NZ-China trade under strain?
The world is now amid potentially one of the most disruptive periods in world trade for a very long time.
Zespri's chief operating officer Simon Limmer says change in China has the newly wealthy showing success by buying and showing their friends premium products such as cars and clothing.
Zespri kiwifruit is a premium brand distinguished from other kiwifruit on sale in China, Limmer says. The kiwifruit marketer will this year spend about $150 million on the brand – about 7% of its $2 billion business.
"Zespri is taking a premium position in the market. We are one of the leading, if not the leading, brand in the fruit industry," he told Rural News. "We are very much at the higher end in quality fruit and pricing. We are recognised as consistently delivering a high quality, good tasting fruit with health benefits, which allows us to occupy that position in the market."
Limmer says Zespri has only one product and one brand and it lives and dies by that.
"When Chinese consumers think about Zespri they think about consistency. So when they pick up a Zespri kiwifruit – as opposed to any other kiwifruit – they are going to have a good taste experience and know it will ripen in the fruit bowl, unlike some other kiwifruit," he explains.
"Also our quality systems give the Chinese consumers confidence that what they are buying is going to be good."
Limmer says there is still a lot of scope for expansion in the Chinese market. China grows about 1.5m tonnes of kiwifruit, contrasting with the mere 100,000 tonnes Zespri exports there. But Zespri holds the premium position in the market, in which some other kiwifruit is of variable quality.
Zespri has deliberately has a strategy of occupying the top end of the market, realising that NZ is not a low cost producer and that its strength lies in its ability to extract top dollars from a premium product. But even at the high end of the market there are plenty of opportunities for growth, Limmer says.
'We are seeing our ability to create new demand, to open up new markets such as China. Ten ago it was a very small market; today it is 20% of our total portfolio and that is exciting.
