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Farming: Leave the cheap end of the market to alternative proteins

04 Apr 2018

I heard Professor Frank Griffin, Director of Ag@Otago[1], speak last night in Balclutha and I am still buzzing with the excitement he created.

Frank is a microbiologist and immunologist and looking back at his research papers shows a long-standing research interest in bovine tuberculosis. However, last night he was speaking on the future of alternative proteins and he got stuck into his subject combining lots of humour and a great depth of knowledge.

What are alternative proteins? They are meat alternatives made in factories from either:

  1. Plant based material, like yeast. This alternative is currently the most viable
  2. Stem cell technology, growing meat in the laboratory from stem cells
  3. Farming novel alternatives, like insects

Alternative proteins are our saviour

Frank believes that the development of alternative proteins will create the incentive for some New Zealand farmers to move out of the commodity-producing systems into added-value, branded, niche market businesses that we have been talking about for years, but so far, have not managed to exploit in sufficient quantities to make a difference.

“Leave the cheap end of the market to alternatives. They will do it cheaper and more reliably than animal-based systems. Basically, the cheap end of the market is a race to the bottom and paradoxically, it is a race you don’t want to win.”

  • Commodity animal protein will never be worth more than $10/kg in today’s dollars
  • New Zealand-type branded protein, maybe up to $50/kg
  • Appellation-type branded protein[2], up to $100/kg
  • Manuka honey, up to $5oo/kg
  • Wagyu steak, up to $1,000/kg
  • Whole, fresh tuna, up to $3,000/kg
  • White truffles, up to $40,000/kg

Every producer has the choice of where on the list they want to play.

How about this, “New Zealanders are the best farmers in the world, but the worst marketers.” I heard this out of Frank’s mouth, to a bunch of farmers, and I was impressed with his straight-forwardness. It was a conclusion I had come to some time ago but was not prepared to express.

Frank talked about the export bull market to the US where our animals end up as hamburgers. “Why would we want to be in the fast food industry, feeding people in a hurry, right at the bottom of the food chain?”

The audience asked Frank for a quick lesson on marketing. It wasn’t quite the time and place for Marketing 101 but here were some of the lessons from his experience:

  1. Millennials are your future customers. Get to know and understand where they are coming from. Look them up on Google. Ask questions of all the millennials you know in your circle of friends. Learn to think like they think. Don’t judge them; serve them.
  2. Spend time and money on researching your customers trying to understand what it is they need and want and are prepared to pay for. The alternative protein industry is spending hundreds of millions of dollars on market research. You can’t do this entirely on the cheap. It costs time and money to know your customer.
  3. Decide on your point of difference. Create a story around your point of difference. What is your unique selling point? Does it have something to do with your niche market and does the research you have on your potential clients reinforce your point of difference. You must have something to say about your product that resonates with your target market. “Tell nature’s story”?
  4. Test that story with your niche market. This is going to be a big part of your brand.
  5. Band together with other producers who share your story, culture and values to create scale and to maximise your market development spend. It will cost, big time, but to get out of the commodity producing game where you are a price taker, you must spend some money. It won’t happen by wishful thinking.
  6. Use the power of media to spread your message. Technology is helping here.
  7. Implement your plans and adjust as new information comes to hand. Don’t stop researching the needs of your customers. That never stops.

Remember, people are eating less and less meat, but they want a better experience with the meat they do eat and if the experience is satisfying they will pay a lot more for the experience.

Real food is expensive.

Keep asking great questions …

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[1] Ag@Otago is a research initiative at Otago University bringing all their work on agriculture together under one roof; a total of 60 people all up managing $10 million worth of current research projects. See Ag@Otago

[2] As an example, KiwiGold is an appellation brand owned by Zespri.