KEY POINTS:
Outgoing Zespri chief executive Tim Goodacre has mounted a staunch defence of the company's kiwifruit export monopoly, saying it helps ensure the New Zealand marketing spend needed to combat increased competition from foreign producers.
Goodacre's comments come as the $1 billion industry faces a number of unsettling issues,
such as a cut in export volumes this year and kiwifruit becoming the centre of attention in talk of a "food miles" tax on our produce flown or shipped overseas.
The former Australian Wheat Board man has also faced a tough time personally after it was alleged he was told about kickbacks paid to Iraq relating to the oil-for-food scheme. Goodacre could face charges over the scandal.
Under current rules, Zespri acts as the sole exporter and overseas marketer of New Zealand kiwifruit to all countries other than Australia. The company recently reported a drop in half-year net profits despite stronger sales, as it increased "loyalty payments" to growers, partly to give them a commercial incentive to stick with the current monopoly system.
Even if the regulations were to go - a move not currently considered likely - Goodacre hoped a commercial decision would see a single seller retained.
Goodacre, due to leave the company by March, said the monopoly helped give Zespri scale and certainty of supply, meaning it could better invest in its brand and fruit quality.
"When we know we have all of the supply of New Zealand kiwifruit ... we can then invest in selling that product, even prior to the season."
Deals were already being done for next year and overseas marketing campaigns were being committed to. "We can only do that when we know how much fruit we're going to sell."
In an unregulated system "you aren't able to make those sort of longer-term commitments".
Growers were keen to have a marketing arm that took a long-term view, rather than focus on short-term returns.
"We spend $70 million a year on advertising and promotion. We do that because we know we're going to get the New Zealand crop to support that."
Goodacre said Zespri fruit attracts a 30-40 per cent premium over other global producers and the company would fight hard to retain that.
"We only get that because of the brand and the acknowledged value."
Zespri was horrified when the theoretical amount of carbon used to fly kiwifruit to Europe was raised during talk of a "food miles" tax to protect the environment.
The company is worried the talk could affect consumer perceptions of the Zespri brand.
Zespri responded to the claim over kiwifruit by pointing out that exports mostly went by ship anyway.
No overseas advertising to counter any negative fallout was planned at this stage, Goodacre said, but an eye was being kept on reaction to the issue.
He believed being environmentally sustainable was part of Zespri's "brand value", with the product seen as clean and green, and was hopeful this would help avert any problems.
"Our customers [are] certainly not seeing it as an issue. We would need to monitor that. But they are comfortable because again they see Zespri as being a very responsible marketer of a sustainable product."
Meanwhile, by the end of last month export volumes this year were down 5 million trays on last year.
One of the main reasons was the fact that fruit quality from some growers was not up to scratch.
The fruit "spoiling" issue affecting returns ironically comes at a time when market prices are strong.
The industry - which has had a 20 per cent production boom in recent years - is reviewing why the spoiling has occurred.
The two main reasons suspected are wet harvest-time weather and the possibility that fruit was taking too long to be processed. A report is due by year's end.
Goodacre said the extent of the problem varied between processing facilities. "Some of the post-harvest facilities have had reasonably low levels of fruit loss, others have been having high levels."
The review is looking at whether facilities - faced with the production surge - are handling fruit in a timely way.
Zespri, which is expanding its overseas growing operations, hopes to become a $2 billion turnover operation within a few years and take up a growing proportion of the world fruit market.
It also has other ambitious targets relating to boosting returns, brand recognition and fruit quality.
