Ginseng shows the way for NZ velvet
Ginseng shows the way for NZ velvet
Demand for NZ deer velvet is continuing to rise on the back of a growing market for health foods in South Korea.
“Deer velvet products are a small but rapidly growing segment in this market, which is dominated by red ginseng,” says Deer Industry NZ chief executive Dan Coup.
“South Korea consumes about half the world’s ginseng production, much of it grown in Canada. Driven by the growth in the healthy food category, world ginseng sales have enjoyed an average annual growth rate of more than 15 per cent over the last 5 years.”
He says sales growth for velvet antler is being driven by the same consumption trends as for ginseng.
“New Zealand velvet production has been growing to match increasing demand from both Korea and China and now stands at around 725 tonnes a year – up from 480 tonnes in 2014. Most of this increase comes from our existing deer farms. Deer farmers have increased their numbers of velvetting stags, as well as the weight of velvet harvested from each stag,” he says.
“Velvet marketers are doing a great job of finding markets at good prices for the increased production, but as an industry we are not encouraging new farmer entrants. Although marketing experts predict global demand for health foods will continue to grow in the next five years, no-one knows what lies ahead. The demand line on the graph cannot go up forever.”
The 2018/19 velvet season ended in January and most exporters report that their cupboards are bare.
“In the last two months 19 new velvet-based products have been launched on the Korean healthy foods market, making a total of 92. Five years ago there was none,” Coup says.
“Of the 92, 72 are based on NZ velvet, 13 on Russian, three on Korean and two of unidentified origin. The dominance of NZ velvet reflects the reputation that we have for a quality product, grown in a clean natural environment and harvested humanely in facilities that have to meet government-regulated hygiene and cool chain standards.
“The Korean companies that are developing and marketing these products are very protective of their corporate reputation. Having an MPI regulatory control scheme for velvet harvest and storage has firmed-up our already sound reputation.”
Since the Korea-NZ free trade agreement came into force three years ago, tariffs on imports of dried velvet from New Zealand into Korea have reduced. This, together with the need for health food companies to be confident in their supply chain, means an increasing proportion of velvet destined for Korea is dried in New Zealand and shipped direct to the buyer.
According to statistics from Korea’s National Veterinary Research & Quarantine Service, 718 tonnes (frozen equivalent) of velvet from all origins were imported for the year ending December 2018, up from 603 tonnes the year ending December 2017. This increase is largely driven by the active promotion of new velvet products by health food companies.
Velvet from New Zealand, exported directly or via China after drying, is thought to make up around half of this. Most of the balance of NZ production is consumed in China.
“The two most sought after ingredients in Asian traditional medicine are ginseng and deer velvet. In recent decades ginseng consumption has increased dramatically in Asia and the west, as manufacturers have developed a raft of ginseng-based skincare, beverage and health food products for consumers. Velvet remained important in the traditional medicine sector but demand was shrinking,” says Coup.
“In the last few years, demand for velvet in Korea has sprung into life, led by the decision of the Korean Ginseng Corporation to develop a range of health food products based on NZ velvet. Now every health food manufacturer in Korea wants to be part of the action.
“While there is nowhere near the same potential for velvet market growth world-wide as there has been for ginseng, in Korea new velvet-based products are enjoying strong and growing consumer demand. The NZ deer industry is increasing supply to meet that demand, while working on a strategy for encouraging further growth in demand from China.”
Cheon Nok Sam, one of the Korean Ginseng Company’s top-selling health foods based on New Zealand velvet. The company’s success with its velvet-based products has prompted many other major Korean companies to manufacture and market their own velvet products.