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Add value to lift profit, food industry told

Add value to lift profit, food industry told
Kiwi food and beverage exporters need to focus on adding value if the sector is to live up to its full growth potential, an industry report released today shows.

Kiwi food and beverage exporters need to focus on adding value if the sector is to live up to its full growth potential, an industry report released today shows.

While processed foods may not be the best option healthwise, they're good for the country's collective wallets.

"Relative to peers, NZ has good F&B exports per capita; however, our mix is currently skewed towards traditional minimally-processed foods," said consulting firm Coriolis in its study, Moving to the Centre: the future of the New Zealand food industry. 

Food exports make up  54 percent of our total export value and has been our largest single export for the last century. But less available land and falling animal numbers suggest exporting more of the same is not sustainable. At the same time, Coriolis said, barriers to food processors adding value are falling, such as shipping times and access to overseas markets.Food and beverage exports

According to the report, Australia is proof that exporting processed foodstuffs works - Kiwi-made soft drinks, confectionery and frozen french fries have been particularly successful across the Tasman.

If our global food export mix reflected the Australian mix, weighted toward processed items, the food industry would be more profitable, it concluded.

But success can only be achieved through individual companies and investment decisions, Coriolis said, with government merely acting as an enabler.

In another industry report, Julian Mellentin, director of New Nutrition Business, said Kiwi growers tended to focus on fresh products rather than ingredients, where the highest margins are.

Dairy was one of the biggest areas of opportunity.

"Fonterra should create new consumer brands in its core Asian market and create new categories, as Anlene has," he said.

He said there were hundreds of universities and research organisations offering their services as research partners to the food and beverage industry.

Research partnerships are increasingly provided by ingredient suppliers, however, who act as gatekeepers for research to get to food companies.

"Far-sighted companies are deliberately setting out to bind their clients - the consumer goods companies - closer tothem by offering such total packages, which include R&D strategy."

The studies are part of the Food and Beverage Information Project, a slew of reports to the Ministry of Economic Development that represent the most comprehensive analysis of New Zealand’s F&B industry ever undertaken.

Economic development minister David Carter said the sector employed one in five New Zealanders and was key to lifting export growth.

“New Zealand’s reputation as a trusted producer of high-quality food and beverages is our success story. 

“The world needs food, and it’s common sense that this is produced in the most suitable locations by the most efficient producers," he said.

“This will stimulate thinking and enable government and industry to work together to resolve issues and drive export growth."

The reports cover beverages, processed foods, meat, dairy, produce, seafood and nutraceuticals and foods for health. Further studies  analyse global markets, provide an industry guide for investors and look in-depth at the Singapore market, which Coriolis pinpointed as ripe with opportunities.

It said New Zealand was gaining market share in Singapore, and there were opportunities to take even more share from higher-cost competitors. Singapore is increasingly a net importer of food, especially in dairy and beverages, in which New Zealand companies excel.

What's more, it's centrally located in south-east Asia and acts as a natural hub and gateway to the region, with an existing free trade deal in place.

The project will run for five years, updated annually - see all the reports at www.foodandbeverage.govt.nz.