No brand from New Zealand is stronger than the kiwifruit. New Zealand kiwifruit is always a hit at the international fruit and vegetable exhibition in Beijing. Kiwifruit grown in New Zealand might not seem special to us, but in certain markets overseas it fetches $3 or $4 a fruit – all thanks to constant marketing by Zespri and rigorous control of the product. And yet, Zespri has dropped “New Zealand Kiwifruit” as their slogan. Why?
A SIMPLE SOLUTION
Let’s take a step back. Why would a Kiwi grower-owned company get involved with growing on the other side of the world? Seasons. Zespri mainly sell kiwifruit from April to November in China, as that is all the southern hemisphere season allows. Every year when they re-enter the market they have to convince consumers to buy the fruit again and renegotiate retail placements. The solution seems simple once you think about it: why not just grow the kiwifruit right inside its biggest market, China?
Kiwifruit actually comes from China, hence the original name “Chinese Gooseberries”. In the 1920s Hayward Wright took a sampling of the fruit – then rougher and redder – that had been imported to New Zealand and experimented until she created the green (and now gold) thing we know today. By 1959 when New Zealand was selling serious amounts of the fruit to Americans, the name “Chinese Gooseberries” had became a cold war liability, and the “Kiwifruit” was born. But the Cold War is over, and Zespri desperately want to sell more kiwifruit to the Chinese – even if that kiwifruit has “Product of China” in the small print. In China, that country of origin tag is very important – and the source of a lot of risk for Zespri. “I think they need to be very very careful,” says Mark Tanner, a Kiwi who runs the consumer research outfit China Skinny. “They will really need to make sure that their supply chain is airtight.” Copious research shows that the richer Chinese consumers who can actually afford Zespri kiwifruit far prefer imported food to anything produced locally. “They prioritise differently – their official income might not be as high as someone in Wellington or Auckland, but they are way more likely to place a premium on safe and secure food,” Tanner says. Chinese consumers spend an average of 31 per cent of their disposable income on food. In the United States consumers spend around 10 per cent.
“For the top 20 per cent of affluent consumers, that consumption of food is growing the fastest. When you can afford it, that’s when you go to buy safe imported food.”
That top slice of buyers is gigantic now, but it’s tipped to explode. In 2010, around 4 per cent of Chinese consumers earned more than NZ$36,220 a year. By 2030, McKinsey expects that number to soar to 54 per cent. China is already the world’s largest producer of kiwifruit – but they don’t export it, and it sells for a lot less than our stuff, and tastes worse. How long will that last? By partnering with growers on the ground here, Zespri could stifle out any other “luxury” brand emerging and scale up production far faster than anyone in New Zealand could.
WEATHER A PROBLEM
On a sunny day last April, deep in the rural Shaanxi province of China, I visited one of two test orchards where Zespri are developing their China operation. Local Apple giant Haischen operate the orchard, and the seeds come from within china – Zespri are there to provide technology and expertise. For an orchard with so much riding on it, it doesn’t look like much. I stand shading my eyes on the roof of a squat three storey building sat in the middle of 80 hectare of orderly rows of plants, listening to a fresh faced 34 year old orchard manager Bao Liangshuai. “We want to solve the technical problems of growing in China through this orchard,” Bao says, through a translator. You would think the country where the fruit was found would be perfect for growing it at scale, but not if you want Kiwi-quality-kiwifruit.
Much of the problem is weather. The Bay of Plenty hosts the majority of New Zealand’s Kiwifruit orchards because it is both very sunny and very wet. Shaanxi is the “fruit bowl” of China and is certainly sunny, but receives just over half the annual rainfall of the Bay of Plenty. To counter this, an intricate drip system of irrigation has been set up, as is present on most professional Kiwifruit orchards. Water is efficiently distributed exactly where it needs to go. But it isn’t just the weather. There are also problems with the soil, which has had very little plant waste fed back into it – the peasant farmers traditionally burn it for warmth. There’s also a coal power plant in easy eyesight a few farms away, but everyone assures me this won’t be an issue. Zespri Global Production manager Shane Max is along for the ride, and his expertise is intoxicating. Is there risk bringing all this knowledge to a country where intellectual property is far less respected?
“We have to be sensitive to the fact that we’re bringing a lot of technology over that will help the Chinese industry fullstop, that might end be used to compete against us,” Max says. “We face that in pretty much every country we go into.”
There are also those branding risks – will the top end of the Chinese market want to buy Chinese fruit? Max agrees there is some risk, but argues the Zespri brand stood for quality and sustainable growing practices – not just “New Zealand”. “There’s always going to be tension around the global supply [overseas fruit] versus New Zealand,” Max says. “We’re a New Zealand company so we’ve got look out for our New Zealand growers first.” “We dropped New Zealand, but I think we play on it a lot, you know the clean and green,” Max says. In terms of convincing Chinese buyers, Max is confident he could hold up his end, and grow premium fruit.
“It needs to taste at least as good as the New Zealand fruit, but I’m not worried about that. I think on food safety we overworry, but I think we can manage that pretty easily. The harder one is the sustainable growing practices – bringing these growers up the standards we expect.”
Max believes rich Chinese consumers will slowly grow to see Chinese brands as high quality as the country’s economy matured, much like Japan and Korea’s technology sector. Zespri’s Chief Operating Officer Simon Limmer makes the same comparison. “We saw this in Japan and we saw it in Korea in the 70s and 80s as they moved through the value perception continuum, and their ability to deliver quality products be it cars, computers, or mobile phones increased. We’re now seeing China move through that continuum as well, it’s just a matter of being able to choose when the moment is right,” Limmer said. Limmer is correct – there is a trend in recent years of Chinese companies wearing their country of origin with pride, and consumers loving it. The thing is, the ones who are pulling this off are electronic giants – Huawei, Xiaomi – and people don’t eat smartphones. “Chinese brands for so many categories are on the up, and foreign companies have to be aware of that – but food and beverages are not one of those categories,” Tanner said. “No matter how proud you are as a Chinese person, you are still going to be very reluctant to put Chinese milk powder in your baby’s mouth.” Then, it makes a lot of sense for Limmer and Max to think of kiwifruit in terms of technology. The modern kiwifruit is far cry from something “natural”, as much the result of copyrighted genetic material and rigorous growing conditions as it is a product of nature. And by looking at the fruit as a technology, Zespri can aim for perfection, for a consistent experience every time. That’s why they are trialling this China growth, not fully committing to it yet – every new tech release needs a beta test.
“Until we have real comfort with the quality, the safety, the practices, then we’re not going to be putting the Zespri brand on anything,” Limmer said. It was hard to doubt him. But considering the difference between the dusty farm I visited and the Bay of Plenty, that comfort could take a long while.
Henry Cooke travelled domestically within China courtesy of Zespri.
– Sunday Star Times