Aftertaste #2 - 15 future food cities, ANZACs undervaluing Asia, fermentation vs the cow, China branding with Peddlers Gin
Encouraging to have a warm response to the Aftertaste series following our first edition. We sent the first copy out to a focus 400, and ended having it re-shared and read over 3000 times. This is wind in our sails, setting the scene for this inflated update. Topics covered in Aftertaste #2 include:
- a continuation of the cities vs markets strategy including a list of 15 future food cities to feed;
- our opinion that ANZAC businesses still don’t value Asia experience;
- the future of precision fermentation and what this might mean for cow-derived exports;
- our first feature interview with Shanghai-based marketer Joseph Judd / Peddlers Gin Co on how to build a new gen consumer brand from China.
The past month has been busy ahead of a move down to Queenstown. In our view the Central Otago food story is internationally under-told and hopefully we can help in some way to improve this, especially as the tourism sector rebuilds. Arguably, it is the world’s purest food sourcing region.
Along these lines, it was intriguing to catch the NZTE Made with Care food campaign (consumer facing launched this week) that comes across as Govt marketers telling NZ natural food marketers what they want to hear in red meat, dairy, wine, hort etc categories. US is still getting a large push as the next focus market -- we wonder if they've asked the US Fonterra foodservice team how well their # of years of seeding investment has worked out. Also interested to read 'they' used frequently in the Made With Care China section, whilst no mention or similar diction used when describing Germany or US markets – perhaps we were reading too heavily into it or otherwise a pretty telling indication of the author’s orientation.
In other news, we've helped place a friendly into a GM role for a new seafood startup and also formalising an emerging food leaders collective for Aotearoa future food. The informal network three years ago was used to share ups and downs as businesses were founded; now these companies collectively represent 50m NZD of new revenue for New Zealand’s innovative food sector and expect this to grow by ten fold over coming years. Not bad for a few characters dodging the traditional corporate expectations and giving it a good nudge. Hopefully they can become role models and backers of the next wave of Kiwi food entrepreneurs.
Lastly, product highlights we've been sampling worth mentioning - Supergreens by Matakana Superfoods; Bean Supreme's marinated tofu range; the whole range of Chia Sisters carbon-neutral juices and hemp-based beverages (worth reading their brand story); Barkers Boysenberry & Blackcurrant Fruit Compote; Smartfoods vs Hubbards muesli comparisons; Pure Food Co for sick family members; Zaroa Pohutukawa-smoked sous vide Angus brisket; and Arnott's Pizza Shapes.
Enjoy this issue and please sing out with any feedback or areas you’d like us to clarify or debate.
- Impossible launches retail packs across HK and Singapore / Impossible hints dairy play and further R&D team investment
- Omnifoods launches plant-based SPAM at 400 McDs HK and Macau
- Hema’s first super store launched in China
- Aussie v2 Foods Series B sees Temasek and Chinese PE funds join
- JUST opens culinary studio in Shanghai for plant-based conversion
- Chinese demand is almost back post Golden Week
- China minted 257 new billionaires over the past year
- NZ Beef & Lamb claim they are close to carbon neutrality
- Fonterra China Farms exits
- Ray Dalio on US and China -- chapter 7
- Perfect Day spins off new Brave Robot consumer brand
15 future food cities to feed
In the first edition we made a primary point that exporters need to cut the markets mentality and focus on dialling consumer needs at city (or even neighbourhood) level. This forces a more detailed value-chain deep dive, working back from demand-channel-consumer needs, working out what partners are needed, and ignoring overly commodity-centric generalisations…China plus one strategies this, US pivot that.
Driving this message home further, there are 15 future food cities that food exporting countries should focus on, build protected supply chains into, position and market brand stories from, and fundamentally compete and win in. Imagine if you had an Eataly type of experiential platform in every one of these cities collectively telling your country food stories from a centralised HQ -- and then having all the brands and collective funds to further this story online and offline. Feels like a no brainer right, and with pooled budgets not too hard to kick off and quickly measure return on investment...product sales!
Pacific Rim countries that have serious food export plays to pull this type of focused strategy off include NZ, Aus, Chile, Argentina, Mexico and Peru. The winners will be those who leverage existing trade relationships and focus their resources into winning over key cities. Winning allows for brand building, halo Country of Origin marketing synergies, and leaping into adjacent cities/verticals as and when required e.g marketing premium food has greater premium tourism, education and investment attraction synergies down the line. Losers will be those who kick the commodity-exporting can down the road (Argy currently doing this in full swing), fail to invest in owning the value chain, limit marketing to occasional channel investments and govt trade shows under the premise of freer trade, and token industry activation events a la winegrower slosh ups in HK.
If we were advising Ministers of Trade or Food Industries, below are the cities we’d target and why. If we combine these 15 cities above there’s 190m+ consumers or at least 50-60m mouths for a New Zealand to feed in the upper end of the needs pyramid. A Peru might want to position a little lower than a New Zealand, or perhaps not with its prized GMO free claims. Given New Zealand only produces food today for <60m mouths this feels like a much clearer way to focus Trade & Enterprise government funds and exporters' limited cash.
What cities have we missed?
- Tokyo – 37m pop metro area - hard to activate technically but once you are in you are in.
- Seoul – 10m pop - the new Tokyo for food and beverage trends. Progressive and open to new ideas. And soft power cool in the region.
- Beijing – 20-23m pop unofficially - hard nut to crack but still the gateway for real China conditioning, just don’t tell Shanghai.
- Sydney – 5.3m pop - an increasing global brand platform down thanks to Instagram, vegans and Bondi.
- LA – 13m pop - global food trends follow Hollywood and now programmed culture on Netflix.
- London – 9m pop - still the cosmopolitan gateway for a lot of European and Anglo new brand entrants
- San Francisco or NYC – 3.3m or 8.8m pop respectively - depending on your product either can be effective, NYC for mainstream credibility and San Francisco for slightly dorky tech/VC endorsement.
** For Latino countries both Miami and Madrid will likely be prioritised here, as both key brand halos for any global branding initiatives from LatAm.
North East Asia
- Taipei – 2.7m pop - easier to build a foothold, harder to gain real traction but good organic brand halo for wider foodies in the region.
- Shanghai – 27m pop - arguably the IT city for new food marketing in Asia, if a little commercial and cyclic. Need RMB to stand out.
- Hong Kong – 7.5m pop - still a great incubator for North Asia and South East Asia lift + shifts.
- Shenzhen – 12.5m pop - city of the future with huge concentrations of Chinese Gen Y, Zs etc working away from home with disposable kuai.
- Chengdu – 16.3m pop - cultural and lifestyle hub for much of China (hip hop etc) and an increasing beacon for brands. Chongqing also worth a consideration -- 30m population and lovers of all thing spiiiiiicy.
South East Asia
- Singapore – almost 6m pop - cultural hotpot for SEA, lots of need still for imported foods despite Temasek and domestic food investment agenda.
- Bangkok – 8.5m pop - one of the food hubs of Asia with high concentrations of consumers, great testing bed especially for price-sensitive brand strategies.
- Jakarta – 10m + pop - critical mass makes this more attractive than Ho Chi Minh in our opinion, despite the red tape at the borders. Otherwise replace with HCM in Vietnam, or KL.
OPINION: The ANZACs still don’t value Asia experience and perspective
It’s striking how Asia in-market experience and perspective still isn’t valued even in countries like Australia and New Zealand who rely on Asia for an increasing share of their economic prosperity. Former AustCham Shanghai CEO’s opinion in the AFR does a great job on touching on the needs for more not less understanding (and value) placed on China in Australian business and govt circles; and the same holds true in New Zealand.
The re-elected New Zealand PM has limited Asia experience - evident by her single visit to China during her first term. A previous Fonterra Chairman has been captured on record remarking never trust the Chinese. There are hardly any Asian CEOs and trade leaders featuring in business headlines. Unsurprisingly, the shining star of New Zealand exports today, Zespri, is the only major company with its Kiwi CEO based in Asia (Singapore). This feels like a 101 in the growth playbook other companies can look towards.
Noticeably, the need to learn an Asian language rhetoric has been replaced with Te Reo Māori language positioning over the past five years. Even the Asia NZ Foundation - an agency partly funded by Asian countries - promotes Te Reo Māori usage in the queue ahead of Asian languages. Understanding and promoting your own culture is essential, but at what cost when the audience outside of NZ is a key driver for a country's continued success? Do we ask our key partners if they want us to spend some more time speaking Te Reo Māori or Kapa Haka at another Kiwi Week F&B Brunch in Shanghai, or attempting more of their own language signalling understanding and commitment? We're on the fence whether this is more a case of Kiwis pushing cultural virtues again, even if the rationale of identity preservation and promoting bi/multi-lingualism is completely sound and overdue.
Our view is that much of New Zealand’s business executive is still underprepared for Asia –particularly China. A retraction under the veil of Covid-19 is taking place. Many talk up and like the idea of Asia buying our goods, and ticking up Air NZ airpoints on company jollies when we could fly but living and breathing the cities is a different buzz – why risk the smog when you can afford to live in Auckland’s Kohimarama and cycle to work in 20? There’s been no NZ Inc articulated strategy on Asia and China since John Key’s first term. MFAT still struggles to fill its Beijing diplomat recruitment intake.
This avoidance culture makes us slower and less responsive to fast changing realities - we've got mostly grey hair Boards making calls on Asian business strategy who simply aren't Asia-qualified. The daughters and sons of Kiwi and Aussie industry still prefer to hang out in London instead of Shanghai. It also plays out in our talent pipeline and hiring cultures – glass ceilings on Asian-looking candidates where little emphasis is placed on hard skills developed at Shenzhen or Jakarta coalfaces, and still Big 4 and cricket club experience in London is an easier conversation for slotting back in after the instagrammed dime a dozen OE.
Fundamentally, this same cycle of Anglo-feathering is preventing the next wave of business pioneers -second or third generation Asian emerging leaders who work fluidly in the dualism- to reach the top of Aussie/Kiwi industry echelons. Instead they are moving to startups. This means that increasingly we classify companies as either getting Asia, or those companies with execs and cultures that don’t get Asia. It's increasingly binary. We believe there is already some noticeable distinction between these types of company cultures, and the distance between them is only going to increase in years to come. For many it is too late.
Can this culture change if the next PM in Australia or New Zealand is Asian? Or does a country like New Zealand need a clearer Asia Pacific strategic refresh, starting with accepting more of its destiny as a part of and vested in Asia, rather than its historical narrative as an Anglo-Pacific port for sheep, wool and butter exports? Auckland is now one of Asia's most ethnically diverse cities after all - it could be a bastion for progressive and new generational values across APAC...
Wishful thinking for now.
The future of precision fermentation and what this means for cow-derived exports
We helped moderate a panel recently hosted by the NZX on the future of precision fermentation, an encouraging move when the NZX is weighted towards trading futures tied to physical dairy commodities.
The panellists were class – with perspectives from cultured cheese player New Culture, Zymergen, RethinkX and Auckland Uni-services. The general message was disruption is coming and a value chain approach is required if to truly scale up precision fermentation to compete with/displace traditional animal-derived proteins. Debate remains as to level of disruption and traditional dairy's future existence (e.g displaced from commodity but active in premium nutrition). Still a massive question on cost of production at scale. 2030 as a tipping point may be a little ambitious, and now on track for 2035-2040. Big questions asked what this means for a country like NZ's with regard to future export strategy.
"Isn't something like 70% of dairy from New Zealand exported? New Zealanders shouldn't be concerned with New Zealand consumers, they should be concerned with what the rest of the world wants" - Catherine Tubb, Rethink X
FEATURE: How to build a new gen consumer brand from Shanghai with Peddlers Gin Co and Joseph Judd
Walking the talk on the rhetoric above, we wanted to cover more personal stories of entrepreneurs from Asia at the coalface building up brands and giving insights on their why, what and how.
The first feature is with Joseph Judd, Strategic Planning Director with BBH as well as Marketing Director for Peddlers Gin Co. We know Jojo from many moons ago in Wellington, and been impressed with how quickly him and co-founders have grown out a craft gin brand from Shanghai across China and now into Asia Pacific:
1. Mind introducing your personal and work story - any key highlights?
Following stints in Hong Kong and Cambodia, I worked for a PR firm in Wellington before moving to Australia to complete my Masters at the ANU. Before long I had an urge to move back to Asia, which took me to Taiwan on a Mandarin language scholarship. Following a year of study I worked as a brand strategist at DDG, a brand consultancy based in Taipei. It was a few years into this role that I was approached by some friends in Shanghai about launching a Chinese craft gin. My wife and I had been planning to move to China for some time, and I soon started a new role in Shanghai within the WPP advertising network as a brand strategist working on Ford. At the same time, we kicked off Peddlers Gin. I am now strategy director at creative agency BBH, where our clients include Kraft Heinz, Burberry, Mondelez, Google, Pernod Ricard and Mercedes Benz.
2. Tell us about Peddlers Gin Co and China's first crafted gin
While a lot of craft gins offer a citrus-forward profile, Peddlers Shanghai Gin differentiates with a more distinctive flavor, brought through botanicals such as Qingxi Sichuan pepper, Buddha’s hand and Yunnan cassia. Our brand was inspired by the hustle and bustle charm of Shanghai and the city’s unique history and culture.
3. What was key to building the brand in the early days, what has worked?
We spent a lot of time getting the product right. In terms of the brand, it was about arriving at a position that was true to our product, relevant to our audience and distinct from the competition. This required research and rigor, and informed our brand name, story, visual identity and tone of voice.
Allowing space for creative talent in the brand development process was critical, and thinking ahead as to how we would build distinctive and memorable brand assets over time, such as our custom typeface, color palette, packaging and other elements.
From the start, we set out to be a brand and product that bartenders love to work with. So collaboration has always been a core part of the Peddlers brand. Having a strong team and product to make that real has played an important part in our growth.
4. Tell us about proving the source story, promoting Chengdu and local ingredients and the burgeoning underground hip hop scene…
Authenticity is key. We knew early on it would be important to show what makes our product different. The first story we covered was a trip to Hanyuan where our Sichuan peppercorns are grown. What’s unique about the peppercorns we use is that they’re grown in a small village which has a very specific climate, making them the most fragrant and prized on the market. They’re called tribute peppers because they were once gifted to the Emperor.
We did another content piece around this time about China’s underground music scene. We linked up with bilingual hip hop artist Bohan Phoenix for an interview in Chengdu. By chance, we also ended up spending time in the studio with the Higher Brothers – a group that’s blown up in China recently – as they recorded a track with Bohan. This was about shedding light on creativity and craft in modern China, and uncovering insights from those shaping the trends of nightlife here.
5. What do consumers seek in your brand - who do you target and how do you reach them?
We approach market segmentation and targeting on a city-by-city basis.
Bartenders are an important audience for us. We try to understand how we can add value to what they’re doing. Then our marketing efforts flow from there; whether through activations, telling stories about craftsmanship and innovation in the industry, or facilitating collaboration between bars. In terms of reach, a lot of it is about on-the-ground relationship building.
For end consumers, we focus on people that are well-travelled, curious and adventurous; looking for a gin with an unexpected flavour. Considering other markets, if someone has a connection to China, such as second generation Chinese, or they have an affinity with Chinese culture and cuisine, we see them as an opportunity. This is why Singapore and Hong Kong make a lot of sense for us, beyond the geographic location.
We’re active across e-commerce and social media in China, and this is an area we’re continuing to invest in more. We try to make sure our campaigns are impactful and hardworking by considering the overall customer experience. Where’s the creative opportunity? Is the brand and message front and centre across touch points? Are we connecting our offline activations to the online space? How can we make our product convenient to buy at the right moments?
6. Limited releases, localised collaborations, the Great Gin Road and new business model pivots (e.g re-made cocktails for delivery) seem to captivate new audiences...what are the behind the scenes insights?
All of these touch on what I mentioned before about collaboration. Gin Road helped to build relationships and establish our presence as a community-driven brand with a footprint across China.
This year we put out three limited edition labels as part of our ‘Love Your Local’ campaign, working with Plastered-8 studio in Beijing, Nini Sum in Shanghai and OMACKE in Shenzhen. This was about staying active and relevant during COVID, and also supporting the creative and F&B communities who have been going through a tough time this year.
7. What are challenges to scaling from Shanghai across China? What needs to change in the brand, what stays true?
Our brand was created and inspired in Shanghai, but our product draws on ingredients from across China. So being an adventurous ‘made in China’ gin holds true across the civilisation.
In terms of what changes, it’s more about our go-to market strategy for different types of cities and customers. For example, tier one and two cities come with different opportunities, challenges and customer needs, all of which need to be taken into account.
8. Do made-in-China-for-the-world food stories work? How do you see alcohol and spirit trends across APAC with a Chinese tint? What are growth plans and how central is the China story to this?
Absolutely. Take the example of Japan, and how appreciation (and pricing) for Japanese food grew along with its economy in the post-war era. Many western cities haven’t scratched the surface when it comes to the depth and sophistication of Chinese food. There will be a lot of opportunity in this space for good products that can tell the story well.
There’s a clear trend toward more experiential F&B across the region that brings consumers more into the process. EcoSpirits Global, which Peddlers has recently signed up with, are doing important work to drive sustainability in the industry by limiting on-trade single use. It’s exciting to see bartenders in China continuing to innovate with new concepts inspired by local culture and ingredients.
China is our home market and remains our core focus. We also have a presence in Hong Kong, Singapore, Taiwan, Australia, New Zealand, and will be in Europe in the coming months. As the first Shanghai Gin, our provenance and ingredients are key to how we differentiate and tell our story in new markets.