Teaming up to grow South East Asia market

07 June 2016

Dave Courtney / Zespri General Manager Grower and External Relations / New Zealand

When Kiwi brands work together to grow their business around the world and deliver greater value back home, it’s a great New Zealand Inc story. 

That’s why the new initiative between us at Zespri and Turners & Growers (T&G), which will see us initially increase our presence in South East Asia, is really significant for both our companies and our country. 

We’re two leading New Zealand brands in the fruit exporting business, now working together to generate value for growers and shareholders on both sides. 

While we’re both very strong exporters, we obviously have differing strengths. Zespri is solely kiwifruit while T&G has a much broader range of branded products and a range of experience in different markets around the world. 

T&G’s networks and knowledge of markets will be valuable in our new partnership as we take our first steps together into Thailand, Cambodia, Myanmar and Laos. Last year Zespri sold 670,000 trays of kiwifruit into these countries. 

"Two years ago the kiwifruit industry proactively undertook a strategic review and our growers said that we needed to be actively looking at how we can work with other exporters of kiwifruit - or other produce-marketing companies - to try to bring more value back to New Zealand kiwifruit growers and the wider industry." 

Dave Courtney, Zespri General Manager Grower and External Relations Through the new partnership T&G will establish a representative office in Thailand and manage sales of Zespri Green and SunGold kiwifruit across the four countries. The Zespri kiwifruit business will complement T&G’s other product sales in these countries. Together we’re aiming to accelerate volume growth over and above what Zespri could achieve by operating on its own across these four countries. In 2016 we’re looking to build Zespri brand kiwifruit sales through this initiative to over 1 million trays. 

South East Asia is a key region for us because of its demographics and rising middle class income. There is enormous potential and through this partnership we’re looking to capitalise on this potential in a cost-effective and efficient way. 

More broadly, the New Zealand kiwifruit industry is in the middle of a strong growth phase. 

Last year Zespri exported about 120 million trays of fruit to our markets around the world and our global revenue was around $1.6 billion last year, of which, just over $1 billion was returned back to New Zealand in terms of export dollars. 

That’s a very good news story, particularly given that money is returned to the regions, to places like Te Puke and Katikati and the other smaller rural regions where New Zealand’s 2500+ kiwifruit growers are based. 

Offshore, this growth also drives change.  We now sell into a broader range of markets than we ever have.  Our focus is on incrementally building demand in our mature markets and strongly building demand in developing markets such as those in South East Asia. 

This growth though cannot be achieved on our own; the Government’s ongoing efforts to liberalise trade is a key support.  For example, the NZ-Korea Free Trade Agreement is significant for us because we were facing a 45 percent tariff in Korea. Now the tariff is at 30 percent and will reduce to zero by 2020, which makes a significant difference to our competitive environment in that market. 

Of course, the future is not risk free, whether that is because of demand or supply side risks but this is the case with all primary industries.  We feel really optimistic about our partnership with T&G – it’s a great Kiwi exporting story of an industry working together to capture value offshore and return it back to New Zealand. 

This story was originally published in NBR.