Consumers are demanding ever-greater sustainability in their food choices. That comes with a financial cost. How can producers earn more to cover these new costs? This webinar explored how the New Zealand horticulture and arable sectors are winning the ‘green premium’ by working with suppliers, communities, retailers and consumers to find greater value – and then re-investing that premium in sustainable production.
This webinar was held on Tuesday 18 April 2023, featuring:
- Morgan Maw, Boring Oat
- Carol Ward, Zespri
- Dr John Reid, Ngai Tahu Research Centre
- Prof Caroline Saunders, Agribusiness & Economic Research Unit
- Vincent Heeringa, MC
Watch the webinar for insights from leaders in the horticulture and arable sectors, highlighting the importance of building partnerships with people with similar values, and being consistently grounded by consumer needs.
We have what we call the lipstick effect, where actually you can treat yourself with something you do on a daily basis, like putting on lipstick, even if you haven't got the new designer handbag to go with it.Carol Ward, Zespri
Find and know your customers
For Zespri, that means the health benefits of kiwifruit are a critical selling point – but consumers don't care just about product attributes, says Carol Ward, chief grower, industry and sustainability officer at Zespri International. They also care about the brand and its provenance (also recognised as key factors within product quality, according to the research). Even Zespri's innovation pipeline of cultivars is deeply grounded in consumer needs, says Carol, an area of critical importance as Zespri looks to build resilience to climate change.
But what about a new product, without any proven demand? This was the case for Ngaī Tahu's fragrance product, Mea, says Dr John Reid of the Ngaī Tahu Research Centre.
Noticing that boutique perfumes had been popping up all over the world “like craft brewers”, and that all growth in the billion-dollar perfume market was concentrated in that segment, Ngaī Tahu wondered if the powerful indigenous story behind their perfume would resonate.
“With Caroline Saunder's help and her team at the AERU, we started looking at markets in London, New York, San Francisco, and we're trying to peg down, who are the people that want to pay the most for this perfume? What are the characteristics of these people?” says Dr Reid.
“Through that process, we found some very key market segments that surprised us in terms of who was willing to pay significant premiums for these products – you know, several hundred dollars a bottle. From that, we're now looking at how we can market to those market segments.”
But most people don't have hundreds of dollars to spare. If New Zealand only markets its products to wealthy customers, will those products go off the menu in times of economic difficulty? Not necessarily.
Zespri's Carol Ward describes the “lipstick effect”, where lower-cost items make it into the shopping basket as everyday luxuries. “You can treat yourself with something that you do on a daily basis, like putting on lipstick, even if you haven't got the new designer handbag to go with it.”
“We found some very key market segments that surprised us in terms of who was willing to pay significant premiums for these products – you know, several hundred dollars a bottle.”Dr John Reid, Ngaī Tahu Research Centre
Align with like-minded partners
How do you build a network of people with similar values to reach a critical mass? Morgan Maw, founder of the Boring Oat milk company, explains how she teamed up with partners that share her values – and her brand of “mad”.
“Initially I met Apollo Foods, who own the apple press. They are people who are as mad as I am actually,” she says. “I thought, they've got the same sort of challenges as me: they need to get the apples in liquid form into the bottles. And the same with [our oats].”
Initially, Maw connected with them as a contract manufacturer, but a few months from launching Boring Oat, the companies decided to partner up.
“You need to find people whose values are aligned with your own, because when push comes to shove, and you have to make financial decisions in a business with pressing costs, if you're not coming from the same place, you're going to disagree.
“Because we've got the same set of values, when we've had challenges over the last couple of years, like everyone has, we're working on it together.”
“You need to find people whose values are aligned with your own, because when push comes to shove … if you're not coming from the same place, you're going to disagree.”Morgan Maw, Boring Oat
Ensure producers are rewarded
A recent Kantar report described what really matters to consumers, says Zespri's Carol Ward. “We see that the segment called the Eco Actives is really increasing. These are people who not only care about the sustainability attributes of their products, but are also willing to turn that intent into action.”
From there, says Professor Caroline Saunders, director of Lincoln University's Agribusiness & Economic Research Unit, it's critical to return that sustainability premium to producers.
Professor Saunders praises Zespri for its response to low sales in Japan, due to the low sugar content of New Zealand kiwifruit at the time, which didn't match the tastes of Japanese consumers. Zespri introduced Taste Zespri, a programme backed by consumer research.
“Producers had to reduce the yield and they actually pay a premium to producers for that. So the whole chain picked up that value and meant that that market revived and has flourished,” explains Professor Saunders.
- For in-depth case studies visit, The Value Project website
- For academic outputs and context for this work, the Rewarding Sustainable Practices research page
- For support from NZTE, the Made With Care platform
- A range of additional resources related to increasing value
- There were some questions about the environmental benefits of growing oats on dairy land. You can view the Boring Oat report here, and explore an interactive model produced by an Our Land and Water project with an instructional video here