Friday, July 1, 2022

Velvet market tipped for strong growth

Exports of New Zealand velvet could reach $200 million a year over the next 10 years with potential sales growth in several markets including Korea and China. 

In his address to the recent deer industry branch chairs meeting in Wellington, Deer Industry New Zealand (DINZ) markets manager Rhys Griffiths reported a positive future for velvet.

Velvet is a growing industry, with exports estimated to reach $120 million by the end of this 2021-22 season, Griffiths said.

This is a doubling of production and a quadrupling of farmgate value over the past 12 years.

However, the economic impacts of inflation, falling consumer confidence, lockdowns in China and temporary stifling of new product development, along with plenty of this season’s unprocessed stock sitting in China, will remain problematic in the short term as covid-19 continues “to knock the industry for a six”, Griffiths said.

In the medium-term, the overall outlook looks positive. 

“More opportunities are emerging in South Korea’s healthy foods market where companies are investing in ‘NZ-ness’ so need NZ velvet.”

NZ Trade and Enterprise workshops are helping NZ velvet to connect better with Korean consumers and more innovative products are in the pipeline, such as the newly launched Sooshin Energy Shot from New Origin.

In addition, China represents a significant opportunity for growth where currently consumption is natural and organic and entry to the market must be well managed to replicate what has been done in Korea.

“Now is the time to own the position,” Griffiths said.

Velvet exporters are working within the China Deer Velvet Coalition to establish links with potential customers in the Chinese food sector.

As well investigations are underway in Taiwan where Korean company KGC recently reported success for a second new velvet product. 

DINZ is also looking at prospects in Japan and Vietnam.

While there are plenty of challenges Griffiths painted a bright outlook.

“If industry is successful in its ambitions, we could increase to at least $200 million in the next 10 or so years,” he said.

Meanwhile PGG Wrightson has exported the first ever dry velvet to China, signalling a sign of the changing times for NZ deer velvet that is targeting health food companies in the emerging market.

The small trial airfreight consignment arrived at Beijing in early June in what is hoped will be the first of many shipments for the company, PGG Wrightson national deer and velvet manager Tony Cochrane reported.

Addressing a DINZ road trip event Cochrane told farmers industry is working together to promote the product into China as a food ingredient with the collaboration also part of the Primary Collaboration NZ (PCNZ) based in Shanghai.

There is also potential for a boost from “revenge spending” as Chinese consumers exit strict lockdowns looking both to boost their immune systems and try new things like NZ deer velvet and venison.

China takes all grades of NZ deer velvet but particularly prizes the jelly tips of the velvet, the part that has the active cell growth and that sells for $10,000/kg.

But of the 60% of velvet currently exported to China, 40% goes to customers in South Korea.

“If we want to expand and to grow a market because we want to grow production, we’ve got to find ways of getting into China and that’s why we’re trying to tap into those food companies.”  

In doing so, managing animal welfare and public perceptions through VelTrak and the sector’s quality assurance programmes will be important, Cochrane said.

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