26 June 2011

A Match Made In Avocado Heaven

A successful 23-year relationship between Bay of Plenty kiwifruit and avocado post-harvest operator, Apata Limited, and Auckland-based produce marketers, Primor Produce Limited, just got stronger as two of the largest players in the avocado industry join forces.

Apata Chief Executive Officer, Steve Low, is pleased to announce Apata has purchased a cornerstone share in Primor, a decision certain to influence the avocado scene.

“We now have complete integration between post-harvest and marketing services. Many years ago our focus was on kiwifruit and our avocado business developed because the avocado peak-season occurs during our kiwifruit off-season.

“But it was our strong personal connection and inherently successful business partnership with Primor that really helped get us to the next level and become the size we are today,” says Mr Low.

Mr Low says the decision to invest was not made overnight but was carefully negotiated over a period of six months.

“Strategically, we focus on providing a premium service to growers. So, over the past few years we ensured continual reevaluation and improvement to our harvesting logistics, and post harvest packing supply chain, while investing a sizeable amount of capital into those systems.”

But Mr Low says what became increasingly apparent and imperative during the last few seasons is that Apata needed to have a stronger strategic focus to encourage more growth.

“Our principles in considering how to foster and grow our avocado business were based on taking the years of success we’ve experienced and figuring out what we needed to do from an orchard, post-harvest perspective to ensure optimisation of our services.

The way forward for Apata, Mr Low says, was to invest in Primor. “The company is an extremely efficient and high performing market business and has a well developed network into key Australian and Asian markets, in addition to the New Zealand domestic market. It means we can share even more of our successes with each other.”

According to Mr Low, Apata will gain a deeper understanding of marketing strategies while becoming more visible.

“While we are the largest post-harvest avocado provider, we will not lose sight of what is really important, which is our growers. We will work closely with growers to target certain markets. In essence, we will send their fruit at just the right time and to the best location, resulting in optimum returns to the grower’s pocket,” he says.

As far as professional marketers go, Mr Low says Primor are very connected with growers unlike some marketers that sit in an office and work from their desk. “We won’t need to introduce Primor employees to growers because they already know them. I expect this to be a very natural progression for everyone.”

John Carroll, Primor director and also a director of the Avocado Industry Council, says he was impressed even as a young man, by the way Apata operated.

“Back in the 1980s when I worked in Te Puke I visited packhouses in the Bay of Plenty area as part of my job. Myself and my colleagues found Apata staff to be uncomplicated yet professional and held a balanced view of their importance. They are still like that today. They do things accurately with a good attitude and not everyone is made that way,” he says.

Mr Carroll says Apata were not the first to hold discussions with Primor regarding a financial partnership over the years.

“The fact that we have agreed to sell 33 percent of our shares says a lot about how much we value doing business with Apata and is a huge credit to them.

“No one had to do this. Neither company is under financial stress. This is a simple evolution of what has already been a successful, positive and simple relationship. This is us saying it is appropriate to continue doing business together while embracing opportunities we can both benefit from. Now feels the right time to change the shape of it,” says Mr Carroll.

He also says the New Zealand avocado industry needs allegiances and stronger, seamless supply chains to help increase export.

“We handle over 30 percent of our national avocado crop which is mostly packed at Apata. Our focus has been on the Australian market where we do substantial business with Coles Supermarkets. The beauty of supplying to Australia is that it is a high value market on a world scale, right on New Zealand’s doorstep.

“Because Australia is close, the fruit doesn’t have to travel far, and our natural supply window into that market is right in the peak of their consumption time, which is their summer. And just like other parts of the world, the Australian avocado market has continued to grow. It’s been a real success story particularly in the past 10 to 15 years. There are always new consumers coming into the market and existing consumers are finding more and more ways to use avocados,” says Mr Carroll.

But he says New Zealand can be a significant international player in our own right.

“Apata buying into us not only gives us a degree of security, but it achieves the same for customers and growers. We are positioned to deliver the best product, information and supply possible to a wide range of world markets.

During a time of financial uncertainty for many companies Apata is moving ahead. Apata’s significant investment in Primor closely follows another recent announcement whereby Apata purchased 50 percent of Te Puke-based orchard management services company, Oropi Management Services.

ENDS

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