Tough Chile competition bruises kiwifruit season

By LIBBY MIDDLEBROOK

Increased market competition and smaller fruit sizes have bruised Zespri International's performance during its first two months of operation as a corporate entity.

Zespri International - the body formed to market and export kiwifruit - has had a bumpy start to the 2000 season, with poor weather limiting fruit growth.

Greater competition in the European market and new supply structures have also caused headaches for the grower-owned company, according to chief executive Tony Marks.

"What's been different in Europe is that unlike last year [when] most of the residual crop had sold by the time we got to the market, this year there's still quite significant Italian and French product in the shops," Mr Marks said.

He was in Tauranga yesterday for Zespri International's first annual meeting.

Mr Marks was upbeat about the remainder of the season, with large quantities of fruit due to come on stream during the next few months, including increased volumes of organic kiwifruit.

Demand for Zespri's Gold Kiwifruit was also growing, with big marketing campaigns held in Asia and Europe to promote the new golden-fleshed variety.

"At this stage it looks like it's going to be a more difficult year, but we will work our hardest to deliver the best possible performance," Mr Marks told more than 250 growers. "We're going to have to go head to head against the Chileans, who also have an abundance of small fruit of inconsistent and often dubious quality, but which can be very well priced indeed."

In April, the Government did away with the industry producer board - the Kiwifruit Marketing Board - in favour of separate entities to handle exporting, marketing and regulatory issues.

Under the new structure, kiwifruit growers are hoping for a repeat of last year's record season return of $7.62 a tray, up 17 per cent on the 1998-1999 year's $6.50 return.

There were few grumbles from Zespri shareholders and suppliers at the meeting yesterday, other than standard objections to any increase in directors' fees, proposed to rise by around $3000 each this year.

Some shareholders were also concerned by Zespri's proposal to raise funds through share issues worth $6 million, as it was not likely to raise the company's market capitalisation.

Zespri's plans to earn $9 million through sale commissions, and to pay a $2 million after-tax dividend to shareholders also drew criticism.

One shareholder did not expect the company to be financially stable enough to declare a dividend during the next 12 months.

Meanwhile, Zespri plans to set aside 0.5 per cent of the net value of Zespri Gold kiwifruit sold this year to fight any illegal plantings of the variety, which has taken more than 20 years to develop.