Zespri is getting back on a growth course in China as its gold kiwifruit volumes recover from the Psa crisis and it restructures its operations locally in the wake of a high-profile under-invoicing scandal.
Matt Crawford, Zespri’s China corporate relations manager, says the New Zealand kiwifruit marketer is looking to ship around 9.5m trays to China this year. That figure marks a near 10 per cent increase on last year’s volumes, but the company has much bigger expansion plans.
“We’re looking at doubling volumes here in the next four years with the goal of making China our number one market in five years’ time,” Crawford tells Asiafruit.
Crawford is part of a new management team running Zespri’s business in China. Chinese national Lewis Pan was recently appointed as the company’s China-based country manager, while experienced Zespri executive Simon Limmer is providing oversight from New Zealand.
Crawford is managing government relations and corporate governance, where Zespri has been doing a lot of work to restore its reputation with Chinese authorities after receiving a hefty fine last year for an under-invoicing scam involving its former importer Liu Xiongjie of Neuhof Trading, who is currently serving a 13-year prison sentence.
Zespri has now restructured its distribution, appointing a panel of four importers – Golden Wing Mau, Goodfarmer, Dole and Yidu – who between them can provide a strong national network into both traditional and modern retail channels.
“We’ve decided the best way to separate the market is on a regional basis,” Crawford explains. “We’ve gone for import partners that are geographically strong, so Golden Wing Mau is looking after the southern and central regions, Goodfarmer is also managing the central region including Beijing and we are in the final stages of negotiation for Dalian Yidu to represent us in the north. Dole is more focused on our retail channels, given its strength in that field.”
Zespri’s new season campaign in China is set to get off on a strong footing, with its first arrivals due to arrive in Shanghai in week 17 (week commencing 20 April). “They’ll be coming in on a charter shipment, our first charter shipment to China in a very long time,” says Crawford.
Gold to rise again
The vessel will be loaded with 600,000 trays of green kiwifruit, and a second charter shipment, estimated to depart in week 16, is due to be loaded with 500,000 trays of green and gold varieties.
While early season arrivals will be dominated by the Hayward variety (Zespri Green), Crawford notes that a mix of gold varieties (Hort 16a and G3) will also be coming in as volumes recover from the impact of the Psa vine-killing disease.
“We’re probably looking at shipping around 2.5m trays of gold, which is a significant increase on last year,” he says. “The volume will be predominantly made up of the new G3 variety SunGold, as Hort16a (Zespri Gold) is being phased out due to its susceptibility to Psa.”
Traditional gold variety Hort16a has proven to be very popular in the Chinese market, not least due to its sweet flavour profile. SunGold is a different variety, both in terms of look and taste, but Crawford is confident that it can build a similarly successful position in the market.
“The reception to SunGold has been great globally, including in Asia – it’s an exceptional product with high sugar content,” he says. “The sugar levels are tracking even higher this year, and growers are getting more used to growing it, so we're hopeful of a pretty seamless transition from Hort16a. The trick is to ensure it’s got the right taste.”
Zespri Charm, an earlier gold variety with slightly paler fresh, was also trialled in China last year, but Crawford says only small volumes will be available this year and no fruit will be going to China. “We’re still in the learning process with Charm, which is why volumes are not as high as SunGold.”
Looking ahead after legal challenge
Responding to questions on the fallout from the under-invoicing scandal, Crawford says it has had a negligible impact on Zespri’s business in China, while admitting it has generated more of a stir at home in New Zealand.
“The China market is in very good shape, and the issues are very much historical in that they relate to events from 2008 to 2010,” he points out. “In New Zealand it’s played out with domestic grower politics and there’s where the publicity has focused. It’s frustrating because the China market is in great shape for us while all the talk at home is of this historical issue, but we believe the grower base is overwhelmingly supportive of Zespri.”
The market signals are very positive for Zespri in China this season, and with frosts scaling back export projections for key competitor Chile, some might argue the market is even more open, but Crawford does not see it that way.
“In a global sense, while we compete with Chile around the world, the frosts are a tragedy for their industry,” he says. “I am not convinced it’s a good thing for the kiwifruit sector because we’re so tiny. Having good fruit in the market around the world is important and such a decrease from Chile means the kiwifruit category will suffer. A strong Chile is good for the category.”
Crawford expects Chilean kiwifruit prices in China to be much higher than usual as a result of the projected shortage.
Zespri’s China corporate relations manager Matt Crawford will be speaking on Zespri’s new China market and distribution strategy at Asiafruit Market Insight on 28-30 May in Hangzhou. For more information, visit www.asiafruitmarketinsight.com
