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Strong growth and sophistication of the hospitality sector helps Neat Meat transform product offerings with unique pasture-based products, and build exports based on that success

Posted in Business
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By Andrew Patterson

Not all meats are created equal, particularly if the Gisborne born Eriksen brothers are involved.

The three siblings Simon, William and Tim along with two other founding shareholders have been slowly redefining the meat category over the past decade with high end product offerings designed to cater to an increasingly sophisticated palate.

Their Neat Meat retail shops along with their Harmony and Angus brands and their Chefs Series range have given customers access to high quality cuts of meat in a variety of forms that were previously only the domain of exporters and high end restaurants.

The business gained further kudos last month after being named one of the recipients of the University of Auckland Business School’s annual Entrepeneurs Challenge Award which formally recognised its success as an innovative brand champion.

Early beginnings

Returning from overseas in 2001, Managing Director Simon Eriksen says the business has come a long way since the days when he ran it out of the back of his Subaru Legacy.

“I remember driving around Auckland looking for a job and it struck me the meat sector was ripe for a bit of an overhaul. It still had this very traditional approach to the way it did things at a time when consumers were starting to look around for some variety.”

“The business itself was originally set up in by Richard Kidd in 1998 and I took it over in 2001.”

“We started from very humble beginnings out the back of my car boot. We probably broke all the health and safety regulations at the time and fair to say it was pretty basic. At the time we were importing Aussie beef and lamb so that didn’t make us too popular and we spent all our time with people trying to generate sales.”

“In hindsight it actually worked out really well for us because over time we got to meet everyone in both the retail and hospitality trade. Eventually we converted to NZ beef and lamb and we were able to go back to those who turned us down with a better offering.”

Over time Simon Eriksen’s two other brothers got involved in the business after returning from their OEs along with ‘adopted’ brother Andy Ham who is now the company’s CFO and, along with one other shareholder, each now has a stake in the business.

Brand profile

These days the meat offerings available to customers cover the entire spectrum from regular basic cuts through to grass fed organic beef where the animals are almost pampered to ensure the tenderness and flavour of the meat.

Neat Meats sources its meat from a range of farmer suppliers who agree to certain conditions to meet the company’s exacting standards that are necessary to ensure both the integrity of supply and quality of the final product.

“Since we started, the category has grown hugely and now we are very focused on growing our brands including Angus Pure and Harmony and really showing the quality of those meats we sell under those labels.”

“What we were able to do was create a range of high quality meats with reasonable margins for both ourselves, the farmers supplying us and also the restaurants and retail outlets. Effectively what we did was take a leaf out of the wine sector and use it as a template for marketing and selling meat more effectively.”

A multitude of changes in the last decade have literally transformed the meat industry that almost makes it unrecognisable today. The explosive growth in the hospitality sector, including a significant increase in the number of dining out options, has also created attractive new opportunities for business such as Neat Meats.

“In the past the focus was always on the fact we were a major exporter of meat and until a decade ago our restaurant and dinning culture wasn’t that sophisticated either.”

“These days things are very different. Customers are much more discerning, there is a huge range of dining options and there’s been a real cultural infusion has resulted in lots of new styles and approaches to food.”

“Funnily enough, the recession has forced restaurants to really think about their point of difference. So being able to offer, for instance, a range of meat and cuts from grain fed to grass fed has allowed them to really tell a story around the dishes they are serving.”

Learning from the wine sector

The success of the wine sector and its ability to tell stories around brands by fully engaging the customer has become a key learning for businesses like Neat Meats who have recognised how this approach can really push customers up the value chain.

“The wine sector very successfully grew the grapes, bottled the wine then really invested in marketing their brands whereas the meat sector acquired the meat, undertook the killing process but really didn’t set out to promote or market the end result in a way that engaged the customer.”

While meat perhaps lack the romance of wine, Simon Eriksen says the industry is having to adapt to a new era in food production and an increasingly sophisticated clientele.

“Obviously this is a very traditional industry so there’s always been a bit of a ‘fill up the container and ship it off’ mentality. Our approach has been much more customer focused. Like the wine sector, what we’ve done is firstly ensure the brand and the quality line up, that we get the story right and then we go out and tell that story. The final part of the process involves educating the staff involved so they go out and sell the product properly to customers.”

There’s a good challenge there for the meat industry to see if customers in the future could discern the difference between a grain fed steak from one that had been grass fed in the same way that most people can usually tell the difference between a sauvignon blanc from a chardonnay.

Developing a segmentation strategy has also had its challenges for Neat Meats.

“Harmony was a business we acquired that focused on producing organic, free range meat. It was a brand that really allowed us to understand more about consumer behaviour at a retail level.”

“However, when it comes to restaurants, chefs are really the people who promote your product and they’re the people you need to get alongside. So the combo of retail, which is where you can sell to a mass market and restaurants where you can really establish the brand niche allows you to keep the sequence going and the whole thing can build on itself.”

Marketing & promotion

“The Masterchef TV series has been brilliant for us because our Chef’s Series brand is the third part of our business. The relationship between well-known chef Josh Emmett has been fantastic for us but we also have great relationships with a range of chefs both here and overseas."

“Shows like Masterchef have also allowed us to further leverage our brand profile, as well as educating consumers about different aspects of food. We’ve developed a range of high quality quick eats specifically designed for people life chefs who work pretty unsociable hours. When they get home they want something that’s quick and simple to eat but is also of a high quality which means they don’t mind paying a premium.”

Export growth offers the biggest potential opportunity for the business to expand further in the future. “Currently it represents around 10% of our business but there is a huge opportunity for us to grow that percentage in the future.”

“Obviously with the emerging global protein shortage, the growing wealth of countries within the Asian region and an increasing amount of interest in western style cuisine we’re clearly well placed to take advantage of those trends."

“However, we have to do it our own way and that means being different. These days I think of exporting very differently to how I thought about it even two years ago.”

“Australia is a good case in point. The Aussies are tough customers. They really support their own suppliers and farmers. But we produce superior grass fed beef to their traditional grain fed variety. So we decided the best strategy to compete was to actually set up over there ourselves and tell them about our product and not reply on other people in the middle to tell that story for us.”

“Thinking a few years ahead, what I’d really like to see in the future is that we just don’t export the meat but that we export the entire butcher shop which could be set up in Harrods or Sainsbury’s.That really would give us a unique point of difference.”

Now there’s a great idea to really brand New Zealand meat successfully offshore.

KEY FACTS

Sector: Primary produce
Founded: 2001
Staff: 45
Turnover: NZ$18 mln
Annual growth rate: 60% (Harmony) 13% (Neat Meats)
Biggest market: NZ
Export markets: Australia, Singapore, Hong Kong, Thailand
Domestic / Export sales split: 90% / 10%
Profitable: Yes
Recent Highlight: Joint winner of 2012 University of Auckland Business School Entrepeneurs Challenge
Ownership: Private (5x owner shareholders)
Likely to IPO: No

 

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