As leading New Zealand meat exporter, Alliance, puts its new strategy into operation and begins its infiltration into new markets, it continues to return to Atradius and EFCIS / ICBA (UK) for its trade credit insurance needs.
Donna Smith, Regional General Manager of UK & Europe, at Alliance Group, explains why the relationship between itself, its broker and its insurer has been so successful in helping to deliver its New Zealand produce to the UK and further afield.
The last few years have been difficult for every sector, but for the meat industry, in particular, we have had our fair share of setbacks. Political conflict continues to pose problems for exporters such as ourselves; Brexit had a huge impact on labour shortages and the free movement of goods around the EU, and the war in Ukraine is further exacerbating shipping problems.
In New Zealand, Veterinary Certificates have been a requirement for quite some time. Post-Brexit, the same rules were introduced for the UK. And though this hasn’t impacted our trade to the UK, it’s meant that our route to market from the UK to mainline Europe has been disrupted, prompting us to branch out to new customers until a Free Trade Agreement has been ratified.
Add to this, the global rise in inflation met with the industry’s already tight profit margins, leaves little room for mistakes. A trading loss of £100K for a <2% net margin business will mean we need to generate an additional £5.7m in new business sales to replace this bottom-line profit, which is significant. What’s more, the seasonality of the produce puts pressure on consumers to buy, causing stock to move quickly, particularly in an increasingly competitive market.
Despite these challenges, premium and specialist meat brands such as the ones we produce at Alliance are selling really well. As an increasing number of people move towards a healthier and more flexitarian diet, we’re seeing consumers making the conscious choice to have a varied diet, and when they do buy meat, they want to purchase high-quality produce with better welfare standards.
But there’s a lot of competition on one plate. Prices for quality lamb are considerably more than average prices for chicken, pork, and beef, and one of the main obstacles for retail continues to be competition against other meats.
Thankfully, EFCIS / ICBA UK and Atradius have helped us to navigate our way into new markets by ensuring we have a thorough risk assessment plan in place. Having worked in partnership with both companies for the past six years, their knowledge and insight of the industry played an integral role in the success of Alliance in the UK today.
The cover of non-payment that trade credit insurance provides has given us the confidence to make educated investments knowing that we’re dealing with credit-worthy partners, buyers and customers. The last two years have seen a number of unforeseen circumstances arise. And without access to the up-to-date information on companies that Atradius has access to, we might not have been able to securely expand around Europe and further afield, despite not having a physical presence.
Using a broker like EFCIS / ICBA UK has been equally as important. Having not come from a background in finance, it’s been fantastic to work with our partners at EFCIS to help me understand the complicated ins and outs of our trade credit insurance reports. At Alliance we feel safe in the knowledge that we have someone overseeing the process, backing our business and constantly re-evaluating our coverage to ensure it’s to the correct amount.
The seamlessness of the working relationship is a testament to our collaboration and Alliance and EFCIS’s ability to remain impartial, transparent, and trustworthy. So much so that both businesses are corporate Partners of Butcher’s Hall, a London livery that has an incredibly longstanding history in the industry. The event space provides professionals in the industry with the social headspace to share knowledge and network; something that has proved hugely beneficial.
Since the COVID-19 pandemic, we have continued to expand into the home food delivery boxes, which has enabled us to gain instantaneous feedback from consumers. This initiative was supported by having several conversations with Atradius and EFCIS on how we could be supported in these expanding markets to survive and grow with the changing landscape. Information and protection have been two of the most prominent benefits we’ve seen since our relationship with Atradius began, and what we’ve learnt from our relationship with them we’re now working on emulating with our own customers.
Looking ahead, the future is looking bright for the meat industry. At Alliance, we’re looking forward to our continued relationship with the trade credit insurance sector. If the past few years have taught us anything, it’s to stay ahead of the game and work in harmony with our partners and customers to better understand their needs.