Complementing the anticipated average New Zealand growth rate of around 6% to 2020, non-NZ supply was also reported to be growing significantly, which was supporting the development of Zespri’s year-round market visibility.
The opportunities to capitalise on reliable 12-month supply of Zespri kiwifruit in premium markets were now well established, with an ageing population generally consuming more fruit, a rising middle class in developing markets seeking higher-quality fresh food, greater focus of governments on health and wellness, and increasing global demand for compliance over food safety and sustainability.
The overriding challenges faced by Zespri, were not new either – distance and cost to market, and most (more than 80%) globally-traded kiwifruit consumed in the Northern Hemisphere. These represent two key factors driving the push to develop non-NZ supply.
The Zespri board had noted non-New Zealand supply was poised for strong growth in the five-year horizon, driven predominately by Gold3 recovery in Italy, and being well-positioned in Italy to meet rising global Green demand.
The next two years indicated strong increases driven by Gold3 coming into production in Italy. This would support the market focus on migrating more customers to the 12-month supply programme.
Similar increases in demand for Green in China could lead to China becoming Zespri’s biggest single market with premium Zespri-branded product for 12 months of the year. Zespri was continuing to assess the capability to supply a premium quality Zespri kiwifruit grown in China, including through developing supply partnerships to underpin a sustainable long-term business.
Familiar risks associated with non-NZ supply still existed. Logistical issues around coping with large increases in volumes needed to be addressed to provide confidence that market expectations would be met. These included procedural challenges (documentation, shipping and sales structure), as well as ensuring the right human resources were in place.
In terms of production, the risk of failure to achieve supply forecast through disease, weather or financial disasters would need to be managed.
The strategic focus was to consolidate non-NZ supply as a fundamental pillar of Zespri’s competitive strength, underpinning its position as a leader in the global fruit industry. “We aim to unlock value in our business by leveraging the brand, our intellectual property and our supply chain expertise,” the Strategy Update said.
Innovation remained central to Zespri’s international competitive advantage, and the potential for supply chain innovation had been identified to assist in developing 12 month availability.
Supply chain efficiency was expected to unlock significant value through design space with the application of new supply chain management processes and technologies for improving product quality attributes.
