The deer velvet industry is looking to take things up a notch after Korean authorities approved deer velvet’s use for a fresh health claim.
Korean company Kwangdong Pharmaceuticals was recently notified by the Korean Food and Drug Administration that it was successful in gaining a claim that it helps with prostate health and anti-fatigue.
Deer Industry New Zealand markets manager Rhys Griffiths was in Busan in South Korea last month after the announcement to talk up the value of New Zealand velvet as demand for the new product grew.
“They actually really did talk about why they love New Zealand velvet, I mean historically they’ve used Russian velvet for some of their other leading products, but for this big project they used New Zealand velvet.
“And they love the consistency and the professionalism.”
There’s other work in the wings as South Korea pours millions into health food research.
“Another close partner to us, Yuhan Corporation, who are like the Pfizer of South Korea, they’ve been really, really successful in their human clinical trials around immune function and a bunch of other claims. They haven’t had these claims approved yet but they’re expecting them to come through.
“And then we have Korea Yakult … they’re also doing work on the health functional food extracts that contain New Zealand velvet.”
Griffiths said partnering with these big companies would help local farmers plan for growth and lock down some consistency with their pricing.
“I’m not talking about a finished product here in New Zealand. We’re partnering with those companies that have gone through and spent the millions of dollars to trial and research products and we’re there to make sure we can get the messaging right in terms of why they’ve used New Zealand velvet.
“So that helps underpin the fact that these companies will come to New Zealand to buy velvet not our competitors’, that we will have closer longer-term partnerships between the exporters in the farmer base and these companies so they can plan ahead for growth.”
He said New Zealand velvet had a good reputation in Asia, and had come a long way in the past decade when exporters mostly supplied traditional medicine customers.
“We were producing small amounts of a reasonably high-priced product but there was very little chance to be able to differentiate your product or your ingredient.
“And there were swings, in terms of prices from year to year, and that type of volatility is just not sustainable for a sophisticated farming business.”
Reaching the ceiling on the traditional market, the industry moved into supplying deer velvet for uncertified health foods and supplements in about 2010.
Now looking for new ways to expand, and capitalising on the respected brand of New Zealand deer velvet, the health functional foods market (which requires certification) is the next big thing.
New Zealand Trade and Enterprise, which falls under the Foreign Affairs Ministry, recently commissioned research into this part of the South Korean health food market.
“Korea is a health-conscious society. Covid-19 has continued to drive Korean interest in health products and maintaining a healthy lifestyle, alongside growing concerns of an ageing population. Having a wide range of health-related products is common in many Korean households,” the report said.
It found that growth in the health supplement market was huge post-pandemic, with online shopping a popular way to buy them, and most sales being for personal use.
In 2021 the health supplement market was worth NZ$4.95 billion. This increased 22 percent by 2022.
“The strong reputation of New Zealand’s premium health products and Korean consumers’ willingness to spend for quality, paints a promising picture for New Zealand health supplement exporters who are looking to add value to health supplement ingredients.”
“Eight out of 12 new deer velvet health food products launched in Korea in 2022 contained, and more importantly were marketed as containing, New Zealand deer velvet. Deer velvet is one area that continues to be promising for New Zealand exporters looking to innovate, add value, and move from volume to value in the Korean market.”
The 2015 Free Trade agreement with South Korea also made it easier to do business.
New Zealand-processed deer velvet had a 9.3 percent duty on it from January 2022, compared with the 20 percent duty paid for frozen deer velvet or deer velvet from other countries. This will reduce by a further 1.3 percent a year to zero percent in 2029.
Exporters do not expect to be hugely affected by the newly passed Therapeutic Products Act, as they are exporting an ingredient, not a finished product.
However, there was uncertainty about how the new law would interact or crossover with the current law they were regulated under – the Animal Products Act.
Most of the changes brought in by the Therapeutic Products Act will not start until mid-2026.