Agribusiness Report: Zespri takes Covid-19 in its stride

Kiwifruit being harvested.

Zespri expects to again achieve more than $3 billion sales in 2020-21 and is on track to reach $4.5b or 220 million trays in five years, with SunGold the dominant variety. Backed by an increasing volume of gold kiwifruit, global marketer Zespri is heading for another record year despite the chill of Covid-19.

The industry has pulled out all stops with picking and the first round of packing finishing on time last week; Tauranga-based Zespri is now working on selling its largest ever crop.

Zespri expects to handle about 180 million trays of green and gold kiwifruit grown here and overseas — compared with 164.4m trays last year — and this includes a record harvest of 160m in New Zealand.

"It's driven by the new hectares of SunGold both here and in Italy [which produces 80 per cent of the offshore crop]," said Dave Courtney, Zespri's chief grower and alliances officer. "The fruit has flowed well out of the port and into the markets throughout the world. There hasn't been significant disruption.

"As things stand today we are happy with how sales have gone. We are having a very good year in Europe, and Japan and China are going to plan. We are starting to see a [consumer] trend for food products rich in Vitamin C and this is helping demand."

Courtney said Zespri was under no illusion there could be rough patches ahead "as the economic recession starts to bite. The crop is off [the vines], the supply chain is working well and we are ready to be agile and adjust our plans if needed. Every week now is a good week for us."

Kiwifruit growers and packhouses, were able to cover gaps in the harvesting gangs by employing people from other businesses that closed during the Covid lockdown.

"They had people from hospitality through to tourism and in the early days, forestry workers when the China shutdown impacted the logging industry," Courtney said. "It will be interesting to see if some of these people stay in the industry and view it as a viable career pathway."

The growers and packhouses, however, did have extra costs through running extra shifts and implementing social distancing and other health and safety processes.

David Courtney, Zespri chief grower and alliances officer.

Courtney is confident Zespri will again surpass $3 billion in sales for the 2020/21 financial year — in 2019/20 it was $3.36b, creating net profit of $200.8m and an 8 per cent increase in fruit and service payments to growers of $1.96b.

During the Covid crisis, Zespri experienced an increase in online sales particularly in China. "We have relied on in-store promotion and because of the restrictions we had to rethink our strategy and do more online and home marketing."

Zespri is also investing heavily in the United States market to increase sales there from the present 8m trays a year. "Kiwifruit is not that well known as a fruit product in the US and the gold variety is bringing consumers to the category," said Courtney.

"We've had a record start with SunGold in the US this year and we are on track to reach our target of 25 per cent growth in 2020/21. We want to double the business there over the next five years."

Zespri has a goal of reaching $4.5b in global sales by 2025, representing 221m trays of green, gold and the new red kiwifruit — 186m trays produced in New Zealand and 35m offshore, a 34 per cent increase in volume from 2019/20.

The popular SunGold variety now accounts for more than half of New Zealand's production and is estimated to grow to 115m trays by 2024/25, outstripping the traditional Hayward green with 59m trays. SunGold has provided orchard gate returns to growers of more than $11 a tray compared with green's payment of about $6.50 a tray.

"It's still relatively early in the season but prices in all markets are tracking to plan," said Courtney.