New Zealand-The nations leading meat packer.

NEW ZEALAND.

Alliance leading sheep marketer

20-04-2009

Acquiring the Levin Meats business has extended Alliance Group’s newly regained position as the biggest New Zealand sheep meat marketer.

European market quota figures for 2009 show Alliance with a 29% share once the Levin figures are added, taking it ahead of the 27.6% share held by Silver Fern Farms, though Alliance chairman Owen Poole told shareholders last year that their company had already gained that market share status before buying Levin. He confirmed that view last week.

Quota figures for each year are based on the rolling average of quota filled over the previous three years, so a wider margin for Alliance should show up next year. According to the New Zealand Meat Board list, Alliance had 62,667 tonnes of supply in 2009, with another 3712 for Levin, a total of 66,379 tonnes. Silver Fern’s tally is 62,832 tonnes.

Meat board figures back to 2002 show that Silver Fern and its acquired Richmond business have fallen sharply in both market share and volumes.

Silver Fern (then PPCS) had a quota of 52,034 (23.66%) in 2002. It was then in the process of taking over the third biggest sheepmeat company Richmond which had 36,909 tonnes (16.8%). Between them, they had 89,943 tonnes, a 40.4% market share.

By 2004, the merged group’s quota had fallen to 77,112 tonnes or 35%. The total volume slippage over the seven years to 2009 has been just over 27,000 tonnes. Over the same period, Alliance has increased its quota from 59,162 tonnes (27% share). It had been the largest sheepmeat processor before the Silver Fern takeover of Richmond.

The two big farmer-owned co-operatives (Alliance and Silver Fern) had a combined share of 62.5% in 2005, when the Richmond name disappeared from the quota list, and this has since fallen to 56.6%.

The lost Silver Fern volumes have been spread over many of the 20 or so companies on the quota list, with the biggest gainer being the ANZCO Foods subsidiary Canterbury Meat Packers (CMP) - up nearly 80% in volume from 8585 tonnes (3.9% share) in 2002 to 15,360 tonnes (6.75%), helped by the start-up of a lower North Island plant.

AFFCO Holdings (like ANZCO mainly a beef processor) has increased its sheep meat tonnage by 3560 to 28,560 tonnes since 2002, and market share from 11.3% to 12.55%.

Companies associated with Craig Hickson have also grown. The Bernard Matthews group quota includes figures formerly listed under Progressive Meats and Lamb Packers Feilding, for a total 12,484 tonnes, a market share of 5.48%. Related company Te Kuiti Meat has a 2009 quota of 3116 tonnes, or 1.32%.

Taylor Preston and Blue Sky Meats/Horizon have increased their volumes, with market share of 4.4% and 2.9% respectively in 2009, both figures marginally higher than in 2002.

The Levin output will be included in the Alliance quota next year. The plant is being upgraded in time for next season’s kill, though Poole said this was aimed at further processing gains for chilled product and smaller cuts to meet market demand, rather than chasing market share.

The high value European quota - 227,514 tonnes in 2009 - takes up half of New Zealand’s sheep meat volumes and is representative of the total industry volumes, with companies getting quota for one head of stock for every two they process. Europe is very important because of the size of the market, the wide product range it takes and its value. North America is also high value, but largely for middle cuts only.

With the six million fall in lamb numbers this season, plus reduced ewe numbers, everyone is expecting greater pressure on supply from now on. The detailed impact of the lower numbers for each company’s processing tallies is unlikely to show up till next year’s quota figures are published.