Zespri Sales Gaining Momentum After Late Start

Zespri Sales Gaining Momentum After Later Season Start

ZESPRI International, the world’s largest marketer of kiwifruit, is making up ground after a late season start, with sales now gathering momentum in key export markets in Japan, East Asia, Europe and North America.

“We had anticipated and planned for another testing selling season with a later than ideal start, big volumes similar to last year’s record crop, greater competition from Italian and Chilean fruit and a New Zealand dollar that remains very strong against the Yen and Euro, our main trading currencies,” CEO Tim Goodacre said.

“Conditions are challenging, but our fruit quality is very good and customers are switching to our ZESPRI™ brand early as promotions swing into action. Our focus for the season will be on offsetting the adverse factors as far as possible by increasing market revenues, reducing costs where practicable and being ready to realign tactics as required to make the most of any opportunities.”

Mr Goodacre said the record global sales of $1.02 billion and strong pricing in local currencies achieved in 2004-05 were a testimony to the power of the integrated orchard to retail ZESPRI™ System and ZESPRI™ Kiwifruit Brand in delivering premium returns in difficult conditions.

“We will work to ensure that we make the best of the circumstances again this year and leverage the value inherent in the ZESPRI™ System and Brand and single point of market entry structure to maximise returns.”

Mr Goodacre said in the ZESPRI Annual Report released today (Thursday, June 23) that “effective management in upholding quality, customer relationships and targeted, tactical promotions and product allocations demonstrated what co-operation and co-ordination could achieve when linked under a common production and delivery system and a meaningful brand”.

“Despite unprecedented volumes and some product and storage issues in 2004-05, customers and consumers stayed with the premium ZESPRI™ Kiwifruit range because they had confidence in our ability to deliver the quality demanded, regardless, and stay true to the values associated with the brand. That reputation for delivering consistently superior quality and service is of enormous help as we launch the new season’s sales programmes.“

Mr Goodacre said marketing and promotions would continue to play a critical role in achieving premium pricing in local currencies and target sales volumes in the present selling season. Above the line spending again would be targeted at markets which would best maximise orchard gate returns for growers.

Year to date, ZESPRI is reporting volumes are up 53% in the Japan market, with ZESPRI™ GREEN Kiwifruit up 51% and ZESPRI™ GOLD Kiwifruit sales surging 55% ahead of the same time in 2004-05, pushed by strong direct customer relationships and integrated advertising and promotional activities.

Sales in the tiger markets of Taiwan and Korea are well ahead of the same period last year despite delayed supply, buoyed by the first wave of promotions integrated back to point of purchase. Korean sales hope to benefit from a popular health documentary on the role of fresh fruit and vegetables, including kiwifruit, for all round good health and protection which is due to be broadcast on national television in late July.

The European programme started later than Japan and Asia which received the first shipments of the new crop. Early sales have been strong in terms of both volume and pricing. Conditions are testing with competition from Chile and the overhang of the very large Italian crop, much of which has been sold at discount prices.

“We have made a good start to the new season but the reality for us is that competitors are progressively getting better, customers are consolidating into larger, globe spanning entities and consumers are demanding more. For ZESPRI to continue to set the benchmark as global category leader we have to constantly earn our place in the market and key to this is working with all our partners along the supply and delivery chain through to retail,” Mr Goodacre said.

“We are working on the next phase of our evolving global business strategy to identify how best to protect and enhance the value of the ZESPRI™ System and Brand to generate sustainable profits over the long term. The result will be a strategic plan that takes us through to 2015.”

He said the strategic review would focus on what had to be done to sustain growth and take advantage of new market opportunities to protect grower returns and shareholder wealth.

“The review, which will be completed later this financial year, will take into consideration market conditions, supply, retail and consumer trends and what ZESPRI must do to retain its paramount position in the continually changing competitive environment,” he said

Shareholders will learn more about the strategy forward and the current season’s prospects at the Annual General Meeting in Tauranga on July 21.

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