New Zealand has the advantage of being in the food production industry where demand can only go up. Make no mistake, food is a fantastic industry to be a part of. There will be population of 9 billion by 2050, and feeding this population will obviously become a top priority of every nation in the world. This will create enormous level of opportunities to New Zealand.
World Bank data indicates New Zealand’s total exports in 2013 were $74 billion (US$55 billion), or around 30% of its GDP. According to 2013 figures, reaching 40% of GDP means reaching nearly a total export target of $100 billion (US$74 billion). That means New Zealand brace itself for some really hard work in next few years.
It’s always easy to make big money by hitting the top end of the market – but that requires strategy.
That strategy necessarily revolves around time of entry, branding and the image of New Zealand itself.
Time of entry
New Zealand has a remarkable track record of developing trade deals with the rest of the world. As an island nation the country, on a global scale at least, does not have much to offer to the world, New Zealand currently has a number of significant trade deals in force. South Korea, a significant Asian market may come on board soon, and the TPP deal will hopefully open doors to new markets such as Japan, the US and Canada.
However, trade agreements do not make trade, they merely facilitate trade. Time, therefore, is a key factor in trade deals. If New Zealand can establish agreements prior to its competitors, Kiwi firms will get the ‘first mover’ advantage, helping firms to create markets, build relationships, develop in-depth cultural understanding and adopt profitable business models.
Sooner or later competitors will make entry into these markets, as they have in China (Australia, for example, has preferential access to China). If New Zealand firms use their time appropriately, that will help them to create the competitive edge essential for business success.
Even if New Zealand firms do not have the first mover advantage, Kiwi firms will be able to compete and capture the market when it gains entry if Kiwi firms can establish ‘trusted brand’ status.
Brand is a promise. New Zealand exporters should focus on branding and work hard to deliver the promise of the brand. Consumer have become brand buyers rather than product buyers. Branding will help Kiwi firms sell at a premium to the top-end of the market. Kiwis have to change their mentality from being farmers or growers to becoming international marketers.
Another opportunity brand creates is that it allows New Zealand companies to source products from any part of the world as long as they keep their brand promise. That means brand allows exporters to sell dairy, meat, fruits, etc not necessary produced in New Zealand, but produced anywhere else in the world under Kiwi brands.
New Zealand exporters should learn from technology giant Apple, even though the country is not a major technology exporter. Apple recorded a profit of $25 billion (USD$18b) in the quarter ended December 2014. That was the highest quarterly profit a public company has ever recorded. Almost every product they create is being bought by customers across the world, even though Apple products are much more expensive than competitive products. It’s brand that makes the difference. According to Forbes, Apple is the most valuable brand in the world way and ahead of competitors, with a brand value of over $195 billion (US$145b). Though Apple manufactures its products all over the world, they keep their brand promise.
A well-designed country image can be a sales booster. If the best watches are produced in Switzerland and if the best automobiles are produced in Germany, why doesn’t New Zealand position itself as the country that produces the best food in the world? We already talk about a ‘clean, green’ image, so perhaps Kiwis need to shout a little bit louder about how the country makes when it comes to food. In this respect, New Zealand is still not properly on the radar of some significant markets (such as Korea).
However, New Zealand may also have to think about how to handle its obesity and health issues if we are to be taken seriously as a great food-producing nation.
We also have to become a leader in food-related research. New Zealand needs to come up with innovative food technologies that define processes, methodologies and tools for the rest of the world. We need to stand at the leading edge when it comes to food.
According to the United Nations, globally, 60% more food will be needed by 2050. New Zealand therefor should keep a close eye on developments around genetically modified and synthetic food, which may play a major role in the future food market.
New Zealand needs to deploy international marketers across the world. We need to be proactive. While individual companies build their own brands, industry bodies and government should join hands to build and market New Zealand’s image as the best producer of food in the world.
Pramuk Perera is the first doctoral researcher in International Business at University of Otago. He has experience with global organizations in Asia, Europe, the Middle East and now the Pacific.