NZ Apples Vie to Reclaim Lost Market Share
New Zealand Apples Vie to Reclaim Lost Market Share
The New Zealand apple industry is faced with the challenge of regaining lost market share, since the global competition has caught up with the once unique quality of New Zealand apples, according to a recently released industry report.
In its latest Global Focus report on the New Zealand Apple Industry, leading agribusiness financier, Rabobank says that the New Zealand apple industry was once the envy of the world, due to its quality and varietals, but now the rest of the world has caught up and New Zealand must now revisit its strategy if it is to regain what was once its.
“New Zealand apples were once highly prized and sought after - commanding premiums in the market – but, for the moment, those times have passed,” the report says. “However, through industry co-operation, strategic planning and implementation, the industry could well regain much of the ground that has been lost.”
Another factor affecting the industry is that the single-desk marketing of New Zealand apples has disappeared and growers now compete against each other in the market place domestically and globally, and the dynamics of the industry have changed.
According to Rabobank’s Food and Agribusiness Research analyst, Neil Burgess the issue now is that the global market is awash with apples from many different sources, and New Zealand consumes only around one sixth of the apples it produces annually; therefore, for the industry to survive, exports are a necessity.
“The technological advances in shipping, logistics, controlled atmosphere storage and chemical inhibitors of the ripening process, are contributing to the longer shelf-life that apples now have – which can last well into the following season,” Mr Burgess says.
“A frightening thought, especially when there is a global over supply.”
New Zealand cannot hope to compete on the global stage as purely a commodity producer - cost of production alone prevents this, he says. “The answer lies in innovation, consolidation within the industry and the promotion of a quality product that once again will make New Zealand the envy of the apple producing world.”
If the New Zealand industry is to survive and regain its place in the global market place, it needs to concentrate on what can be done, rather than what can’t be done.
It is encouraging to see that the New Zealand Pipfruit Industry has developed the ‘Strategic Plan 2005-2010’ which has highlighted the deficiencies within the industry, Mr Burgess says.
“What is vitally important is that this strategy is not allowed to stagnate - it must be sufficiently flexible to accommodate any changes to market forces. Of equal importance is industry participation. Since the removal of the single desk system, the industry has become fragmented - marketing strength, quality focus and industry competitiveness have been dissipated to a greater or lesser degree. This dissipation of skills does have an effect on the industry’s ability to compete on the global stage.”
For the industry to reap the benefits in the future, it will need to consider uniformity in the quality of export fruit.
As the New Zealand apple industry is totally dependent on export, any fall in quality perceived or otherwise could spell disaster. The issue the industry now faces is that there are an increased number of individual exporters, and while around 10 exporters undertake around 75 per cent of the total exports, there are possibly up to 100 which undertake the remaining 25 per cent.
Mr Burgess says that the industry has to consider how best to implement a policy and ensure that all apple exports leaving New Zealand are of sufficient quality to regain and maintain industry presence, and momentum in the global market place.
It is paramount that innovation in the development of new varieties has to be an on-going process. Other producing countries such as France, Germany, the Netherlands and the UK are all developing and introducing new varieties to compete in the market.
And, Mr Burgess says “it is vitally important that New Zealand promotes the values and quality of its produce, due to the global glut in the apple industry. The apple industry could consider looking at the dynamics and success of the New Zealand kiwifruit industry which faced similar issues several years ago.”
“What is important is the development and maintenance of relationships with the supply chain participants, agents, buyers and the consumer.”
Value-adding also needs to be considered, Mr Burgess says, and this should not be confined to just additional processing, although it would be prudent to consider the viability of all processing or semi processing of apples.
“Alternative value adding could be in the form of packaging innovations, such as the use of biodegradable plastics which are now becoming available, different box configurations, sizes, materials and the like,” he says.
Possibly the most important issue of all is market information, Mr Burgess adds. “Without accurate information the industry is blind to what is happening in the market and is unable to react swiftly which undermines investor and industry confidence.”
“The industry needs to know what is happening on various industry levels, from production, packing and supply chain to domestic and international market trends and competitor activity. Information needs to be interpreted and disseminated to the industry participants to ensure that the industry moves en-masse in the appropriate direction.”
Rabobank New Zealand is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 100 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank has a AAA credit rating and, in recent years, has twice been awarded the title of the world’s safest bank by Global Finance magazine. Rabobank operates in 35 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1500 offices and branches. Rabobank New Zealand is one of the leading rural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 28 branches throughout New Zealand.