Squeezing a higher premium from the higher production cost of sustainable food and beverages is one of the key challenges facing New Zealand producers.
A webinar series sponsored by Our Land and Water is exploring how NZ’s companies are commanding a green premium, and proving it can deliver a genuine return for re-investment into the business.
In the first episode of the webinar, beverage producers explored how beverage brands have turned their sustainability claims into a premium in the NZ and overseas markets.
The webinar panel included Patsy Bass of the Reefton Distilling Company, Florence van Dyke of Chia Sisters, Simon Oley of Karma Drinks and All Good Organics and Professor Paul Dalziel of Lincoln University’s agribusiness and economic research unit.
Dalziel said the unit’s research work into premiums and value returned to producers started when it was realised that despite the genuine regard many producers paid to their communities and environment, they were not being rewarded for that commitment.
“The purpose of the research was to find those consumers in global markets that shared the same values, the care for the planet and local community and cultural authenticity as well as tasting good and creating the value chain that would connect those consumers with NZ producers so the value could be created and captured for the people who were doing the work,” Dalziel said.
He said it became a case of identifying the products’ “credence values”, an international term to describe the values embodied in a beverage that the consumer has to take on trust.
“Claims it’s sustainably grown, that it’s carbon zero, that they are paying living wages: the consumer can’t check all that in the supermarket. They have to take it on trust. And so this is what we mean by credence attributes.”
Coley said typically people may claim they will buy an organic product, but may not actually do so unless they can be seen making the purchase.
“So, we have a job to do to tell the story and to make sure they feel good about being seen with our product.”
He said this was why the company has more success on visible consumption occasions, such as in cafes and restaurants, when a level of virtue signalling occurs.
For Van Dyke, the “big three” values of innovation, nutrition and sustainability underscore every major business decision the company makes. She cited how the decision to shift to their own factory prompted them to install expensive solar panels “but when we did that we launched a new range called Bottled by the Sun, to celebrate that shift to solar power. And the profit from that range far outweighed the cost of the solar panels.”
She said the conversation about values is something that does resonate with consumers.
“They are not looking for perfection. They are looking for some vulnerability and honesty and transparency and action on our values, so it ends up paying off as well.”
The next webinar is scheduled for March 21, on the red meat sector. Interest can be registered here.
