Cricket stars Daniel Vettori, Brendon McCullum and Stephen Fleming are helping to promote Alliance as shareholders of QualityNZ, which supplies New Zealand red meat, seafood and wine to India.
Cricket stars Daniel Vettori, Brendon McCullum and Stephen Fleming are helping to promote Alliance as shareholders of QualityNZ, which supplies New Zealand red meat, seafood and wine to India.
Cricket stars Daniel Vettori, Brendon McCullum and Stephen Fleming are helping to promote Alliance as shareholders of QualityNZ, which supplies New Zealand red meat, seafood and wine to India.
Farmer-owned meat co-operative Alliance Group made the most of its downtime during the Covid-19 crisis by developing new product and new market channels.
During level 4, Alliance's beef plants operated at 70 per cent production and lamb 50 per cent, and this increased to 100 per cent and 80 per cent respectively in level 3. The co-op, owned by more than 4000 farmer shareholders, is back to full production under level 1.
Alliance chief executive David Surveyor said the co-op came through Covid-19 "pretty well and delivered a good result to farmers".
During the restrictions, Alliance concentrated on "delivering in the moment" by continuing to process farmers' livestock and keeping staff safe and employed; working its supply chain hard and shoring up its cash position in preparation for a global economic slowdown; and positioning itself to quickly take advantage when the market turns.
It's all part of Alliance's strategy to become a world-class food and solutions co-operative, not just focused on cost but also capturing greater market value.
"The great learning out of Covid is the need to be agile," said Surveyor. "We diverted product from one market to another to maintain our selling velocity, and we changed product form by making cuts that were more versatile and appealing to multiple markets and channels.
"We focused on value-added products such as dicing and mincing to improve yield performance and recover the maximum amount of meat you can get off every animal.
"There is ongoing work with chefs on new forms of leg product, such as creating cuts to use leg muscles in different ways. Value-added products mean more processing in New Zealand," he said.
With the food service and restaurant trade falling over, Alliance switched to retail and e-commerce, and online sales increased 400 per cent in April.
The co-op accelerated previously planned investment in its online store, puresouthshop.com. And in partnership with Beef + Lamb, Alliance launched a new campaign on China's two biggest e-commerce platforms, TMall.com and JD.com to boost online sales, particularly for its Pure South lamb.
David Surveyor, Alliance chief executive.
The programme includes search engine marketing to attract consumers seeking grass-fed meat.
Surveyor said consumers were seeking out nutritious food to boost their immunity and this was expected to continue as people focus on their health in these uncertain times.
"We can position ourselves by producing trusted protein and pure flavours."
Alliance organised cooking competitions in different marketplaces including involving 600 of United States leading chefs. Influential Italian chef Massimo Bottura, who has more than 1.3 million Instagram followers, cooked Alliance's Te Mana Lamb during the Kitchen Quarantine social media event.
"We have put in a lot of work to make sure that when food service recovers, we are well primed," Surveyor said. "We have found new [selling] channels such as online, and we have found some new customers."
During the Covid crisis, when demand from China slipped, Alliance switched product into other Asian markets. But Surveyor wouldn't identify those markets. The co-op exports 95 per cent of its beef, lamb and venison products to more than 60 countries.
He said China was continuing to recover, but North America was under pressure with South American beef starting to flow into that market.
New Zealand, however, is a growing market for Alliance with sales increasing more than 25 per cent over the past six months.
Five of Alliance's seven processing plants are based in the South Island but it has gained greater presence in the North Island retail market.
The branded Pure South lamb and beef is now regularly available in North Island supermarkets, and sales have tripled in Auckland. Alliance also provides products to home delivery service My Food Bag, which experienced a lift in demand during the Covid restrictions.
For the financial year ending September 2019, Alliance achieved revenue of $1.7 billion — similar to 2018 — reported gross profit of $77 million, up from $60.7m, and doubled its profit before tax and distribution from $10.3m to $20.7m.
During the Covid restrictions the co-op honoured its minimum price contracts and farmers were paid above the market price for their livestock over this period.
One thousand of its 5000-strong workforce stayed at home during the level 4 lockdown and were paid by the co-op and through the government wage subsidy of $34m. Surveyor said if any of the wage subsidy wasn't used, it would be returned to the Crown but it was too early to determine this.
"Our whole aim during the Covid period was to keep processing farmers' livestock, keep people safe and keep people in jobs," he said.
"For many of our farmers we provide 90 per cent of their animal income and this money is recirculated in rural communities where we are the largest employer.
"This illustrates the importance of Alliance and agriculture in New Zealand society. It looks like New Zealand is facing challenging times ahead and agriculture will help lead the country through the economic recovery."
Alliance's plants are in Dannevirke, Levin, Nelson, Timaru, Oamaru and two in Southland.
Surveyor said $4m was being invested in the 18-month-old venison plant at Lorneville near Invercargill, so culled cows could be processed during the peak season. This would free up space at the nearby Mataura plant for prime steer, heifer and bull.
"As supply volumes continued to grow year-on-year, farmers have been asking for more beef capacity in peak season and this investment recognises that need," he said.
"It's also a win for deer farmers because Alliance will be increasing venison processing at the plant. We will be ready for next season."
Surveyor said that globally the importance of food would only increase in these times, and the safety and nutritional aspects of food would continue. "New Zealand is wonderfully placed."
Alliance is doing its bit with a strategy for connecting farmers with consumers and chefs around the world and developing the New Zealand food production story.
