Where next for China’s thriving blueberry industry?

The Chinese blueberry industry has been on a remarkable trajectory of growth and export expansion, defying conventional market trends and economic conditions. In this comprehensive article, we aim to provide insights into the growth of the Chinese blueberry industry through interviews with industry leaders Michael Oates, managing director of Haygrove China, and Huan Zhang, founder of Twinkle Star Berry.

“What we’ve seen really in recent years is that as the Chinese economy has slowed down, the blueberry sector in China has been expanding at an astounding rate, with a demand increase of approximately 40 per cent year-on-year over the past five years, a stark contrast to the modest growth of many other major categories which have seen around 3-5 per cent year on year growth,” says Oates.

Zhang, meanwhile, notes that: “The marketing efforts of companies like Driscoll’s and Joyvio have played a crucial role in boosting demand by educating Chinese consumers about the taste and health benefits of blueberries. With more international players and breeding companies entering the Chinese blueberry market, it is expected that further innovations and improvements will continue to drive growth”.

Several key factors have driven this blueberry boom, including the emergence of major players like NPS, whose planted area has gone from zero in November 2020 to around 1,300ha within three years, The rapid expansion in blueberry cultivation and substantial capital investments have also played an important role.

“We’ve also seen a scramble to plant blueberries, especially Southern HighBush varieties, for counterseasonal cropping in the January to May window, basically anywhere people can,” Oates continues. “It’s still at a stage of market immaturity that even if you are not a particularly good grower and not equipped with particularly special – or in fact legal –varieties, the opportunity to achieve outsized profit compared to various other fresh produce categories is high.

“For example, you have people who have typically invested in tech or real estate, who effectively have seen a spreadsheet that says their return for substrate blueberries is higher than let’s say real estate. And so they’ve parked liquidity there.”

To address growing concerns about oversupply and economic uncertainty in mainland China, key distributors like Driscoll’s and Joyvio have initiated formalised export programmes. Driscoll’s has started exporting blueberries and raspberries to Southeast Asia, while Joyvio has utilised its regional supply chain to export products from its joint venture with Hortifrut. These export programmes serve as a hedge strategy to maintain premium pricing and explore new markets while addressing fears of oversupply in the Chinese market.

“One noteworthy trend is the increase in fresh blueberry exports to Southeast Asian markets. This development is linked to the growing demand for Chinese blueberries and the need to explore new markets beyond the domestic sphere,” says Zhang.

“Peruvian blueberries make their debut in July, extending through January. During the summer, the Chinese market typically lacks high-quality blueberries. Peruvian blueberries become available in China around July or August, constituting a substantial portion of the imports.

“In addition to imports from Chile, China imports a limited airfreighted volume in the summer from the US, particularly from Washington and Oregon. This positions China as one of the largest importers of blueberries on the global stage.”

Despite its rapid growth, the Chinese blueberry industry faces several challenges. These include land zoning policies that prioritise staple crops over economically valuable ones, intellectual property theft leading to illegal propagation, climate change impacting crop management, and rising labour costs with limited incentive to invest in labour-saving capital and a longer payback period due to inability to own land.

“As home to 15 per cent of the world’s population but only 7 per cent of its arable land, China has prioritised food security over cash crops. A policy enacted since January 2020 restricts land usage, primarily reserving it for staple crops. This limitation has caused the cost of developing farms, including land compensation and extensive civil engineering work, to surge by 30-70 per cent,” says Oates.

In the fresh blueberry market, the dominant producing regions are primarily in Yunnan, Sichuan, and Guizhou, with Yunnan standing out due to its ability to produce counterseasonal blueberries. There is also some presence in northern regions like Anhui and Shandong, although the quality from these regions is not as high, making them less suitable for the premium fresh market.

“Yunnan stands out as a focal point for blueberry cultivation, thanks to its ideal climate for producing low-chill and no-chill blueberries. This region is especially significant because it can supply blueberries during China’s winter months when domestic production is limited, coinciding with the Chinese New Year,” says Zhang.

Compared to global markets, the Chinese blueberry market is more fragmented, with an abundance of branding and packaging to differentiate products. One unique characteristic is that there is no incentive for retailers to work with licensed legal growers, fostering illegal propagation and non-compliance with industry regulations.

It seems clear that future of the Chinese blueberry industry is poised for further growth and international collaboration. As the industry matures and overcomes its challenges, players in the sector must adapt to navigate this changing landscape effectively. Zhang sees this as an opportunity to connect international and domestic companies and facilitate knowledge sharing for the benefit of the entire industry.

According to Oates, the Chinese blueberry industry is expected to mature and consolidate over the next five years. The market will see increased competition and tighter profit margins, causing less efficient or skilled growers to exit.

The industry may also witness high-profile failures among companies that over-leverage themselves. Entry costs are rising, and returns are falling, prompting growers to contemplate increased capital investment to reduce labour reliance. China faces a unique challenge due to the inability to own land, which necessitates a delicate balance between capital investment and labour dependence.

As the industry matures, players will need to adapt to navigate these challenges effectively and continue reaping the rewards of the blueberry boom in China. The country’s future will be marked by more international collaboration and innovation, making it one of the most dynamic and international agricultural sectors in China. As the industry continues to mature and overcome challenges, it is poised to remain a powerhouse in the global blueberry market.

* Colin Fain, founder and CEO of Agronometrics, a market performance analysis platform for the fresh produce industry