China now "Rivaling Japan" as Zespri's Top Market

Zespri yesterday announced the official start to the 2018/19 season for New Zealand kiwifruit in China. In a significant departure from last year, the company said it will this year directly manage a portion of the China-side repacking and shipping of imported New Zealand kiwifruit, which began arriving in China on April 11. Zespri also signaled a continued commitment to eventually sourcing kiwifruit domestically in China for counter-seasonal production.

The company, which said in a news release that the 2017/18 season, “saw sales of over NZ$500 million in China,” started conducting its own imports into China in 2016. Zespri said that, as part of a strategy of focusing more resources on high-growth, high-potential markets like China, it would, “for the first time this season manage some of the fruit inventory [in China] to meet partners’ different needs. Zespri will also take over packing, quality checking and repacking, as well as outward logistics to provide another level of quality assurance for Chinese consumers.” According to Holly Brown, Zespri’s General Manager for greater China, “The China market is requiring more for food safety and health.”

Brown also said Zespri now had greater China offices in Taipei, Shanghai, Beijing, Guangzhou, Chongqing and Xi’an, and is continuing to push into a larger number of second tier cities with its promotional programs.

As for local production, Zespri announced a trial production base in Shaanxi province in 2015, but has not released many details about its progress in local sourcing over the past few years. According to yesterday’s announcement: “This is the third year of a three-year supply chain trial conducted by Zespri and local growers. Zespri is working with kiwifruit industry in Shaanxi and Henan to source, pack, and distribute kiwifruit. No insurmountable barriers were found to sourcing kiwifruit using Zespri quality standards.”

According to Zespri representative Nick Kirton, “trials this year will see Zespri sourcing green and red Chinese varieties from Shaanxi and Henan provinces, with plans to expand to other provinces. In addition, this year we will determine whether we can source Zespri-quality kiwifruit in China – meeting our standards right across the quality assurance of the supply chain and out to consumer acceptance. This year also sees a shift in our approach to supply chain trials from a research focus to a commercial one.”

Zespri, the world’s top exporter of kiwifruit, is dependent on export markets for most of its sales and growth. It said yesterday that China had seen sales growth of 31% of the course of the past three seasons and, “is now rivalling Japan as Zespri’s top market.” Zespri hopes China sales will double over the next four years. According to Brown, “last year each Chinese in the mainland consumed an average of half of one Zespri kiwifruit. Based on our forecasts, by 2025 each Chinese will consume an average of one Zespri kiwifruit.”