Investment in the Food

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Investment in the Food Beverage Industry in New
Zealand
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NZ Food Beverage Industry Overview
NZs 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 US238
billion) Source Economic Evaluation of the
Food Processing Sector. Infometrics, Nimmo Bell
to be released January 2004
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NZ Value Proposition for Food and Beverage
Innovation - Excellence in food and biological
sciences Security and Safety - Geographic
isolation pristine environment - Strict
biosecurity standards - Worlds 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
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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 lt50 of
US/Europe Simple tax structure No employee
payroll, social security, capital gains or
regional taxes RD 100 tax deductible Depreciatio
n of IP costs
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NZ Value Proposition for Food and Beverage
Grants/funding Support Government is the primary
source of RD 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
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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.

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The Strategic Opportunities for NZ Food
Beverage
Build value by using existing FB industry
capability, combined with R D investment to
deliver higher value/ margin products Grow
confidence by leveraging NZs safe and
sustainable food production system Ensure access
by strengthening NZs connections and visibility
within the global value chain. Build capability
and a strong domestic infrastructure to support
the transformation of the domestic industry.

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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
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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
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• 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.
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Sectors
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Dairy

• Large industry with over 14,000 suppliers
• Principally a cooperative structure for
  processing and marketing

Fonterra is the worlds 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
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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
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Meat

• NZs 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
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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.
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Meat
Jack Links is the worlds 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
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Fruit and Vegetables

• NZs 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
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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.co
m
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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

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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

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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
Talleys is a privately owned company.
www.talleys.co.nz
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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
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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 Zealands largest
locally-owned wine producer
www.villamaria.co.nz
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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
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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
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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
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Specialty Foods
Asado Foods and Menu Magic produce quality
portion controlled products from their Tauranga
and Mt. Maunganui plants. www.menumagic.co.n
z
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.n
z
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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.
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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
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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
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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
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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
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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
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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
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Contact
Peter Bull Sector Director, Food Beverage NZ
Trade Enterprise peter.bull_at_nzte.govt.nz
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Appendix - Top Five Export Markets for Food
Beverage
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Appendix - Top Five Export Markets for Food
Beverage