Tegel chicken takes off overseas
Chicken company Tegel is spreading its wings to export its products to Africa and emerging markets in Asia.
In three years Tegel has doubled its exports to more than $100 million a year. It recently won the Supreme Award at the 2014 Air New Zealand Cargo Export NZ Auckland export awards. It also won the BDO Food & Beverage Exporter of the Year category award.
Chief operating officer Phil Hand said Australia was the largest export destination for the company's products, but they were now moving into Japan, Hong Kong and the United Arab Emirates, and planned to go further afield.
The surge in exports followed the opening of a $20m production line at Tegel's Henderson plant in 2012, leading to the creation of 500 jobs throughout the country in all areas of the company's operation. Tegel employs 1700 workers.
Hand said Tegel's chief product was fully cooked, frozen, ready-to-eat chicken supplied to fast food outlets such as Subway and McDonald's. Only a small amount of fresh chicken made its way overseas, chiefly to Hong Kong where it was sold in upmarket supermarkets.
"Exports have up until now been a small part of our business but they now make up 22 per cent. Domestic sales make up the balance and are incredibly important, but it's nice to be diversified. "The overseas retail business is more difficult than dealing with quick-serve restaurants," he said.
Export growth began only in 2010-11, when new owners backed the company to build the new fully cooked Henderson line in 2011-12.
Tegel, which brands itself as "New Zealand's favourite" is, in fact, owned by private equity Singapore-based company Affinity Equity Partners, which bought the brand in 2011 for a reported $600m.
Before that it was owned by Pacific Equity Partners, who bought it from Heinz Wattie in 2005.
In its latest financial statement to the end of April 2013, Affinity Equity Partners reported revenue of $484 million for a gross profit of $126m. However it showed a net loss of $12m, after finance costs amounting to $40m.
In New Zealand, Tegel is ultimately owned by parent company Ross Group Holdings Ltd, which is in turn majority owned by the Singapore company, according to Companies Office documents.
Tegel has three main poultry farm sites - in Henderson, New Plymouth and Christchurch - with a distribution hub in Wellington.
Hand said a move into African and emerging Asian countries was on the "longer-term horizon" and would take time as Tegel worked through access and food safety issues.
He was not prepared to name which countries the company was looking at.
A Ministry for Primary Industries spokesman confirmed officials were negotiating for access on behalf of New Zealand's chicken industry with South African authorities. They had already assisted Tegel with access into the UAE.
"New Zealand is well-known for its freedom from the main avian diseases, and our food safety systems have a good reputation.
"This means that new access for chicken should not encounter barriers as such, but negotiating formal arrangements for new trade opportunities does take time," the spokesman said.
Hand ruled out exporting into China not only because of access issues, but also the problem of the country's size.
"We would have to be careful about going into a big market like China because we might not be able to service the demand," he said.
It was difficult to say how big exports would grow because it would depend on opening up new markets.
He envisaged that perhaps in three years' time the company might invest in more plant.
Hand said Tegel chickens were raised in open-plan barns, where the birds could go outside if they wished. They were free from growth hormones, immunisations or antibiotics.
Executive director of the Poultry Industry Association, Michael Brooks, said New Zealand chicken was highly regarded internationally.
"New Zealand is unique in the world for its freedom from major poultry diseases, welfare standards are among the best in world through the government imposed code, with lower stocking densities than elsewhere, and our food safety standards are high - for example, we have extraordinarily low levels of salmonella as measure by independent testing regimes," Brooks said.