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Export Award For Lean Meats

Farmers Doing It For Themselves - Export Award For Lean Meats

Hastings, May 7, 2003 -- Lean Meats, a Hastings-based company that was set up by farmers to ensure they got the best prices for their lamb, has won a Trade New Zealand Export Award for achieving annual foreign exchange earnings in excess of $20 million.

(Note to Editors: Media are invited to attend the presentation of the Trade New Zealand Export Award to Lean Meats by the Associate Minister of Agriculture the Honourable Damien O’Connor, at 11.30am on Wednesday 7 May 2003, at the company’s premises, Corner Gallien & Heretaunga Streets, Hastings).

Lean Meats was founded in 1989 by about 100 farmers from the lower North Island to market and distribute niche lamb products, primarily to the USA, where CEO John Atkins says returns for specialty lamb are higher than anywhere else in the world.

“We were dissatisfied with our lamb returns when we were coming off subsidies and figured that we should at least go and have a look at the market ourselves.

“Two of us went over to the USA and did basic market research to look at what the market wants, how we can get our product up there and do the maths stack up. We came back, started the business and it’s grown steadily ever since.” Mr Atkins gave up his job as a farmer to run Lean Meats with founder partner Phil Guscott being the company’s chairman.

“Based on our market research we deduced it was critical to have a presence in the US market in order to provide the customer what they want, not what we think they want – that’s a critical success factor in exporting.”

In 1989 Mr Atkins and his wife moved to San Francisco to set up the US end of the business and find clients.

“We wore out a lot of shoe leather knocking on doors. We initially targeted the smaller retail markets, supermarkets and restaurants, facing a lot of competition from Australian lamb in particular. As Americans eat very little lamb, it is a difficult market to increase.

“We sell to the end user and that differentiates us. Another key point of differentiation is that we supply a consistent well cut product and a level of service over and above all other competitors.” Mr Atkins says a lot of the small supermarkets it originally secured as clients have now consolidated. He says that has been a key to Lean Meat’s success – as its little clients got bigger Lean Meats has grown with them. Three years ago the couple returned to New Zealand so John could manage the Hastings office, with a staff of seven. His son took over the running of the US office, which now has 22 staff, including John Atkins' daughter. Mr Atkins says the Americans like the family aspect of the business.

Exports account for about 90% of Lean Meat’s business. The USA is by far its largest export market, although product is also sold to other markets, including the EU, Asia and Canada.

Foreign exchange earnings have increased significantly in recent years, in part the result of increased capability. In addition to its 100 shareholders, Lean Meat now buys lamb from a further 150 farmers who are spread throughout the lower North Island, from Taupo to the Hawke’s Bay to the Manawatu and Wairarapa. Mr Atkins says that geographical diversity of its suppliers is deliberate as it protects supply in the face of droughts for example, which is currently impacting on farmers in the Manawatu. In the early years Mr Atkins says Lean Meats had to work hard to keep the farmer shareholders in the programme, with no profit recorded for the first five years.

“We didn’t think it would take that long but we were working with uneconomic volumes. The meat business is a volume business; that is why so few start-ups are successful. Until you can sell a container load, size handicaps you out of the ballgame.”

Trade New Zealand Sector Specialist - Meat and Seafood, Ross Graham, congratulated Lean Meats on its Export Award win.

“Lean Meat’s strength lies in its vertical integration. By controlling all parts of the chain it can ensure its customers receive quality products for a price they see as reasonable and its suppliers receive market returns for their lamb.

“It’s also agile and quick to respond to market needs. R&D has always been high on its list of priorities – not only transportation of finished product to ensure it gets to the market in the best condition, but also how the organisation can help improve livestock to meet their criteria.”

John Atkins says the personal relationship Lean Meats builds with its clients is one of the keys to its success. To strengthen its position in the USA market, the company has started a distribution business, supplying customers with other products in addition to New Zealand lamb. Mr Atkins says these products are sourced both domestically and internationally and range from rattlesnakes to beaver tails.

He says future plans are to do more of the same to manage the growth of chilled lamb business. That includes keeping close tabs on competitors from the USA and Australia in particular.

“I have two sayings in this business. The first is you snooze you lose. And secondly, someone is always trying to steal your lunch, so be vigilant, have the systems in place to get early warning what’s happening and have a good plan to deal with it.”

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