Zespri says kiwifruit export outlook is strong but SunGold will face competition

While flagging challenges ahead, Zespri says its mission to grow global sales revenue to $4.5 billion by 2025 is on track. Photo / Jamie Troughton

Kiwifruit export sweetheart SunGold is expected to be the cornerstone of Zespri’s growth for the next five years, but the global marketer has warned competitors are sharpening their knives.

In a new five-year outlook, marketer Zespri, which has the regulatory right to export all New Zealand kiwifruit except to Australia, said demand for the exclusive SunGold variety remained strong in its main offshore markets, but global macroeconomic trends were shifting.

Noting the market effects of China’s slowing economic growth and the dip in global consumer confidence due to geopolitical and economic pressures, Zespri cautioned that competition in the yellow kiwifruit market was on the rise.

“Competition is increasing ... with a proliferation of brands that are increasingly expanding their portfolio of kiwifruit across the three main varieties of green, yellow and red.

“The offering is not only increasing, but quality and the ability to stay longer on-shelf is developing quickly.”

While China remained a key source of growth for Zespri, and its strong brand was a core competitive advantage, the marketer recognised the need to develop a broader set of markets.

“North America, Korea, Vietnam and India have shown strong growth and represent future opportunities. Consumer confidence levels are affected by volatility and polycrisis the world is seeing, and this is likely to lead to more conservative choices in spending.”

In this context, as a premium product, SunGold could be exposed to consumers trading down to lower-quality products, Zespri said.

Meanwhile, demand growth for SunGold remained strong. Zespri’s mission to grow global sales revenue to $4.5 billion by 2025 remained on track.

Zespri believed it could grow demand for first-class grade SunGold fruit across all markets by between 11 million and 16 million trays a year to 2029. Its forecast supply of this class of SunGold was 153 million trays in 2029-30. The company exported 124 million trays of SunGold this season.

Growth over the next 10 years would continue to be driven by SunGold with New Zealand supply increasing by up to seven million trays a year from 2029 to 2034 based on current licence release plans, it said.

It flagged an increase in the number of SunGold licence hectares to be released next year to 400ha, from up to 350ha previously signalled. Up to 400ha was expected to be released in 2026 and 350-500ha between 2027 and 2029.

The grower-owned marketer used the five-year outlook to further lobby New Zealand producers to support its proposal to expand northern hemisphere growing of SunGold in an upcoming industry vote.

New Zespri chief executive Jason Te Brake is heading the global marketer's push for industry approval to increase northern hemisphere cultivation of SunGold.

“Beyond kiwifruit, there are also other high-quality local fruits that, while in season, can present themselves as more affordable alternatives. This is particularly evident in the northern hemisphere, putting pressure on Zespri to be available on shelf all year round. A gap in supply exposes the brand to competition, making it harder to take back the position with customers once a competitor product with reasonable quality has been on-shelf.

“The growth in competitor varieties is in part enabled by the inability of Zespri to release more licence in northern hemisphere production locations as a result of the unsuccessful producer vote in 2022 to expand offshore SunGold plantings. This will continue to lead to more competition through the supply chain and in-market.”

Zespri said if successful this month, its second attempt to get expansion across the vote line would “give us more ability to compete”.

“Growers should expect alternative northern and southern hemisphere supply yellow-flesh options will eventually be successful, leading to greater competition and therefore returns will moderate in the longer term.”

It said SunGold was a growth driver “reaching maturity stage” towards the end of the five-year outlook.

Achieving economies of scale and controlling costs in the value chain would be critical to sustaining the high levels of profitability the product had delivered so far, the company said.

Its modelling suggested orchard gate per hectare returns could be sustained at $150,000-$190,000 over the next five years, on volumes growing to 153 million trays in 2029-30.

In the 2023-24 season, Zespri exported 124 million trays of SunGold.

Zespri is growing SunGold kiwifruit in four countries outside New Zealand - Italy, France, Japan and Korea. It will soon have planted all 5000 offshore hectares approved by growers to date.

As these orchards came into full production, offshore SunGold volumes would reach 40 million trays by the 2029 season.

“Despite these increases, (offshore) production from the current approval will only meet almost two-thirds of the targe demand of the New Zealand off-season in 2029,” the company said.

This month’s vote will ask producers to support expansion of offshore SunGold hectares by up to an additional 420ha per year for the next six years in Italy, France, Japan, South Korea and Greece.

The result of the vote will be known in mid-December.

Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the $26 billion dairy industry, agribusiness, exporting and the logistics sector and supply chains.