Call to lift export gains
New Zealand is stuck in the past figuring how to produce even more low-cost export commodities while the marketing of fine products it already has is ‘‘woeful’’, says New Zealand Merino boss John Brakenridge.
‘‘We sell commodities at an export value of around $37 billion that reach consumers globally at a value of over $200 billion,’’ says the chief executive credited with driving merino’s monumental shift from a nearly 100 per cent commodity sold at auction to 70 per cent grown under lucrative contracts to elite wool product makers.
Brakenridge’s call for New Zealand to dramatically lift its marketing and branding game follows another gathering at Stanford University, in the heart of Silicon Valley, of New Zealand’s primary sector ‘‘bootcamp’’, the Te Hono Movement. Te Hono, founded in 2012 by Brakenridge, says it has so far united 178 chief executives and leaders representing 80 per cent of the primary sector, in a goal to collaborate to transform New Zealand’s approach to doing business globally. It was Te Hono’s fifth workshop at Stanford, where participants work with professors at the world-leading research and new technology university and Silicon Valley business innovators.
Asked to comment on a call for new farmer-owned strong wools company Wools of New Zealand (WONZ) to pair with NZ Merino, Brakenridge said Kiwis liked to talk ‘‘structures’’ not ‘‘strategy’’. He had no comment on ex-WONZ chief executive Ross Townshend’s call for a merger.
Brakenridge said through Te Hono, companies and sectors were realising they could work together, even if competitors, to break into an increasingly sophisticated marketing world.
Te Hono was not another talkfest. Practical results were accelerating. One was a collaboration in China by five big companies in the seafood, meat, dairy and wine sectors. Instead of setting up five offices in China they established one. ’’An obvious extension of that is how they now might work together.’’ About 150 more collaborative actions were under way in China and the United States as a result of a similar Kiwi initiative, Team USA.
A dramatic shift in thinking was needed by primary exporters, crown research institutes and universities, Brakenridge said.
‘‘A lot of the primary sector’s support structures are still stuck in that ‘we must produce more, and more efficiently’ thinking. When it comes to producing more off the land, in reality we are quite good at that already. What is just woeful is how we connect with consumers and how we develop marketing and brands that realise the intrinsic value of what we produce.
‘‘Our support infrastructure [is] set up for when New Zealand’s future was to produce more as a low cost supplier. This no longer holds strategically given the volatility of markets, our loss of competitive advantage and our vulnerability re environmental pressures.’’
The threat to the primary industry from onrushing world change was unprecedented - so too were opportunities.
New Zealand needed to start talking about the big gap in its performance, ‘‘monetising our commodities’’.
‘‘A lot of the conversation is about science and research. The biggest gap isn’t that, it’s about how we take our products to market, and you can quantify that by the example of $37 billion turning into $200 billion (consumer value). A huge amount of that extra value comes from the intangible value wrapped around those products through branding and capturing the hearts and minds of target consumers.
‘‘New Zealand is largely woeful first in elevating this conversation, and then working out all the components required to successfully capture this value.
‘‘We have good products now but we leave so much value on the table. Of course science and research have a place in terms of extracting innovation but that should be anchored off a sophisticated marketing infrastructure.’’
Brakenridge said the Stanford workshops stretched thinking.
‘‘We ensure we are not just hearing what we want to hear... we don’t want this to be someone coming in and saying this is the increase in the middle class in China and they’re going to need protein so New Zealand just needs to concentrate on how to produce more.’’
A Danish marketing expert’s opinion on New Zealand exporting was: ‘‘You’re lazy and you’ve had it too easy’’. ‘‘At first I was a little defensive. ‘‘But Denmark has put a huge effort into design and branding whereas we tend to go down the path of least resistance, producing commodities and selling them as close to their rawest form as possible.’’