Meat company Richmond takes plunge in market

By PHILIPPA STEVENSON agricultural editor

Meat company Richmond is facing the challenges of stock management on two quite distinct fronts.

This week the country's biggest meat processor and exporter, headquartered in Hastings, will list on the stock exchange, joining its North Island rival, Affco, in courting investors.

Chief executive John Loughlin said Richmond's 100-year history would be irrelevant - investors would be looking at it "from here on in."

He claimed not to be concerned about the listing price.

Richmond shares on the secondary market have traded at around $2.20 each. Affco shares were trading at 42c last week.

Cavill White analyst John Cairns said the ability to make comparisons between the two big North Island companies would be welcome.

The South Island cooperatives PPCS and Alliance also published their accounts, allowing better analysis of the sector.

Richmond, with other companies in the North Island, had benefited from a reduction in killing capacity and Richmond's operating margin was better than Affco's, Mr Cairns said.

The presence on the board of Paul Collins and Bruce Hancox of Active Equities, formerly of Brierley's, was also likely to be regarded well.

"It is a difficult industry, but we are of the view that things are beginning to improve, albeit slowly. There is some prospect of that sector moving forward but it's going to be slow and difficult."

Mr Loughlin said listing was also partly a bid "to change attitudes to meat companies totally, to have them seen as another food company."

It is the same challenge the company faces on the livestock front.

Mr Loughlin addressed the issue at last year's annual meeting, telling shareholding farmers that "a lot of the behaviour right through the supply chain is too much focused on animals and not on attractive food.

"It is important that we build a psychology [of] wanting to produce food that we are proud of and that someone will enjoy. This is the key to unlocking value."

In recent weeks, the company has translated the goal into practical terms.

It has held cooking demonstrations in Wanganui for some key suppliers, and last week did the same near Hastings, neatly aligning gourmet meat meals with the star of the New Zealand food business - wine.

The demonstration, using meat cuts and other products from Richmond food service subsidiary Gourmet Direct, was held under a marquee amid the 7ha of grapevines of Askerne Vineyard, owned by Mr Loughlin and his wife, Kathryn.

Underlining the message Richmond aimed to send suppliers, the venue was also part of the high-profile, four-day Harvest Hawkes Bay festival which attracted wine buffs and gourmets nationwide.

The cooking was done by Anna Hansen, a London-based New Zealand chef who has consulted for Richmond Europe for three years at major food fairs such as Anuga in Cologne. She prepared the same type of fusion cuisine she uses to attract European clients to Richmond.

The value of showing it to farmers was evident within minutes of the heat being turned off under a bubbling tahini and wasabi dressing for a dish of marinated beef.

"I've never been to a cooking demonstration before," an elderly Hawkes Bay male sheep farmer told Ms Hansen.

The mostly farming women who made up the audience - another unusual feature for a meat company meeting - were absorbed by the event, but another male farmer was nonplussed by a demonstration he regarded as unorthodox.

Illustrating the gap Richmond hopes to bridge, he was not quite sure what relevance cooking had to him but conceded that it had been interesting to see what customers were exposed to.

Backing Richmond's push to value-added products is its impressive new FoodTech plant at Takapau, near Waipukurau.

The company bills the $14 million plant, opened last July, as the new generation of meat plant and the "new face of the export meat processing sector."

The facility, employing 300 people at its peak, butchers carcasses from the adjoining killing plant into a range of cuts, some destined straight for packaging and the market. Other portions are chilled to be retrieved for further cutting on demand.

Products from the plant, which has the capacity to process 4000 lamb carcasses a shift, range from portion-controlled lamb cuts for supermarkets in the Middle East or Europe to sausages and meatballs for baked beans and spaghetti cans at the nearby Heinz Wattie plant.