Nz Economic Development Since 1990

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					Investment in the Food &
Beverage Industry in New
Zealand
     NZ Food & Beverage Industry Overview
NZ’s largest and most competitive manufacturing sector
Exports have doubled since 1990
In 2002 NZ exported $16 billion food, beverage and ingredient
products. This represents half the total merchandise exports from NZ
Nearly half the food and beverage exports are value added products
NZ food processing sector accounts for 5% GDP, 31% manufacturing
GDP, 26% manufacturing employment (63,000)
In combination with agriculture and food services, the food sector
share of GDP is 10%
NZ supplies 2.4% world trade in processed foods (total US$238 billion)


Source: Economic Evaluation of the Food Processing Sector. Infometrics, Nimmo Bell to be
released January 2004
  NZ Value Proposition for Food and Beverage
Innovation
   - Excellence in food and biological sciences
Security and Safety
   - Geographic isolation & pristine environment
   - Strict biosecurity standards
   - World’s best animal health status
Workforce and Skills
    - Sector labour productivity compares
favourably with Australia, UK, Canada and the
Netherlands
    - 8 Universities, 20 Polytechnics
    - Over 4300 science graduates each year
  NZ Value Proposition for Food and Beverage
Infrastructure
   Excellent telecoms, land transport, ports and international
   airports
   Government is facilitating regional development in key
   industries including food and beverage
Cost-effectiveness
   Typically <50% of US/Europe
Simple tax structure
   No employee payroll, social security, capital gains or
   regional taxes
   R&D 100% tax deductible
   Depreciation of IP costs
  NZ Value Proposition for Food and Beverage
Grants/funding Support
  Government is the primary source of R&D funds
  Business development grants are available

Regulatory Framework
  Comprehensive, consultative

Venture Capital
  Government and private equity

Corporate Governance
  High standard
  Economic freedom, 2nd least corrupt
  Global Food & Beverage Market
Consumers want food and beverages that are convenient,
  healthy, safe, tasty and better value.
The global food and beverage industry is responding by:
• Managing margins through consolidation/ rationalisation of
  production, distribution, marketing and by leveraging global
  value chains
• Leveraging umbrella brands and increasingly outsourcing
  contract and private label manufacture
• Changing the definition of foods by producing innovative
  products with healthy/functional properties
• Taking a more holistic/integrated approach to food safety
  and traceability.
   The Strategic Opportunities for
   NZ Food & Beverage
Build value by using existing F&B industry capability,
combined with R & D investment to deliver higher value/
margin products
Grow confidence by leveraging NZ’s safe and sustainable
food production system
Ensure access by strengthening NZ’s connections
and visibility within the global value chain.
Build capability and a strong domestic infrastructure to
support the transformation of the domestic industry.
 NZ Food & Beverage Sectors
                     Exports NZ $billion (June 2002)

Dairy                            7.24
Meat                             4.61
Fruit & Vegetables               1.78
Seafood                          1.52
Beverages                        0.40
Other Foods                      0.54
                                                                                                 Go to
                                                                                                 report

*Report produced by Ray Winger, Edel Power, John Mawson, Allan Rae, Anton Meister. Institute Food, Nutrition
and Human Health and Department of Applied and International Economics, Massey University
    “Added Value” Report Observations
• “Added-value” production varies from 35% (in Dairy and Fruit and
Vegetables) to 100% (in beverages) depending on the sector.
• Approximately 46% of all goods are “added-value” products in the
NZ food-processing sector. However, the bulk of NZ “added-value”
food processing is occuring in the smaller (by dollar value) sectors.
• The key challenge (and opportunity) for the NZ food processing
sector is to increase the percentage “added value” in the “high-dollar”
meat, dairy and fruit and vegetable sectors. NB: In some sectors,
such as meat, current trade restrictions may limit the opportunities to
significantly increase the “added-value” component.


NB: Products have been separated into “added value” and “commodity” at the
HS10 level by industry experts where possible, and using an “average pricing”
financial rule where no clear distinction could be made.
Sectors
   Dairy
• Large industry with over 14,000 suppliers
• Principally a cooperative structure for processing
and marketing
Fonterra is the world’s largest exporter of commodity dairy products.
The FMCG subsidiary NZ Milk markets consumer food products. It is
cooperatively owned by 13,000 NZ dairy farmers.

                                              www.fonterra.com

Tatua is a small cooperatively owned dairy company producing
innovative food products and ingredients.
                                              www.tatua.com


Westland is cooperatively owned and manufactures sophisticated
ingredients in conjunction with Tatua.
                                              www.westland.co.nz
Dairy
Kapiti Cheeses Ltd was established in 1984 and is now a major
exporter of specialty cheeses and super premium ice cream.
                               www.kapiticheeses.co.nz



Whitestone is a specialty cheese producer.
                              www.whitestonecheese.co.nz




A2 Corporation is developing international markets for the beta
A2 casein variant. A2 has just signed a partnership arrangement
with Ideasphere, which will see A2 milk sold in over 5,000 US
retail health food outlets. Plans to list on the NZSE secondary
board in 2004.
                               www.a2corporation.com
  Meat
• NZ’s pastoral-based meat industry encompasses
sheep meat, beef and venison
• The meat industry is internationally competitive
and earns premiums in the EU and US for product
quality and customer responsiveness.

PPCS is a farmer-owned cooperative processing and exporting beef,
lamb, venison and goat.
                                              www.ppcs.co.nz

Affco is a meat-processing and marketing company that is listed on
the NZSE.                                   www.affco.co.nz
Meat
Alliance is a farmer-owned cooperative, which processes and
exports lamb, beef, veal, venison and pork products from seven
South Island processing sites.
                                      www.alliance.co.nz


Anzco Foods is an integrated meat-processing and marketing
company.

Richmond is a major farmer-owned meat-processing cooperative
that is transitioning to a food company.
                                      www.richmond.co.nz



Bernard Matthews processes meat for export to the UK and
US. It is UK owned.
  Meat

Jack Links is the world’s number one selling beef jerky. The NZ
business is 40% owned by NZ interests and 60% by Links Industries
(US).
                                             www.jacklinks.co.nz



Aria Farm produces freeflow mince and meat chips. Aria has invested
in a plant in Wales and interested in other JV opportunities.
                                             www.ariafarm.co.nz
 Fruit and Vegetables
• NZ’s horticultural industry is based largely on the
export of fresh fruit and vegetables
Zespri, owned by NZ Kiwifruit growers, markets fresh green and
gold kiwifruit internationally.
                                             www.zespri.com




Heinz/Watties manufactures and markets canned and frozen foods,
baby food and nutritional supplements. It is wholly owned by Heinz
Corporation.                                   www.heinz.com
   Fruit and Vegetables
Enza (formerly the Apple and Pear Marketing Board) and Turners
and Growers are now principally owned by Guiness Peat Group.
The companies market fresh fruit and vegetables internationally and
manufacture apple-based products.
                                               www.enza.co.nz




McCain has three vegetable and food processing plants. Wholly
owned by McCain of Canada.


Nikken Seil is a subsidary of Nikken, Japan. It is investing in
organic production and a business park for functional/healthy
foods in Oamaru.
                                                www.nikken.com
  Seafood
• There is a diverse range of products in the industry. One
  major wild fishery (hoki) exists and there are a small
  number of major aquaculture products with Greenshell TM
  mussels being the largest.
• Wild fisheries are managed through a quota management
  system
• The industry has closely held interests with Maori owning
  40%
• A study part funded by NZTE - “Industry Development
  Framework for the NZ Seafood Industry” by LECG and the
  NZ Seafood Industry Council - will be published in 2004
• A study part funded by NZTE – “A Template for Evaluating
  Business Opportunities for Aquaculture Production in
  Offshore Markets” by Gary Bevin, Supreme Link Consultants
  – was completed in April 2003
 Seafood
Sealord is owned 50% Maori Fisheries Commission and 50% Nissui.
                              www.sealord.co.nz


Moana Fisheries and Sealord will become part of Aoteraroa
Fisheries.




Aotearoa Fisheries is the holding company for the Maori fisheries
investment.
                              www.aotearoaseafoods.com
Seafood
Sanford is listed on the NZSE.
                                         www.sanford.co.nz




Amaltal is a joint venture between Amalgamated Marketing Ltd of
Auckland and Talley's.
                                         www.amaltal.co.nz




Talley’s is a privately owned company.
                                         www.talleys.co.nz
   Seafood
Independent fisheries specialises in added value products. It is in
private ownership.                           www.indfish.co.nz




New Zealand King Salmon Co Ltd is a wholly owned subsidiary of
Oregon Group Ltd, which is ultimately owned by the Tiong Group.
                                             www.kingsalmon.co.nz
Beverages - Wine

Montana Wines (with Church Road, Wither Hills, Corbans) is New
Zealand's largest wine producer and exporter. It is a wholly owned
subsidiary of Allied Domecq plc.
                                      www.montanawines.co.nz


Nobilo is the second largest winemaker and is owned by the US
corporate Constellation Brands.
                                      www.nobilo.co.nz




Villa Maria is New Zealand’s largest locally-owned wine producer
                                      www.villamaria.co.nz
Beverages - other


Independent Liquor manufactures, distributes and exports alcoholic
beverages.                         www.independentliquor.com




DB Breweries is a brewer and marketer of beers and spirits. DB is
owned by Asia Pacific Breweries, Singapore.
                                     www.dbbreweries.co.nz
Beverages - other

Frucor is a leading Australasian beverage manufacturer. It is
owned by Groupe Danone.                www.frucor.com




Phoenix Organics is an organic beverages company.
                                       www.phoenixorganics.co.nz




42Below is a premium vodka company, which has just listed on the
NZSE secondary board.
                                       www.42below.co.nz
Specialty Foods

Hubbards manufactures breakfast cereals.
                                      www.hubbards.co.nz



Old Fashioned Foods manufactures and exports microwavable
steamed puddings.                 www.auntbetties.co.nz


Genoese Foods is a privately owned New Zealand company
specialising in the manufacture of fresh herbs in oil, condiments,
pestos and tapenades from herbs grown on it's own farms in NZ and
Fiji.
                                      www.genoese.co.nz
Specialty Foods
Asado Foods and Menu Magic produce quality portion controlled
products from their Tauranga and Mt. Maunganui plants.
                                        www.menumagic.co.nz

Comvita is a Bay of Plenty-based natural health products company
that produces and sells a wide range of largely bee-based non-
prescription health products internationally.
                                       www.comvita.com

Extract Solutions is a 50 : 50 joint venture partnership between the
NZ hop industry and Nutri-Zeal Ltd, a Nelson-based processor of
nutraceutical productis. They operate a large supercritical extraction
plant.                                 www.extractsolutions.co.nz

Griffins manufactures biscuits and snackfoods for the domestic
and export market. Owned by Groupe Danone.
                                       www.griffins.co.nz
Specialty Foods
Taura Natural Foods                   www.taura.co.nz



                                      www.aotea-baking.co.nz



Hi Tech Foods is a specialty ingredients manufacturer.
                                      www.jatra.co.nz




General Mills NZ manufactures pasta. Owned by General Mills
Inc.
Specialty Foods
Cadbury manufactures in their Dunedin factory and
distributes/exports chocolate and confectionery. Wholly owned by
Cadbury Schweppes plc.
                                      www.cadbury.co.nz

Nestle New Zealand manufactures food and pet products.
Wholly owned by Nestle.
                                      www.nestle.co.nz


Allied Foods manufactures flours and bakery products. Wholly
owned by George Weston Foods (Australia), which in turn is owned
by Associated British Foods plc.

Dominion Salt manufactures rock and flaky salt. Owned by
General Mills Inc.
                                      www.domsalt.co.nz
Specialty Foods
Goodman Fielder manufactures branded consumer grain-based
foods. Recently purchased by Burns Philp, which also owns NZ Dairy
Foods.                               www.goodmanfielder.com.au



                                     www.burnsphilp.com.au
 Crown Research Institutes
Agresearch is involved with research into life sciences
genomics for animal & pasture improvement.

CEO Dr Keith Steele         www.agresearch.cri.nz

Celentis is the commercialisation arm of AgResearch.

CEO Dr Stewart Washer       www.celentis.com


Crop and Food focuses on research in crop & marine
biotechnology.
CEO Paul Tocker              www.crop.cri.nz
Crown Research Institutes

HortResearch is involved with research into genomic
improvement of fruit crops and discovery of bioactives.
CEO Paul McGilvary          www.hortresearch.co.nz




NIWA focuses on research on marine organisms and
bioactives.
CEO Dr Rick Pridmore        www.niwa.cri.nz
Crown Research Institutes
Industrial Research Limited focuses on research into
pharmaceuticals, bioactives, natural products & carbohydrate
synthesis.
CEO Nigel Kirkpatrick                     www.irl.cri.nz


ESR is involved with research into the areas of
pharmaceutical, forensic, health, food, environment
monitoring.
CEO Dr John Hay                           www.esr.cri.nz
Universities
University of Auckland - Relevant departments include Food
Technology, International Business, Medicine, Nutrition and
Engineering.                   www.auckland.ac.nz

Massey University - Relevant departments include Food
Technology, Technology and Nutrition.
                              www.massey.ac.nz
Lincoln University - Relevant departments include Animal and
Food Sciences, and Viticulture and Oenology.
                              www.lincoln.ac.nz

University of Otago - Relevant departments include Food
Technology and Medicine.
                              www.otago.ac.nz
Contact


 Peter Bull
 Sector Director, Food & Beverage
 NZ Trade & Enterprise
 peter.bull@nzte.govt.nz
          Appendix - Top Five Export Markets for Food & Beverage
Category        Europe            MidEast /      South East       North Asia       Americas      Australia /
                                                 Asia                                            Pacific
                                  E Asia
Alcoholic       UK $121m                                                           USA $59m      Australia $59m
beverages       Netherlands $8m                                                    Canada $9m

Beverages                                        Singapore $2m    Japan $12m       USA $10m      Australia $58m
                                                                                                 Cook Islands $2m

Bakery          UK $2m                                            Japan $8m        USA $1m       Australia $43m
                                                                                                 Cook Islands $1m

Cereals                                          Malaysia $1m     Japan $1m                      Australia $4m

Convenience                                      Singapore $29m   Japan $52m                     Australia $119m
                                                 Malaysia $19m    Hong Kong $41m

Condiments      UK $2m                           Singapore $2m    Japan $27m       USA $114m     Australia $42m

Confectionery                     Saudi Arabia                    Japan $33m       USA $2m       Australia $54m
                                  $3m                             China $3m

Fats / Oils                                                       Japan $63m       USA $75m
                                                                  China $42m       Mexico $66m
                                                                                   Canada $54m

Functional                                                        Korea $1m
                                                                  Hong Kong $1m

Ingredients                                      Thailand $19m    Japan $113m                    Australia $72m
                                                                  China $60m
                                                                  Korea $20m
        Appendix - Top Five Export Markets for Food & Beverage

Category     Europe          MidEast /   South East          North Asia        Americas      Australia /
                                         Asia                                                Pacific
                             E Asia

Dairy                                    Phillipines $358m   Japan $401m       USA $303m

                                         Malaysia $303m

                                         Indonesia $292m

Fruit,       EU $303m                                        Japan $376m       USA $144m     Australia $194m
Vegetables
             UK $176m

Meat         UK $541m                                                          USA $1318m

             Germany $406m                                                     Canada $336

             France $261

Seafood                                                      Japan $273m       USA $297      Australia $162m

                                                             Hong Kong $149m

                                                             Korea $73m

				
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