23rd January 2020 is the day that everything changed; the day that China closed down due to COVID-19.
Everything stopped. We received only one order at a time when we should have been flat out. It's safe to say that it has been a tough start to the year and we are now operating in a 'new normal'.
While the sale of NZ venison hasn't been banned in China, for a few months that was looking ever likely, which led to plenty of sleepless nights. Thankfully, it has been confirmed that New Zealand red deer venison is on the approved product list and we can move forward by servicing the changing market. From a shallow base in February, we are back selling venison and experiencing growing sales.
Here is a summary of the approach we’re taking in four different market segments:
5 Star Hotels
Many of our larger clients are 5 Star Hotels and it has taken time over the past few years to develop these relationships. The current landscape means that this sales channel has stopped and will not return in any meaningful way - until later this year at the earliest.
Currently, a majority of these clients are running at 10% to 30% occupancy, where pre-COVID-19 they were around 90% to 100%. People are not back travelling yet, and many hotel restaurants are closed or have been running on reduced menus.
Although many have seen this low occupancy; a few hotels have returned to purchase from us during May, albeit in small volumes. It's encouraging to see venison return to menus, and we trust this trend will continue in the coming months.
Another positive is the reopening of hotel buffets in Shanghai over the last few weeks. Surprisingly, the rules have remained consistent in regards to foodservice and social distancing meaning consumers can eat as much as, and as fast as, they can!
A challenge we continue to focus on is getting venison onto summer buffets. We have had a few quick wins and are looking for new opportunities by continuing to build relationships. Things are changing fast, as most hotels get back up and running, and our focus is setting ourselves up for increased sales volumes come September.
Unfortunately, as the restaurant industry in China is tight at the best of times, a number of our regular clients have closed their doors for good. On the flip side, the restaurants which remain open are now doing really well.
There has been an emerging trend around China of people spending a little less per meal at western restaurants. Consumers are looking for more value for money which is putting pressure on the top end. This trend has continued post-COVID-19, and many medium to high-end restaurants are feeling the pressure.
Currently, our biggest client (volume-wise) is a 78-seat coffee shop come pub called Mel Bourne (see previous story). In May, Mel Bourne purchased an average of 25 kgs per week and this has increased in June. They have a good location and excellent quality food, serving 150g burger patties and venison rumps. This volume is well above other restaurants we have supplied previously, as Mel Bourne’s main point of difference is venison.
A number of restaurants around Shanghai are starting to do well and we are being contacted by former loyal clients interested in adding venison back to their menus. Our reputation for quality products, a reputation built over the last few years, puts us in a good position to weather the pricing pressures.
We are also picking up some new restaurants in Shanghai and around China, which is always positive.
Direct to Consumer
We are slowly developing a direct to consumer model, which we will primarily operate ourselves. The challenge here is the same as in the rest of the world - people are still learning to cook venison at home.
To address this challenge, we will start with foreign/western cooking and move to Chinese at some point soon. We are gradually building an online community around the product and are excited to see how this will develop over time.
Following the growth we have seen from our burger patties, we are looking to expand our processed venison offering in China. We are looking for another factory to expand our range which isn't easy, given the meat processing rules in China. This initiative will help increase volume as we begin our push into the retail space.
In summary, there is plenty of hard work ahead of us to get back to some good sales volume after the economic pause that COVID-19 brought. We are positive in the future with the indication from the market heading in the right direction and with the new segments that we are working to serve.