Opportunities for New Zealand sheep milk products: a study of 5 - - PowerPoint PPT Presentation

Sheep Milk New Zealand Conference 2020 31 March 2020

Opportunities for New Zealand sheep milk products: a study of 5 export markets

Presenters: Jan Hales & Shane Kells

Findings will be presented in two parts

• Part 1 (Jan Hales)
• Project background.
• Key findings on the global

market opportunity.

• What this means for

developing New Zealand’s sheep milk industry.

• Part 2 (Shane Kells)
• Implications for processing.
• Implications for farming.

• Undertaken by the New Zealand Food Innovation Network.
• Funding from the Provincial Growth Fund (PGF).
• Started January 2019.
• Focused on opportunities to grow the New Zealand sheep and goat

dairy industries and stimulate regional economies.

• Concentrated on how to scale the sector to meet PGF goals.

Project Scope

Export Markets

China USA Germany South Korea Taiwan

Processing

Current vs. future requirements. Creating value from milk. Manufacturing models.

Farm

Current vs. future requirements. Financial model. Environmental implications.

Cheese Yoghurt Butter UHT Milk Nutritional Powders Infant Formula

Key Points

The market for sheep milk products is small and undeveloped High farm gate milk price expectation limits where we can compete To win, we need to position New Zealand sheep milk products at the premium end of the market

THE MARKET IS UNDEVELOPED

According to Julian Mellentin from New Nutrition Business, sheep and goat milks are fast growing, premium niches that are starting to challenge cow’s milk ... in the West as well as Asia. Kid’s Nutrition Report, 2019

Germany is the most developed market for Sheep Milk products

2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 China USA South Korea Germany Taiwan Tonnes

Sheep Milk Products - Estimated Total Market Size

Cheese Yoghurt Butter UHT Milk Nutritional Powders Infant Formula

Values derived from data provided by Gira (2019) and MPI & Euromonitor (2020)

5,000 10,000 15,000 20,000 25,000 Cheese Yoghurt Butter UHT Milk Nutritional Powders Infant Formula Tonnes

Sheep Milk Imports – Estimated Market Size

China US South Korea Germany Taiwan

Values derived from data provided by Gira (2019) and MPI & Euromonitor (2020)

Cheese dominates the market

HIGH FARM GATE MILK PRICE EXPECTATIONS LIMIT WHERE WE CAN COMPETE

Our sheep milk costs 2-3 times more than

• ur competitors
• Average milk price NZ$2.75

per litre

• Sardinian milk price NZ$1.10 -

$1.45 per litre1

This forces us into premium categories OR the premium end of every category.

1Source: https://www.forbes.com/sites/annalisagirardi/2019/02/19/why-shepherds-are-pouring-milk-on-highways-in-the-italian-island-of-sardinia/

Yoghurt is a large, fast growing category in China - we would have to develop the premium end of the market to be profitable

Note: Calculations include manufacturing and supply chain costs; excludes R & D and market development costs. Derived from retail pricing provided by Gira (2019).

$5.50 $15.00 $20.00 $(3.90) $3.56 $7.48

• 10.00
• 5.00

0.00 5.00 10.00 15.00 20.00 25.00 US$/kg or NZ$/kg

Drinking Yoghurt in China

USD$ Avg market price

• Approx. NZ margin

Current price

• f locally

made yoghurt from non- bovine milk

NZ margin is the value of the product when is leaves New Zealand, minus manufacturing/transport/storage costs.

Infant Formula is an easier win

$89.51 $75.00 $76.70 $64.60 $99.01 $49.35 $27.67 $27.69 $25.95 $56.80 0.00 20.00 40.00 60.00 80.00 100.00 120.00 China USA South Korea Germany Taiwan US$/kg or NZ$/kg Sheep Infant Formula USD$ avg market price

• Approx. NZ margin

Note: Calculations include manufacturing and supply chain costs; excludes R & D and market development costs. Retail prices from Gira research (2019).

TO WIN, WE NEED TO POSITION NEW ZEALAND SHEEP MILK AT THE PREMIUM END OF THE MARKET

Who are our consumers? What do they value? What are the willing to pay for? Leverage our strengths/ address our weaknesses Adapt and innovate without compromising our resources

Acknowledgements

Project Lead, CEO FoodSouth John Morgan Steering Group Daniel Phillips, Ministry for Primary Industries Mackenzie Nicol, Ministry for Business Innovation and Employment Nick Dobson, New Zealand Trade and Enterprise Stuart Gordon, Waikato Innovation Park Warwick Tauwhare-George, Parininihi ki Waitotara Craig Prichard, Massey University Peter Hobman, Working Foods International And everyone else who has been generous with their time and shared their expertise with us throughout the project.