NCMC development and implementation of retail veal category growth strategies

Summary

Northern Co-operative Meat Company (NCMC) are a producer co-operative whose main business is member service kills. A secondary arm of their business is veal production and sales which they are looking to re-invigorate in the Australian market with their branded Richmond Valley Veal product range. NCMC have entered into a partnership with a supermarket and have established a good sales arm to their veal initiative. They are also currently working with producers to strengthen their supply arm.

The alliance between NCMC and the retailer presents an opportunity for the Australian veal industry to take a new and fresh approach to the positioning of veal with Australian consumers. A successful five-year program would see an increase in the consumption of veal per capita. To achieve the full opportunity, NCMC will need to ensure optimum alignment on the supply side to grow production, improve market signals to assist producers in better meeting market specifications, and develop new models for growing production to supply at suitable times of year and with a focus on increasing total supply chain profitability.  

This project assisted by preparing demand forecasts to give a clear, forward definition of supply required per month.  

Richmond Valley Veal

Prior to this program, sales of veal had been declining year on year due to lack of investment in the category and the product range. NCMC aimed to increase the volume and value of veal consumption in Australia through a series of activities that ran in parallel to this project. Upon launch of the Richmond Valley products in September 2016, there was a period of large markdowns and waste. This was not entirely unexpected as a similar peak in markdowns & waste occurred for house-branded products in the previous Christmas/New Year period (December 2015 to January 2016 period). It was agreed with the retailer to maintain fixed per unit and per pack pricing from launch through to end of first quarter 2017.

The Richmond Valley category started showing improvement in January-February 2017, with growing sales and reducing markdowns and waste. The category continued to make good progress in increasing veal sales throughout the first half of 2017. The product and consumer insights that were gained provided an important base for future development of the category considering the predicted increase in livestock supply (from end of 2017 into 2018). A short-term approach was also developed, in discussion with the retailer, to further reduce markdowns and waste to an estimated 4%. As part of an overall category development strategy, in store visits were undertaken to connect to and inform in store meat manager, observe in store product appearance and specification, and begin to understand how to engage with consumers.