Zespri and T&G's collaborative marketing example for all industry, says Hort NZ

Friday 5th February 2016

Horticulture New Zealand says the memorandum of understanding signed today between former foes Zespri and T&G Global is an example of how the horticultural industry will achieve a planned doubling in value by 2020.

Kiwifruit marketer Zespri and NZX-listed produce company T&G have committed to developing market opportunities together to grow export sales and kicked that off with a collaborative marketing partnership in four south east Asian countries – Thailand, Cambodia, Myanmar, and Laos, in the 2016 season - involving both kiwifruit and apples.

The industry strategy released last year aims to have a $10 billion horticulture industry by 2020 and says for that to happen, market players have to collaborate and focus on markets with the greatest potential.

Horticulture New Zealand chief executive Mike Chapman said the Zespri/T&G collaboration illustrates two key aspects identified in the strategy – scale and expertise.

“This is exactly what needs to happen and is a great example to other horticultural exporters to try to develop similar collaborations,” he said.

While there were already a number of collaborations in the industry, most were still small scale, Chapman said.

Kiwifruit is New Zealand’s second-largest horticultural export behind wine, with exports of just over $1 billion in the 2015 year, and remains subject to a legislated export monopoly regime except in the Australian market, where Zespri is planning to reposition kiwifruit as a higher margin product.

Under the new deal, T&G will open an office in Bangkok to support the two companies’ sales of both Zespri kiwifruit and T&G branded products such as Jazz and Envy apples into the region.

It hopes to boost Zespri’s current sales of 670,000 trays of kiwifruit into the four countries to 1 million trays this year.

BayWa bought 73 percent of T&G for $158 million in 2012 soon after T&G dropped an appeal against a 2010 High Court ruling that upheld Zespri’s monopoly rights.

Dave Courtney, Zespri’s general manager of grower & government relations, said the collaboration could be the first of many with T&G where it had a stronger footprint in a market and better distribution than Zespri.

It’s the first of its kind to be approved by regulator Kiwifruit NZ, which under the regulations setting up Zespri’s single-desk marketing status has to authorise any collaborative marketing deals. Kiwifruit New Zealand’s 2014/15 annual report shows collaborative marketing returns have risen to $16.4 million from $10.8 million in the past decade but by volume still represent only a small portion of the industry.

New Zealand’s avocado industry has doubled the value of the industry to $135 million in the past four years, in part due to more collaboration.

Jen Scoular, chief executive of industry group NZ Avocado, said its Primary Growth Partnership, NZ Avocados Go Global, aims to triple productivity to 12 tonnes per hectare and quadruple returns to $280 million annually by 2023.

Five years ago, the top three avocado exporters representing 85 percent of the industry set up a marketing entity, Avanza, setting aside their traditional rivalries to collaboratively market the fruit outside New Zealand and Australia.

Since then two of them, Southern Produce and Primor Produce, have also set up Avoco to do the same thing in the Australian market.

Scoular says while the industry doesn’t have the single-desk status of Zespri, collaboration on everything but pricing is working in growers’ interests and that experience could have application in other horticultural industries.

T&G shares last traded at $2.10 on the NZX.

BusinessDesk.co.nz

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