Marketing NZ lamb in the UK

With the price of both New Zealand and domestic product soaring, UK demand for lamb has dropped off considerably over the past year, leaving importers with a challenging market.

The latest data suggests that volume sales of lamb in the UK were down 20% year-on-year over the past 12 months, with market value down 7.8%. This has resulted in a shrinkage of the retail cabinet space available for lamb items, and a reduction in lamb usage in the ready-meal sector.

“Over the past year, we have seen a significant lift in prices, a lot of which has been driven by lack of availability coming out of New Zealand,”​ explains Brian Johnston, general manager of New Zealand Farmers. “That lift in prices has had some impact on products eventually going through either to the retail or foodservice sectors. Particularly at retail, we have seen lamb consumption fall quite significantly.”​

John Whitlam, general manager, sales, for Silver Fern Farms (UK), points out that while prices for meat have risen by around 4.5% over the past year, prices for lamb have risen by as much as 17%. “Very simply, lamb is an expensive protein and it has had quite a lot of inflation over the last year. I suppose that, in these austerity times, it can have an effect on consumption, with consumers looking at other protein offerings,”​ he says.

Importers report that Christmas lamb sales went well, bolstered by retailer promotions, but demand has been slow so far this year. “High prices have quite definitely had an impact on demand in the UK – even more so with the economic situation in Europe, not just in the UK but everywhere. Christmas went well, starting with the new season, but now we are seeing a resistance to those high prices,”​ says Stephen Clapham, manager of AFFCO Europe.

Chilled lamb, which has been increasing its share of imports over recent years, has been hit by slowing demand. “For the first time, the figures for the past 18 months are showing that demand for chilled product has plateaued and is on the way down,”​ says Clapham. He admits this is partly due to consumer resistance on price, but adds that global competition for New Zealand lamb has also reduced volumes. “You have had less product coming over here, because production in New Zealand has been less. Then you have also had increasing pressure in relative terms from other markets, which have been competing to procure the lesser tonnages available.”​

Johnston says a drop-off in retail activity has also had an impact on the demand for chilled lamb. “In previous years there was a lot of retailer support for promotional activity, in which they invested significant margins of their own,”​ he says. “While that is still happening around key periods, such as Easter, there is less direct investment outside of those periods by retailers, as they come under pressure themselves. Any product that has had to sell at a standard price, even in the chilled cabinets, is meeting with consumer resistance.”​

However, with retailers planning activity on lamb for Easter, demand for chilled lamb should pick up. “Demand is looking to be quite high in the UK for chilled lamb at Easter,” says Heath Milne, general manager at Anzco Foods UK.”​ He adds that prices for Easter will be affected by current lack of supply, although product is expected to come through later in the year, “which will keep them from going through the roof”​.

In general, prices for lamb are likely to remain high this year. In terms of unit price, this has been exacerbated by an increase in carcase weights coming out of New Zealand. “On top of lamb becoming more expensive, certain lamb cuts — lamb legs for instance — have become heavier because lambs being exported out of New Zealand have become heavier,”​ says Whitlam. “So you had a double effect — the price per kilo has gone up, but so has the actual total unit price in cash terms.”​

Milne points out that this does have some benefits, however. “Although prices have been at historical highs, one of the real positives has been that, because of the good growing season we had earlier, the quality we have seen and we continue to see is extremely high this year. The lambs have really been finished well and the product coming in is superb,”​ he says.

Increasing price and weight means that while leg remains the most popular cut in the UK, whole legs are now an expensive option. “A whole leg has a high unit price, so there is resistance to that, as they are expensive and possibly too big for a lot of households,”​ says Johnston. “So we are seeing a move to smaller portions – half-legs, half shoulders and some boneless cuts, such as boneless leg steaks and chop steaks.”​ Milne adds that there has been very strong demand for lamb shank in particular.

Middle cuts are less popular in the UK then other markets, but Whitlam says there is some seasonable demand. “Middle cuts are very popular as you come into the summer season, for grills and barbecues etc,”​ he says.
Generally, however, the sort of cuts in demand in the UK have not changed much over the last few years. “If anything, you are seeing smaller portion sizes to try and get better retail unit prices,”​ adds Johnston.

With this in mind, importers are looking at both new products and new ways to sell lamb to consumers. For Silver Fern Farms, the focus has been on transforming lamb offerings so they are more consumer-friendly. In September last year, the company launched a new range of fresh chilled lamb in Tesco stores under the Silver Fern Farms brand. The range had been launched in New Zealand two years earlier and is designed around unit-weighed packs, weighing 375g, and including four products: lamb loin fillets, lamb rumps, lamb leg roasts and a French-trimmed lamb rack. “We wanted to be able to offer something that was consumer-friendly — from the point of view that it was already prepared, it was small portion size, it was easy to handle, had a recipe on the packaging and everything was effectively done for them,”​ said Whitlam. “We wanted to give them restaurant-quality product that they could actually buy in their local store.”​

The range is currently featured in Tesco’s £2-off range, which means that the lamb rumps and lamb leg roasts, which usually retail at £7, are available for £5. “We are effectively giving consumers the opportunity to try lamb at a much lower price point than they would if they were buying the whole leg,”​ says Whitlam.

Interestingly, the company has found that the lamb loin fillets — the most expensive in the range at £10, or £7 in the promotion — are the most popular. Whitlam believes this is possibly due to the fact that the product is very lean, and “has some incredible credentials from a healthy eating point of view, which is always a big plus point these days”.​

AFFCO is also looking at smaller portion sizes and smaller retail packs, as well as more boneless and ready-to-cook products. “We are trying to make something a little bit more appealing to the consumers because they are the people that are actually going out to buy lamb,”​ says Clapham.

Milne says ANZCO is focusing on bringing new people into the lamb category. “We don’t think that the high prices are going to reverse themselves entirely. Lamb is going to remain a relatively expensive protein, so we are focusing on how we can deal with that, by looking at portion size and different value-added products that can bring new people into the market,”​ he says, adding that the company is looking at how to attract younger consumers, smaller households and even single households. “We are really not going to sell too many whole legs of lamb to single people or to couples, so we are looking at how to leverage the opportunity to offer something that is relative to their situation,”​ he adds.

New Zealand Farmers has also been working with retail customers to boost lamb sales. “From a marketing perspective we are working to support the product. That means we have to work more closely – and perhaps more directly – with retailers on an individual basis to assist them in generating sales,”​ says Johnston. Last year, New Zealand Farmers ran a successful marketing campaign with one of its major retail partners, Sainsbury’s. The campaign, which had match-funding from Beef + Lamb New Zealand (B+LNZ), provided support for consumer-ready cuts, such as leg steaks and loins, using recipe advertising in Sainsbury’s own consumer magazine and on over 38,000 shopping trolleys in stores. The company reported that the campaign was a big success.

In terms of new product development, Johnston says that New Zealand will continue to focus on delivering primal cuts to UK processors in a way that gives them more flexibility as to how they use them and the time frame under which they use them. “We continue to work on things like shelf-life, packaging technology, what we are doing with freight, looking at temperature control, temperature management in the shipping voyage over,”​ he says.