grow.

Once considered as mitigating risks, Environmental, Social and Governance (ESG) factors are a key focus for customers and investors. Companies are looking to give stakeholders confidence in business strategy, product offerings and also making ESG-related metrics available to measure performance.  

Synlait Chief Executive Leon Clement says investors are increasingly focused on the benefits that come with having an ESG overlay in their investment process. 

“Synlait has a strong sustainability story to tell and a strategy that is underpinned by people, profit and planet, but investors have not traditionally been keen to hear about that.

“The conference provided a unique opportunity for ESG issues to be discussed with a broader investor base and to collectively explore ways to build sustainability and awareness of social license into profitable growth in this sector. This all feeds into growing trends around investors wanting to put more focus on ESG.”

NZKS’ Grant Rosewarne says investors are increasingly looking to companies that can really demonstrate authenticity in their ESG stories.

“Aquaculture could become New Zealand’s most valuable industry, as well as its greenest industry from an environmental perspective. That’s because salmon farming is one of the most sustainable ways of farming. The most efficient of our salmon can achieve a 1:1 food conversion ratio.

“Global organisations are recognising aquaculture as a way to feed a growing planet while still looking after it, and investors are now highly receptive to messages like this. They are quick to grasp the opportunity and turn into good advocates for the industry because they understand not only the financials, but also the ESG story.”

The opportunity remains strong for Australian and New Zealand companies to reach local consumers, and those in China and elsewhere. The power of brand New Zealand remains a compelling proposition but there’s plenty of other work to do to be successful, identifying, locating and meeting the consumer in an omnichannel environment offshore.

 

Founded in 1961, Jarden is an independent investment and advisory firm: http://www.jarden.co.nz 

Picture: The King Salmon Farm in New Zealand’s Marlborough Sounds.

Glenn Baker

Glenn is a professional writer/editor with 50-plus years’ experience across radio, television and magazine publishing.

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