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Strategic review readies NZ horticultural innovator

Strategic review readies NZ horticultural innovator to go global

New Zealand Frost Fans is the clear leading supplier of frost fans protecting horticulture from cold weather in Australia and New Zealand, and has a growing international business with sales in Europe and South America. It now has its sights on the next phase of international growth – fuelled by market opportunity and climate change creating more extreme weather events – as it seeks to build on its unique and proven frost protection solutions.

New Zealand Frost Fans has manufactured and marketed the FrostBossTM range of fans from its base in Hastings since 1995. Its customers de-risk their crop yields by eliminating losses from frost damage, transforming their farm economics and their reliability as suppliers.

New Zealand Frost Fans’ growth trajectory has seen it become by far the largest supplier of frost fans in Australia and New Zealand. In the current financial year revenue has increased to more than NZ$40 million as growers seek reliable and proven ways to protect their crops from weather events.

With frost fans still in a relatively early stage of market penetration, the business has also firmly established itself as one of the top three players internationally. Now facing a range of options overseas, it is working through a strategic review assessing all aspects of the business and its markets.

Growth opportunity

“We see huge growth opportunity in front of us, particularly in places like Europe and South America where climate change is increasingly delivering more extreme weather events and damaging frosts,” says CEO Steve Haslett. “You look at, say, Europe’s top three producers – Spain, Turkey and Italy – and at 3 percent penetration by frost fans, that’s a market opportunity for more than 20,000 fans. Add in South American countries – Argentina, Brazil, Chile – on the same basis and there’s potential for another 8,000 machines. Our proven ability to provide more efficient and reliable – and quieter – solutions is a significant advantage we can bring to these markets.

“To date we have really only dipped our toe in these markets and we now know the demand is there. So the opportunity for us is huge – within the next three-to-five years we could be doing three times the revenue that we currently have, and substantially more is possible longer-term. But it will require significant funding for the next phase of growth.”

Haslett also notes that there are still huge opportunities closer to home – particularly in Australia, where frost protection systems still make up only around 3% of the target crop area, estimated to be around 300,000 hectares.

New Zealand Frost Fans operated out of an apple packing shed in Hastings when Haslett purchased the business in 2007. He then set about creating a state-of-the-art fan system with help from experts, including a key America’s Cup research engineer, to create highly efficient and aerodynamic composite blades. New Zealand Frost Fans now employs around 60 people, mainly locals, at its manufacturing plant in Hastings. In 2012, through an acquisition, it opened an Australian business (Australian Frost Fans) which now represents around 60% of new sales and continues to grow very quickly.

Improved farm outcomes

Reflecting on experience in Australia and New Zealand, Haslett says horticulturalists have traditionally gambled on the weather, with good crops in most years and catastrophic losses from time to time being taken “on the chin.” The blow can sometimes be felt for years to come due to the time some crops take to recover to full yields after the damage is done. There are alternative methods. Some growers have resorted to using helicopters – bringing them in to move the air around to save their crops – but that relies on helicopters being available and can be seriously expensive. Other growers have used water-based methods, but these can be limited by water availability and issues arising from excess watering on crop quality or ground conditions.

“The dynamics are different from region to region and crop to crop, but in frost-prone areas with high value crops the scale of losses can hit growers hard. In those places, the economics of our offering become more and more compelling because it’s more reliable and cost-effective than the alternatives,” says Haslett.

An equally important, but less well known, advantage of frost fans is the more frequent protection from “cold” events where the plant is stressed or inhibited in growth from cold injury but not completely devasted as in a serious frost event. Because the frost fan turns on automatically the productivity and yield of the crop is materially improved.

An increasingly important driver of demand, particularly in Europe, is climate change. According to a recent NZ Trade and Enterprise report on European horticulture, climate change is bringing forward the start of the vegetation period faster than the date of the last spring frost. The report notes that this will lead to “… an increase of frost events during the growing season. Sudden spring frosts during the growing season will compromise many harvests.”

“The stage is certainly set for us,” says Haslett. “Our proven system provides crop security for many growers by safeguarding fruit quality and yields – be it for grapes, nuts, apples, citrus, avocados, stone fruit, kiwifruit or berries.”

Research and development

A key part of New Zealand Frost Fans’ success is having a strong culture of research and development. “Our C49 four-blade FrostBossTM fan is our top selling product and is the culmination of years of collaborative design, modelling, building, fine-tuning and testing from a thinktank of talented people brought together with one thing in mind – to deliver a machine with market leading quietness, performance and fuel efficiency.

“Our goal is to continue to make technical advances that help reduce the stress of the frost season for growers and their families.”

Frost fans draw down the warmer air trapped in the thermal ceiling or inversion layer 15-60 metres above an orchard or vineyard at night, to mix with the colder layer of air around the trees and vines. Haslett says frost fans are now widely recognised for their advantages in horticulture and viticulture.

Frost fans are typically 5-6 metres in diameter and mounted on a 10-metre tower, powered by a 160hp engine. Each fan, depending on site-specific features, will cover up to 8 hectares.

New Zealand Frost Fans’ technologies and IP resides in its blade design, proprietary control hardware and software specifically designed for frost fans, clutch design, proprietary gearbox and integration with Loncel remote monitoring systems. This provides growers with an easy-to-operate, quiet, efficient and reliable solution for fighting frosts.

The FrostBossTM product range of fans with two, three, four or five blades provide growers with improved performance across three key dimensions – coverage, fuel efficiency and noise reduction.

With further investment, the business is well positioned to exploit these unique selling points by developing and growing markets beyond its core business in Australia and New Zealand.

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