US loss is NZ’s gain

| October 13, 2001 | 0 Comments

 By Will Verboven

The American Sheep Industry Association (ASI) is trying to rally the troops to fight a giant American grocery store chain over their decision to stock only New Zealand lamb.

The Safeway chain has over 1,200 stores in the USA and over 200 in Canada. In addition they own several other smaller chain stores.

Safeway, in the USA, used to be a stalwart buyer of American lamb. Some stores stocked imported lamb but their emphasis was on the domestic product. The ASI is trying to get American lamb producers and consumers to pressure Safeway head office to change their mind. That will only happen if the public relations department of Safeway decides that the bad press and negative image are not worth the insignificant value of lamb in the overall sales picture.

What is more likely to happen is what occurred with the Canadian branch of Safeway. Eight years ago Canada Safeway dropped their supply contract with a Canadian lamb packer in favour of a supply contract with the New Zealand Lamb Company. That almost put the Canadian supplier out of business but it was probably a good business decision for Canada Safeway. They weathered the protest from Canadian sheep organisations and today are large importers and retailers of NZ lamb.

It’s all quite simple from a North American grocery chain store perspective. Lamb sales usually represent 1% or less of their total meat sales. Company meat buyers and merchandisers cannot justify spending any time worrying about lamb sales – the investment in time is not worth it. Most North American lamb packers don’t help the disposition of chain store buyers and managers by delivering lamb that is too fat or not cut according to specifications, or constantly changing in price.

Therefore, when an importer comes along and offers a trouble-free lamb marketing programme with guaranteed consistency in product quality, inventory control, packaging and merchandising and year-long stable lamb pricing, most chain stores will jump at the opportunity. It’s one less retailing headache to worry about.

Of course free trips to New Zealand for company executives and meat buyers paid for by Meat New Zealand are usually part of the package. All that golfing, sightseeing, lavish meals and NZ beer probably has a male bonding effect between meat buyers and NZ lamb salesmen.

The decision of Safeway USA is not all that surprising considering what happened at their Canadian branch. In Canada, NZ lamb is merchandised by the NZ Lamb Company of Canada. It is considered to be the premier lamb marketer in North America. A few years back, some of its executives were put in control of the American NZ Lamb Company. It doesn’t take a marketing genius to see the pattern.

Although American lamb producer organisations may protest, they need to recognise their role in the Safeway decision. One thing is clear – there is no mercy and very little patriotism left in the North American meat business.

Will Verboven is a meat industry commentator based in North America.

 

Category: Focus

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