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Investing in marketing, not gambling

2020 has brought levels of uncertainty that many of us have not seen for a long time, if ever.  As a weekly business, the marketing team has been focused on steadily increasing sales continuously over the long term.  Throughout that time, the “Get Some Pork on Your Fork” campaign has been running consistently.

Particularly at present, with production forecast to grow in the July to October 2020  period we must choose carefully how to invest for demand growth.  If we say investing is spending money with a reasonable chance of a good return, and gambling is pot luck, then we believe we have been investing for a while.

If we add the extra sales in 2011/12 to the sales in 2012/13 and so on until 2018/19 (the last year those sales figures are available), pork sales increased by $1,461 million, whereas beef and lamb combined have added $917 million We know that APL marketing only creates 18% of the increase in sales (product, pricing and distribution via producers and value chains do the rest).  According to the plans from each year, pork spent just over a quarter of the beef and lamb spend. That is why we have stayed consistent in our advertising messaging.

So, whilst Australian pork supply may increase in the coming months, there are some factors that support good pork demand.  These include:

  1. Australian pork retail prices versus beef and particularly versus lamb are attractive to consumers and are anticipated to remain attractive
  2. There is strong international demand for pork. Hong Kong in particular is increasingly buying Australia pork at attractive prices whilst markets, largely due to ASF.
  3. APL increased investment in advertising from March when other advertisers have decreased spending, which has increased our share of meat advertising. There is evidence that increasing the share of advertising in your category does accelerate share of sales growth. APL’s share of advertising is double pork’s share of fresh meat for 2020 to the end of April.
  4. There are reports of that pork is moving more freely now than it was when COVID-19 caused our lock-downs in March

We have planned to continue with investment levels designed to encourage sales growth from now until Christmas.  This investment will focus on in-home consumption via supermarkets and butchers. These are benefiting from the closure, and in many cases demise, of foodservice outlets.  We are tracking foodservice by state and venue type.  The rate at which restrictions are eased by State and the portion of those businesses that will eventually re-open makes investing heavily, across the board, in foodservice currently a gamble. We do not do that.  Our foodservice experts, Kylie Roberts and Esther Volpe, will continue to target activities to individuals and companies in foodservice that have supported producers and continue to succeed by being agile.  We hope that Kylie and Esther’s support for hospitality workers continues to be appreciated while the rest of the team will focus on returns on in-home investment.

Article originally written by Peter Haydon for Australian Pork Newspaper

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Australian Pork Limited

The producer owned organisation supporting and promoting the Australian pork industry. Australian Pork Limited (APL) is caring for the future of Australian pork.