1. New Food Cultures September 2009

2. Contents Where has global retailing come from? What are consumers looking for? Positioning of Different Proteins Some Commercial Realities Future Retailing Summary

3. Global Retailing – where are we? Hunting & gathering – supply uncertain Subsistence farming – time and energy intense, little variety, consumers were producers Industrialisation – brands, certainty of supply, low prices, specialisation, concentration, disconnected consumers Supermarketisation – brands, choice, low prices, specialisation, disconnected consumers Global retailing – certainty of supply, choice, low prices, connected consumers, psychological ploys (reward cards), consistency of offerings and product Where to next – continued differentiation (niche), greater consumer choice (POD), greater retailer branding –Stores within stores i.e. meat, produce, health and beauty

4. Consumers Want More! Core Criteria (It is all about me!) –‘price’, `quality’, ‘taste’, ‘freshness’, ‘safety and health’ Secondary Criteria (ethical consumerism or ‘attribute’ selling) –Adequacy of supply and competition allow consumers to exercise these choices. –Environment and animal welfare, sustainability (save the planet), traceability, country of origin, organics, fair-trade, food miles, water usage, carbon usage, Antibiotic free etc Other drivers within current global environment –Consumers wishing to replicate cuisine tasted through international travel –“Traditional” foods – sophisticated consumers trying to relocate or invent their culture e.g. Fusion cuisine in NZ –Religious requirements (Muslim communities) – Halal etc

5. Positioning of Different Proteins Generalisation of Protein Hierarchy –Venison –Lamb –Beef –Pork / Chicken Differing cuts will sit in differing market segments e.g. beef tenderloins, lamb flaps Commoditised vs niche or differentiated –POD vs Pointless Difference i.e. what will consumers pay for?

6. Commercial Reality Consumers find it difficult to link what they buy with broader farming systems and the supply chain (tend to be one dimensional when making a purchase decision) Huge trust in ‘their’ retailer –Caveat - a large % of consumers still shop around Difficulty for retailers to tell story to ‘ethically driven’ consumers via point of sale material and labeling – 3 second rule (can be misleading?) Niche is also about ‘availability’

7. Commercial Reality (continued) Consumers feel their actions have little impact upon issues of the day (one vote system) –Reliance on retailers and government to act as interface between consumers and producers Consumer has difficulty in retrospectively assessing value for money. This is due to difficulties in assessing ‘secondary criteria’ via traditional methods e.g. smell, taste and other physical attributes (marginal utility) i.e. sustainability story Many consumers whilst interested in food do not know how to cook. Retailers therefore require food solutions from suppliers (price point is key) –Gives rise to protein niches (ready to cook and ready to eat meals) e.g. pre- cooked lamb shanks, marinated pork tenderloins etc –Requires set weight products, convenience, affordability, consistency, flavor, availability etc etc

8. What does all of this mean for future retailing? Retailers becoming more global and reacting to consumer demands. –All cannot be all to all people –Branding and positioning statement –Waitrose (high end and best in season) –Wholefoods (high end and organic and / or sustainable theme) –Tesco / Walmart (worlds largest discount store) Information about product will remain limited (3 second rule)

9. What does all of this mean for future retailing (continued)? Point of Difference must be to satisfy consumer motivations, and be very easy to comprehend. –Must be robust and easy to communicate –E.g. animal welfare, wildlife welfare, pollution, conservation and sustainability etc Retailers will seek to gain greater control over their supply chains to remove risk and to match future consumer demands (greater on farm and processing audits) –Their own branding stories will determine the depth and transparency of this Taste will become a critical determinant of price across these niche retailers (caveat – commodity vs niche) Greater focus on improved health or wellness – beyond just meeting basic energy and nutritional needs –High in specific ‘healthy’ fats/oils –Rich in vitamins or anti-oxidants –Makes my child ‘brainy’ –Beauty and ageless Price!! (the current economic environment requires a huge willingness to sell under a promotional banner)

10. Summary 1.Moving into an era of branded global retailing with aim of connecting ethically savvy consumers to selective protein offerings Note: one dimensional offerings whilst offering a package of guarantees as a given i.e. traceable, safe, sustainable…. 2.Competition between retailers will ensure price remains a key focus with limited ability for producers to secure sustainable price premiums. 3.Retailers will drive future POD’s with competition between suppliers ensuring continued product innovation at minimal cost. Retailers will not pay for these!! Note: importance of not offering pointless differences that add cost 4.What is the impact of all this on the producer?

11. New Food Cultures Questions