Zespri’s chief operating officer Simon Limmer said with the supply of Green fruit trays down to 69 million from last year’s 83m the marketer had to walk a tightrope with long-term outlets globally to maintain a steady semblance of supply.
Patchy pollination last spring reduced crop volumes while this season’s harvest had proved to be later than usual for the Green fruit, with sugar levels taking longer than usual to lift to match export taste profile requirements.
“However, what we are also seeing is the fourth year in a row where growers are receiving around $50,000 a hectare for the fruit despite the variability in supply we have experienced over that time.”
He said $50,000-$55,000 a hectare was a “good solid number” to generate realistic, sustainable returns for orchard owners. This year’s taste profile and fruit size were both up on last year’s.
Despite the decline in Green volume, the season remained the second largest on record with 55m trays of Sungold also being harvested for global markets that appeared to hold an almost insatiable demand for the higher-value fruit.
China continued to be the big driver of demand for Sungold with sales volumes up 50% last year and 40% this year.
The marketer had managed to tie down supply channels in China, becoming an importer of record, enabling it to control the distribution of fruit rather than relying on private distributors.
The number of Zespri offices in China was being expanded from two to five.
“Managing the fruit ourselves means we can better manage our investment in the brand,” Limmer said.
“We now have brand recognition equal to that of other big fruit brands like Dole and Sunkist despite us only having been in existence for 20 years.”
China’s domestic production of kiwifruit was now about 1.5m tonnes a year, three times NZ’s, with a populace very familiar with the fruit. It was also a market that would require some locally grown supply to augment and complement the seasonally opposite supply from New Zealand.
Limmer acknowledged China was “challenging on every front” and that included the risk Zespri’s franchised plant varieties could fall into non-franchised growers’ hands.
“That is not a surprise but we are working hard on that. Plant variety protection is important, given what growers here are investing in licences.”
NZ licences for Sungold are not well north of $200,000 a hectare, with a further 400ha being sold this year and three more tranches over the coming three seasons planned.
“We are trying to shift the dial (around plant variety protection) in our favour, working on it at a government level.”
In terms of growing crop in China Limmer said three areas had to be addressed – food safety, quality and consumer acceptance of Chinese fruit.
“We can answer the first two quite well, the third is harder.”
Zespri was still working on the business model it could employ once it started growing fruit in China but there were a few other successful fruit-growing models to follow, particularly in the berry sector.
“There are also some interesting varieties coming out of China that are obviously already adapted to the local environment.”
Zespri expected its supply volume would always remain domestically skewed but longer term the current 10% from offshore could move up to 25%.
Limmer said the sweet spot the sector was in gave management time to look more strategically ahead to consider big-picture issues like offshore crop supply and new varieties.
However, the much-promised red variety was still at least two years from commercial launch.
Limmer’s key concerns revolved around the usual bogey men issues, including Trump’s thumbs-down to the Trans Pacific Partnership and a nervousness about what Brexit might mean to Zespri’s massive European market.
“And Chinese growth rates mean we are running faster than ever and to try to get on the front foot we have to think ahead and be sure our growers are ready to shift with us,” he said.
