Marketing your products and services
Market entry
The New Zealand food retailing market is sophisticated and highly branded. Generally, a product should already have achieved success in at least the three eastern states of Australia before considering that product for entry into New Zealand. The level of commitment required for the New Zealand market is the same as, or higher than, that for Australia.
Key determining factors for success in the New Zealand market include:
- existing brand recognition in New Zealand (or a high awareness in Australia)
- sufficient marketing, advertising and promotional support
- effective representation and distribution
- quality
- packaging
- unique features
- price
Exporters can establish a local presence by setting up a branch office, or by engaging a distributor or broker.
Supermarkets and the hospitality trade usually do not buy products direct from overseas companies, unless they are large suppliers.
Packaging should be appropriate for the market. Some packaging graphics and colour schemes which may be very effective in Australia may not be appropriate for the New Zealand market. Emphasising ‘Australian made’, ‘100% Australian owned’ or using the Australian flag can create a negative response. Austrade can assist in testing the market by facilitating local opinions on existing packaging or packaging concepts.
Indicative margins (as a guide only) are as follows:
- Importer: 20–40 per cent gross margin (ie. per cent of wholesale value)
- Commission agent: 10+ per cent
- Supermarkets: 12.5–30 per cent mark up, depending on category
- Independents: 20–50 per cent gross margin
The margins are also dependent upon the product, the individual company and likely product volumes. Exporters must allow for the distributor, broker or importer margins, as well as freight.
Promotion of new products is expected and costs (which can be high) are generally the responsibility of the exporter. Promotion can include:
- Co-operative advertising with supermarkets
- Advertising in trade and consumer media
- Product demonstrations
There are currently no new-line fees for new products. Some categories are reviewed at set times of the year, therefore it pays to check before approaching the market. Terms of trade differ between the two major groups, with each (of course) expecting the best possible price and a range of allowances.
In the processed food and beverages sector, there is limited business-to-business buying of products online by supermarkets and distributors. Some supermarket groups operate online stores.
Distribution channels
Importers, wholesalers and distributors:
- Often handle everything including warehousing of stock and ownership
- May contract out merchandising and distribution – depending on their size
- Have close networks with the major players
- Thoroughly understand their area of expertise
If a company is interested in your products, it should be able to research, and provide feedback on, the product’s market prospects.
Brokers:
- Tend to work with larger brands
- Specialise in the selling, marketing and merchandising functions
- Tend not to own stock and usually contract out distribution
If using a broker, exporters will need to register a company in New Zealand for tax purposes and operate a local bank account. The broker will often provide advice on this.
Exclusive distribution is usually a prerequisite to taking on a product in specific distribution channels. Before deciding on representation, ensure that the company is strong in the chosen distribution channel. Most companies with national distribution have an office in the main commercial centre, Auckland.
Transport
Rates for full container loads (FCL) are lower than less than container loads (LCL). Shipping rates for frozen and chilled product are more expensive than for shelf stable products. There is little availability of LCL rates for chilled products, in particular. When considering export of chilled or frozen, it is preferable to work with an importer who is already importing full containers.
Exporters should be aware that internal container movement can be relatively expensive. The cost of moving a container from Auckland (North Island), to Christchurch (South Island) is almost as high as the trans-Tasman freight costs. In addition, there is less central warehousing and more direct-to-store delivery in New Zealand.
New Zealand’s internal transport networks are extensive and efficient. Distribution is relatively easy due to short travel distances. Distribution costs can be higher than Australia due to the broad geographic spread of a relatively small population.
The major ports of entry are Auckland, Wellington, Christchurch, Tauranga, Napier and Nelson.
International airports are located in Auckland, Hamilton, Wellington and Christchurch.
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