Strong underlying consumer demand for velvet in an uncertain world

Strong underlying consumer demand for velvet in an uncertain world

Friday, October 9, 2020

NZ deer velvet products are enjoying strong underlying consumer demand in a very uncertain world. It is unknown how these opposing factors will influence prices to farmers in the 2020/2021 season, which is now underway.

“Covid has caused huge economic damage and disruption across the globe. Air freight prices have soared. But in our major velvet markets consumers are looking for products that support immune function, one of the key attributes associated with velvet. It’s not a bad space to be in right now,” says Deer Industry NZ marketing manager Rhys Griffiths.

In Korea’s high-end New Origin cafés, customers can add NZ deer velvet to their healthy smoothies. New Origin has just added premium sections, featuring NZ velvet, to its cafés

“Our embassies in South Korea and China are reporting that NZ products with health attributes are doing well. In Korea 20 new consumer products containing NZ velvet have been launched in the last six months, despite the disruption caused by Covid.

“Just like in NZ, people in Korea avoided visiting their medical professionals (in this case Oriental medicine doctors) at the peak of the pandemic for fear of picking up the virus. Patients are reported to be now returning, which will hopefully continue during the new velvet season.

“South Korean companies are further investing in consumer-friendly velvet products, with another 20-odd products launched this year alone. At South Korea’s New Origin cafes, where well-to-do consumers can buy health food drinks containing velvet, premium sections profiling velvet products have been established. In Taiwan the first branded consumer-friendly velvet-based product has been launched by South Korea-based KGC, a major NZ velvet customer.”

On the other side of the ledger, Griffiths says business confidence is an issue. Businesses have suffered during the pandemic. Their working capital has been eroded. So they might be more cautious than ever about taking forward positions.

“Buyers should, however, be reassured by the fact that there is no evidence yet that production in New Zealand is getting ahead of market demand. We estimated last year’s production would be around 850 tonnes and it looks like it might fall just short of that – much less than some market pessimists were predicting.”

He says deer farmers would like certainty in terms of what all this means in terms of farm gate prices, but it’s a question he can’t answer. “Certainty is not something I can offer. Because of Covid-19, this is a unique season. Prices will be what buyers and sellers agree on,” he says.

To support sales by NZ velvet marketers, DINZ is working closely in major markets with NZ Trade & Enterprise staff who will be visiting major velvet customers on the industry’s behalf. DINZ staff beam into these meetings for a brief chat where possible.

“NZTE staff, particularly in Korea, China and Taiwan have been very supportive of our industry,” Griffiths says. This connection is hugely helpful in a world where exporters cannot travel and Griffiths is grateful to NZTE for its support.

DINZ is also supporting a NZ Government recovery initiative, ‘Made with Care’, which will be promoting NZ food and beverage products in a major campaign to be launched on 20 October. DINZ will use Made with Care marketing materials during planned virtual market visits in Korea from 20 October.

Despite Covid, DINZ is also maintaining its long-term market development strategies designed to create new demand, especially for branded health food products. China is a major focus.

Health food companies regard product quality assurance and traceability as critically important. So DINZ is developing VelTrak, a sophisticated web-based traceability system that producers in competing countries will likely be unable to match.