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Home / Business

NZ beefs up Asian exports

Liam Dann
By Liam Dann
Business Editor at Large·
18 Apr, 2004 09:18 AM5 mins to read

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By LIAM DANN

News last week that Japan is about to start talks with the US about the resumption of beef imports hasn't rattled New Zealand marketers who are already reaping big returns in the absence of American competition.

US beef has been banned in Japan, Korea and Taiwan since the discovery
of a single case of BSE in Washington state late last year.

Meat & Wool New Zealand marketing manager Craig Finch said he was confident that any resumption of US beef sales to those countries was still months away.

But in the meantime an aggressive marketing campaign to highlight the virtues of New Zealand beef was paying dividends, he said.

In the first two months of the year Japan, Taiwan and Korea have imported nearly twice as much New Zealand beef as they did in the same period last year.

"If we look at what we've done in the first two months of this year it reflects 31 and 33 per cent of last year's total volume," he said.

The north Asian states are crucial to the New Zealand beef industry because they take most of our top-quality, high-margin product.

Traditionally American product has dominated in the Asian markets because the region's consumers prefer grain-fed beef.

Finch believes the popularity of US product is historical rather than because of any inherent superiority.

"If you eat a grain-fed steak it is very marbled. It looks aesthetically a lot more pleasing to the eye," he said. "But we have conducted blind tasting sessions and we've found that the Asians generally prefer the taste of our grass-fed beef."

The ban on US product was unfortunate and New Zealand had to be careful not to be seen to be exploiting the situation, Finch said.

"We wouldn't like it to happen to us."

But the extra demand was providing a fantastic opportunity to educate Asian palates about grass-fed beef.

"We've been subtle but aggressive. We've blitzed all sectors."

The typical New Zealand clean green image has been promoted in restaurants, supermarkets and at some high-profile functions at the New Zealand embassies in each country.

These had attracted coverage in newspapers, food magazines and even on prime-time TV.

A second wave of marketing was just about to get under way, he said.

The marketing effort this year was not a major change in strategy but it was a matter of condensing what was already being done to take advantage of the opportunity.

"We are free range, we've got green grass, pure water, lots of space. Our beef tends to be leaner than grain-fed US beef. We've got points of differentiation."

Just how lucky we are to have such a disease-free primary sector was highlighted by another disease upsetting Asian consumer patterns.

Normally, given the lack of US beef in the Asian market this year, consumers would have switched to chicken as an alternative protein source, Finch said.

The outbreak of bird flu in the region - which forced the slaughter of 50 million chickens - meant that was not an option this year.

"So the demand has been there and Australia and New Zealand are the only two key players in the markets."

It was just a matter of time until the Americans re-entered the market but the aim was to make strong, long-term gains.

"Sure we'll get drowned out a little ... but we hope to hold a position which is much better than we have previously been able to get."

Japan will eventually relent to US pressure but will probably look to introduce a tough testing regime similar to its own. The Japanese have already had a few BSE scares and apply strict standards to their own production. The Americans were trying hard to get a compromise on this but so far the Japanese were just not wearing it, Finch said.

Japan is seen as the key to the reintroduction of US beef in the region because it has the toughest standards. If it relents, Korea and Taiwan will soon follow.

Until then New Zealand and Australia can send as much additional beef as they like to Japan without fear of attracting additional tariffs. The system in Japan means that over-quota tariffs are triggered only when foreign imports reach certain maximum levels for each quarter.

If the Americans do eventually return to the market with a "wall of meat" every beef exporter to Japan could suddenly be hit with an extra 50 per cent tariff, Finch said.

"By doing that they'd hurt themselves," he said. "Ideally they will do it in an orderly fashion spread over two quarters."

By that time, Japanese consumers should be reaching for New Zealand beef as a matter of choice.

Asian beef boom

* New Zealand beef is exported to 80 markets but most top-grade product goes to North Asia (Taiwan, Japan and South Korea).

* Beef exports to North Asia were worth $387.6 million in the year to September 30, 2003.

* This was 21.3 per cent up on the previous year.

* In the first two months of this year, sales to North Asia have already exceeded 30 per cent of last year's total volume.

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