John Whitlam tries to walk in the shoes of United Kingdom food consumers as he dissects their shopping behaviour.
The conclusion of the Silver Fern Farms (SFF) UK manager is quite simple: their habits are dictated by the pounds and pence they can spend on their weekly food shop.
That is not great news for premium-priced New Zealand lamb but he offers reassurance that NZ lamb is still wanted by UK consumers, and there are plenty of them willing to pay for it.
A typical UK household spends about £72 ($150) on food each week.
Research shows that when it comes to protein, they will spend £2.56 on chicken and just 58 pence on lamb.
In a mid-range UK supermarket, a 1.9kg chicken can cost £5.50, a 1kg boneless pork loin £7.50 and a 2kg leg of NZ lamb £29.40.
Like many countries, the UK is emerging from a post-covid economic hangover that strained consumer budgets.
Inflation peaked at 11%, interest rates breached the 5% mark. An energy crisis quadrupled prices, although they have since eased.
The newly elected Labour government has created uncertainty among consumers, announcing intentions to increase some taxation settings, but without providing details, and cutting a winter energy subsidy to pensioners.
“It affects the mood of the public, which affects the mood of the consumer, which affects us,” Whitlam said.
The supermarket sector is also experiencing significant disruption.
Two discount supermarket chains, Aldi and Lidl, have in less than a decade grown their combined market share from 8.4% to 17.8%.
Their offer of cheap, no-frills food to price-conscious consumers – you can buy 12 sausages for £1 and a whole chicken for £5 – has prompted existing supermarket chains to compete.
And they are, promising to match the price of discount chains on certain items.
“Ten years ago discounters were a very small part of the UK supermarket trade but now bigger competitors are saying they will match their price range.
“The whole market has just got more competitive.”
Shoppers now visit multiple stores to ensure they get the best bargains.
UK consumers still eat lamb and retailers remain committed to stocking NZ lamb and are investing in promotions – evidence, said Whitlam, that there is demand and stocking it is economically viable.
The main proviso for supermarkets running promotions is ensuring they have enough volume. They do not like running out of stock.
Whitlam said UK sheepmeat prices are higher than in NZ, driven by the growing Muslim population and the central role of lamb and mutton in Islamic festivals.
The 2021 UK census counted about 4 million Muslims living in the UK and their demand for fresh lamb is underpinning higher prices, mostly UK lamb bought from local halal-certified community butchers.
“Ultimately they want halal lamb to be as fresh as possible,” Whitlam said.
“That is something we cannot compete with, but it is driving a lot of the current pricing.”
As the UK population ages, the traditional Christmas and Easter lamb roast will become less common.
New products such as lamb leg steaks, mince for use in kebabs and similar products are emerging and gaining market acceptance. SFF is working with UK customers and clients in their development.
Whitlam said the challenge is to ensure extra costs associated with product and market development are not added to an already expensive product.
A container of lamb is loaded on a ship in NZ and delivered to a UK port, from where it is taken to a processor, repackaged and labelled, dispatched to a customer’s cool store and eventually to the end user, a wholesaler, retailer or food service.
“As soon as you start handling it and moving product around, you are spending money,” said Whitlam.
That is why much of the handling and retail packaging is done in-market.
During shipping, product orders or pricing can change and arrival can be delayed, which means barcodes and labels attached in NZ, could be irrelevant or out of date by the time it arrives in the UK.
He said such variables mean that retaining an open dialogue with customers is crucial.
“It’s not straightforward. There are huge variables out there.
“If we get all the basics right, we like to think we’re one of the best on customer service and that’s doing what we say we are going to do when we say we will do it.”
Recently, disruption in the Red Sea has required ships to divert around the Cape of Good Hope adding up to four weeks sailing and making the task for exporters more difficult, especially for chilled product.
Chilled lasts about 65 days but SFF has found a process of slowly unfreezing frozen product, allowing it to meet the specifications and appearance of chilled.
Animal welfare is a key concern among UK consumers but they are increasingly starting to think about the planet, sustainability and how farmed livestock impacts that.
The degree to which those concerns dictate purchasing decisions reflects the prevailing economic conditions, he said.
More: Wallace is visiting seven countries in six weeks to report on market sentiment, a trip made possible with grants from Fonterra, Silver Fern Farms, Alliance, Beef + Lamb NZ, NZ Meat Industry Association and Rabobank. Read more about his findings here.
In Focus Podcast | Selling lamb to a new generation of Brits
Reporter Neal Wallace checks in from London, where he’s spent time with the Alliance Group’s UK team. They’ve hired a chef to come up with new recipes for those consumers who don’t want the traditional lamb roast and learns that a football stadium is a key part of the strategy.