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Record demand for New Zealand avocados in Korea

Record demand for New Zealand avocados in Korea as consumers make healthier food choices

AUCKLAND: 3 November 2016: The death of Thailand’s long-serving monarch may be affecting the buying behaviours of Thai consumers but export group leader AVOCO says any shortfall of New Zealand fruit sold will be more than made up in AVOCO’s other markets.

Thailand is in official mourning following the death of King Bhumjbol Adulyadej on October 13. Popular tourism events have been cancelled and entertainment has been banned for 30 days as Thai people closely observe this period as a sign of respect to the 88-year-old monarch who ruled for seven decades. With fewer people dining out and industries temporarily shutting down, export activity to Thailand has slowed, says AVOCO and AVANZA’s market manager for Thailand, Carwyn Williams.

“Sales have definitely changed and we are keeping a close eye on what impact this event will continue to have on avocado export volumes to Thailand,” says Mr Williams. “Correspondence has been difficult as business takes a back seat for Thai people during this time. This illustrates the importance of having a diverse range of export markets and the silver lining for us is that we can direct more fruit to our strong performing Korean market.”

Shipments of New Zealand avocados to South Korea have reached an industry high with 209,000 trays planned for export this season. Worth about $6 million to the total industry, it is three times the volume exported last year.

The greater volume reflects the industry’s larger national crop in 2016-17 but more importantly the work AVOCO has put in, under its AVANZA brand name, to promote New Zealand avocados and drive consumption in Asia.

After a short crop of 2.5 million trays last season, about 5.1 million trays will be exported in 2016-17 - exceeding the previous record of 4.5 million trays two years ago.

AVOCO will handle the bulk of New Zealand’s crop and this season will export about 3.1 million trays, with 83% destined for Australia. The remaining 17% will be sent to various Asian markets, including Japan, Thailand, Singapore, India and Korea and marketed under the AVANZA brand.

AVANZA is responsible for 85% of all NZ exports to Korea this season, shipping more than 7000 trays a week over a 25-week supply window. Compare that to last year when AVANZA’s total contribution was just over 65,000 trays.

Changing diets and promotion of avocados as a healthy food option means the superfood is in demand more than ever in Korea, which has a population of 50 million people. Korean imports of avocados between January and August this year from all origins, including Mexico and the US, was 347,000 trays – an 83% increase on avocado imports during the same eight month period in 2015.

It’s likely New Zealand avocados will make up about half of all avocado imports this year to Korea where AVANZA market manager Martin Napper says retail and wholesale buyers can’t get enough of the fruit.

“Korea has been a rapidly growing market for avocados. Two years ago, New Zealand shipped close to 72,000 trays to Korea - anymore and the market could tip over very quickly. But this year, we’ve received unprecedented interest. Avocados have just hit a nerve.”

Korea, unlike other Asian markets, prefers large size fruit, which gives AVOCO a valuable supply avenue outside Australia for fruit above a certain size profile. The larger size premium fruit (16/18/20/24ct) is retailing for NZ$4 per piece this season which Mr Napper considers to be a “reasonable price point”, given the nature of the product and the inclusion of duties.

New Zealand’s Free Trade Agreement ratified with Korea in September last year saw the 30% tariff on New Zealand avocados drop to 24% at January 1. The tariff drops 3% annually until it is eliminated in 2024. Mr Napper says that while the duty is still a hindrance to AVANZA, currently accounting for up to US$10 for every bulk carton shipped to Korea, demand for avocados continues unabated.

“There’s recognition that healthy food items command a premium price and consumers are prepared to pay that.”

While other New Zealand exporters have shipped fruit to Korea in small volumes in recent years, AVANZA has led the way in developing the market, partnering with similarly health-focussed brands at retail events designed to raise awareness about the health benefits and versatility of New Zealand avocados. This year, they’ve partnered with Korea’s second largest dairy company, Maeil Dairies, to cross-promote smoothies using avocados and soya milk. By the season’s end, Koreans will have taken part in more than 1000 in-store demonstrations promoting AVANZA avocados since 2014.

AVANZA has also collaborated in the market with the Avocado Industry Council which has helped to promote New Zealand avocados on a website designed specifically for a Korean audience. The NZAIC Korean website offers recipe ideas and fruit handling information to inspire and educate the Korean consumer. It has also engaged Korean celebrity chef Hong Shin Ae to front tasting events and meal demonstrations using avocados.

“The AIC has also undertaken social media research to better understand the buyer behaviours of consumers throughout Asia. That information is fed back to us to tailor our own marketing strategies to reach our targeted consumer, which in Korea is a woman, aged 20-45. She values health and beauty and makes all the household buying decisions.”

Additionally, AVANZA has made efforts to educate retailers handling the fruit. Technical consultants Colin Partridge and Jerome Hardy have visited Korean retailers to instruct them on techniques to ripen fruit correctly which have been critical to boosting sales. Supermarkets have been encouraged to put ripe, ready-to-eat fruit on display alongside hard, green fruit – a strategy that can result in a 300% increase in sales because people buy more often and consume the day of purchase.

“Displaying ripe fruit is a step forward by retailers who would never have done that even two years ago due to perceived wastage. But they recognise now that avocado is an important retail category for them and any wastage will be more than offset by increased sales,” says Mr Napper.

“It’s one of the experiences we’ve taken out of our market presence in Japan where New Zealand avocados are more established. We’ve noticed the difference these strategies have but timing is everything and Korean retailers are recognising now that avocados are a growth category for them and they’re worth the investment.”

Nearly 800 avocado growers across Northland and the Bay of Plenty supply AVOCO. Harvesting got underway in the Far North in late-August and will continue until February.

ENDS

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