Clean, green does not sell
New Zealand’s clean, green image is no selling point for the country’s primary industries, says Synlait Milk chief executive John Penno.
Penno said he was not a believer in ‘‘the NZ story.’’
‘‘We don’t have a monopoly on beautiful clean green places, and yet we act as if we do and act as if people should pay us for it,’’ he told industry people at the NZ Institute of Agricultural and Horticultural Science ‘‘Towards 2030’’ forum at Lincoln University. ‘‘They won’t.’’ ‘‘New Zealand has no advantages in cleangreen over Australia, North America or the European countries,’’ he said.
Penno thinks most affluent consumers want to buy local produce and will only buy foreign if they have to.
‘‘Would you rather buy local beef or imported beef,’’ he said. ‘‘It goes without saying you would choose local beef.’’
‘‘Interestingly, our partner in Los Angeles apologises in his marketing material that he works with a New Zealand partner.
He says ‘if I could get this same product in the US I would but I can’t so I have gone to the next best thing’ which is a supplier in New Zealand
‘‘This may be different in places like China but I think that is short term.’’
Penno said Synlait, which produced infant formula, had tried to actively distance itself from the New Zealand image and create brands and partnerships based on who it was.
Synlait had built a grass-fed protocol for its farmers - tougher to do in New Zealand dairying than people might think, he said.
Farmers were paid a 25c premium per kilogram of milksolids to produce the milk the company wanted.
‘‘What Synlait is trying to do is find things where the farming genuinely adds to the value of the product.
‘‘Then lock that in and charge the consumer for it.
‘‘It has to be something the consumer wants to pay for and in this case it’s grass-fed.’’
Synlait had done market research in the US and its consumer and what they were prepared to pay for their milk products.
The research found that organics was ‘‘on the way out’’ because people had lost confidence in it, Penno said.
But they loved the thought of grass-fed because it was how their grandfather had done it and how they felt farming should be ‘‘It doesn’t matter where they are, wealthy people are prepared to pay for food if it’s good and nutritious, looks after the animals, the environment and the people working around it.’’
Synlait wanted to be known for who it was and what it did and not that it came from New Zealand, he said.
Synlait is intending to raise $98 million for a $300m expansion programme over the next three years to include a second site.
The company wants to increase its infant formula manufacturing and expand its packaging and value added cream manufacturing facilities.
This will include investing in a second site outside of its Dunsandel plant. The site was ‘‘almost certain’’ to be in New Zealand and investigations would include the North Island.