In a marketing-only China velvet coalition – CK Import Export, PGG Wrightson and Provelco – will work together to get the critical mass needed to make an impact with the proposed new health food in China.
In all other respects, they will continue to compete for sales and farmer supply.
The coalition has obtained legal advice to ensure its activities comply with NZ competition law.
There will be no restrictions placed on any health food company they work with in China, as to where in NZ they source their velvet.
Deer velvet and red ginseng, two of the two most highly-prized ingredients in traditional oriental medicine, have in recent years enjoyed an explosion in demand from South Korea for use in branded natural health products to combat fatigue and boost immunity.
The top selling velvet-based product in Korea is used by busy executives to give them an energy boost and a clear focus at work.
Many athletes also use velvet to aid their recovery following intense exercise.
Deer Industry New Zealand (DINZ) marketing manager Rhys Griffiths says the aim of the coalition is to replicate this phenomenon in China where locally produced and imported velvet is still mainly used in traditional medicines.
A Shanghai-based business development manager will be appointed to identify and work with a small group of brand name companies that are willing to develop and promote products based on velvet from NZ.
Griffiths says the success of these products would likely give other companies the confidence to develop and market similar products, hence expanding demand for velvet from NZ.
The three companies will collectively provide the bulk of the funding with a contribution from NZ Trade and Enterprise (NZTE) and administrative support and some funding from DINZ.
DINZ does not own or trade in velvet or venison, it achieves its objectives by supporting venison and velvet marketing companies with their market development programmes.
The business development manager is being employed by Primary Collaboration NZ (PCNZ), a China-registered company the coalition has joined up as a member.
Rhys Griffiths | February 23, 2021 from GlobalHQ on Vimeo.
PCNZ represents several NZ food and beverage product marketers in China and works closely with NZTE.
The Shanghai-based NZ trade commissioner Richard Dunsheath, who attended the public launch of the partnership in Christchurch, believes the coalition is an exciting development.
“I look forward to working with them,” Dunsheath said.
“Collaboration makes a huge amount of sense in a market as large and complex as China.”
China has introduced strict food safety laws in recent years with NZ one of only two velvet producing countries that can comply with these.
“We have an MPI-administered Regulated Control Scheme that ensures that velvet is removed and stored in clean facilities, provides traceability and meets cold chain management requirements from the farm to the market, or until it is processed,” he said.
NZ also has a National Velvet Standards Body that manages a strict code of welfare to ensure that velvet removal is pain free.
Velvet can be removed only by veterinarians, or by accredited farmers under veterinary supervision.
DINZ chief executive Innes Moffat was heartened when the companies approached DINZ with the proposal to form the coalition.
“Collaboration means companies can make faster progress in the market and it makes it easier to secure government and industry funding,” Moffat said.
The venison industry’s Primary Growth Partnership programme, Passion2Profit, operates on a similar basis.
“The initiative has our support because of its potential to benefit the whole industry,” he said.
“It aligns with our objectives of building market recognition of NZ velvet as a premium product, developing new markets, and creating sustainable on-farm value.”
