Duncan & Company

Contents1. Duncan & Co Introduction2. Market Case Study: Germany cf

Non-Europe3. Industry Profitability4. Summary/Conclusions

Duncan & Company

•Established in 1990- 24 years in business•Venison specialists•National coverage

Sales

•New Zealand- 2%•Asia- 8%•Balance –Europe/Nth America 50:50

Supply Contracts

•All year round 12 month contracts- Indexed to the schedule to reflect

market and competitive conditions- Bonuses paid for commitment,

loyalty, off season supply and performance

Yield Scoring

• Yield research trials show over $1.00/kg variation between best and worst yielding stock• Individual deer yield scored to enable more

accurate pricing of deer and valuable breed selection feedback for farmer

Case Study : Germany vs Non-EuropeEurope- Volume dropping- Price premium over other sources

reducing

German MarketWhy?- 2011 research findings back up research of 20 yrs ago- Traditional consumers want :• strong gamey taste, not mild.• local source of supply, not imported• traditional recipe, not modern cuisine• traditional rustic restaurant décor and setting.…those traditional consumers will try venison from other sources, but its not their preference.They’ll try imported, if there's none other available, or if its cheaper. Quality is not critical, due to cut used and cooking method.

German Market- cont.• If we want a premium, our target market is NOT the

Traditional game consumer, but the Non-game consumer, but there are some Hurdles:

1. Pre-conceived notions re taste2. Doubts re the farming of game3. Issues re distance to the market, ( shelf life, fuel cost, carbon

emissions)…which all make Germany a harder place to launch a premium farmed game item than other markets where there are no pre-conceptions.

Non-European Market Development over 20 years

1993 2003 20130

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2

3

4

5

6

Leg/Loin Items

Leg/Loin Items

Non-European Market Development (cont’d)

1993 2003 20130

0.5

1

1.5

2

2.5

3

3.5

Shoulder

Shoulder

Non-European Market Development (cont’d)

1993 2003 20130

1

2

3

4

5

6

7

Trim

Trim

Non-European Market Development• Loin/leg items volumes dropped since 2008 GFC, but recovering.• Shoulder and Trim items growth due to:1. Lack of directly competing products2. New product Innovation:- On-shore, in the NZ plants- Off-shore, at specialty processor level- At restaurant level, where Chefs are increasingly creating high

end dishes, using lower priced, forequarter cuts.

Deer Industry Profitability- Venison needs to be more profitable for both Farmer and

Exporter/Processor- Deer farming profitability driven by:1. Off shore market prices2. On farm cost efficiencies3. Exchange rates• NZ Dairy Industry’s competitive advantage built on NZ being lowest

cost producer with high level of food safety integrity• NZ Deer Industry is not the lowest cost producer of venison so we

need to achieve higher sale prices

Market PricingUpward Forces

• Promotion• Supply shortage• High wealth consumers• Differentiation ( lack of

competing alternatives)

Downward Forces• Lack of promotion• Over supply• Financially stressed

consumers• Undifferentiated

product ( plentiful choice of competing alternatives)

Comparison of Germany with Non-European marketsDifferentiation/lack of competing alternatives

Germany• Low Differentiation• Most NZ venison items

sold to Europe available from other sources e.g.- Spain, Scotland, Eastern Europe

Non-Europe• High Differentiation• Most venison items

sold NOT available from other sources

Other Constraints On Price

Chef vs Consumer• Chef: (purchasing for the restaurant)- Venison is an ingredient in a meal prepared by the Chef- Restaurant is a business therefore food cost is a business

decision the chef wants good quality but not necessarily the very best quality

- Price is critical- A premium is achievable but only small premium

Other Constraints On Price• Consumer (purchasing for the home)- Venison is an ingredient in the meal prepared at home- If the occasion is special the venison purchase may be an

emotional one (not a business decision)- The Moet vs Lindauer decision- To create the premium positioning requires substantial

demand creation at consumer level- Product form and distribution logistics are critical factors

ConclusionsWe need better production ON farm, and better prices from the market.

To get better Market prices:

• Go to the Markets where there is least price competition with similar alternatives

• Go to the markets where the product can be differentiated.• Target buyers who are prepared to pay a premium price

Thank you.

Duncan & Company