Beyond recovery:
Growth, value and
innovation in the kiwifruit
industry
Simon Limmer
AGENDA
1.An overview of our industry
2.Strategy: growing demand and increasing supply
3.The recovery from Psa
4.Challenges ahead
Industry stats
Waikato 3%
Hawke’s Bay 1%
Southern North Island 1%
Gisborne 1%
Auckland 4%
Nelson 3%
Northland 1%
Bay of Plenty 86% 2,435 growers
12,578 hectares
Hayward distribution
Grower demographics
Ave age: 53% of growers are over 60 years old
Size of orchards 0 – 2 ha 791
2 – 5 ha 1,508
5 - 10 ha 589
>10 ha 161
Average orchard size: Green – 3.5ha; Gold – 2.6 ha
All Varieties
0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000
Hong Kong
Belgium
North America
Netherlands
South Korea
Italy
France
Germany
Taiwan
Spain
China
Japan
Sales Volume (TE) By Market 2016
OGR per hectare (total)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Industry structure
NZKGI
Industry Advisory Council
Zespri Board
•Distance to Market
•Land costs
•Labour costs
•Exchange rate
•Scale constraints
•Capital constraints
•Population density
•Infrastructure
•Domestic market
Competitive disadvantages
Hayward cost of production NZ vs Chile.
* NZ based on USD/NZD effective
rate
-
0.10
0.20
0.30
0.40
0.50
0.60
0.70
2004 2005 2006 2007 2008 2009 2010 2011 2012F
USD/KG
Season
Chile Cost of production
NZ Cost of production
Competing in a crowded
marketplace
AGENDA
1.An overview of our industry
2.Strategy: growing demand and increasing supply
3.The recovery from Psa
4.Challenges ahead
Zespri’s purpose
Zespri was created to deliver strong, sustainable returns to our growers and shareholders.
Zespri’s strategy
Developing and
marketing the world’s
leading portfolio of
kiwifruit products for
12 months of the year.
The Zespri System
The Zespri System
The Zespri System is
the knowledge,
policies and
processes that embody the Zespri
brand throughout the
entire supply chain and consistently
allows us to live up to
our consumer
promise.
A premium branded product Investing over $150m a year in global marketing
Top 5 fruit brand
in 15 Markets Created New Segment
A growing international sales
and marketing team
Innovation from soil to spoon.
Over $20m Zespri
investment per year in :
• Production systems
• Crop protection
• Consumer research
• New cultivar
development
New cultivar development
- 58%
Sustainable
production -21%
Sustainable
delivery of fruit - 10%
Health and
consumer research - 11%
1 2 3 4
Commercial
Product • Zespri SunGold
• Zespri Sweet Green
Block Trials • 1 Red
• 1 Green
• 9 Males
Clonal Trials • 9230 New Cultivars
Female
Seedlings • 100,000
Female
Seedlings
World’s Largest Kiwifruit Breeding Programme
-
50
100
150
200
250
Gold9
Future New Varieties
Gold3
Green14
Hort16A
Hayward
207m We are here
PSA IMPACT & RECOVERY
Forecast Supply Volumes To 2025
Vo
lum
e (
mTE
’s)
Gold3 licensing
First licenced in 2010
Provided to Hort16a
growers as a ‘Gold
One For One’
licence or at a fixed
price
A pathway out of
Psa.
60% of growers now
have 2 varieties
New licence
release
programme in 2016
2,000 ha over 4
years
Closed tender bids
Gold 3 Licence release 2017
Auckland 6
Bay of Plenty 262
Waikato 2
Poverty Bay 12
Hawke’s Bay 4.2
Northland 2
Nelson 6
Item All bids
Median price (excl
GST)
$235,000 per ha
Minimum
accepted bid
(excl GST)
$221,000 per ha
Number of
successful bidders
550
Ave size of
successful bids
1.7ha
Total ha bid for 1,277
Location Hectares Note: not all locations of bidders disclosed
• Retain shelf space and maintain
consumer eating experience
• Growing the kiwifruit category as a
whole
• Maintain Zespri brand presence
• Zespri Gold, SunGold, Green,
Sweet Green, Organic Green
• Local presence and support in kiwifruit growing communities
Zespri Global Supply
Reliable Year-round Zespri Supply
Italy
France Japan Korea
(ZGS) Production Countries
China Portugal Spain Turkey
(ZGS) Production Forecast To 2025
-
10.00
20.00
30.00
40.00
50.00
60.00
Vo
lum
e (
mTE
’s)
ZGS Green ZGS Gold
1.An overview of our industry
2.Strategy: growing demand and increasing supply
3.The recovery from Psa
4.Challenges ahead
AGENDA
Hort16A $50.5M in R&D
investment,
lead to ZespriGold®,
a $7B product
An industry under threat.
Many uncertainties to manage.
New reports of infection
Potential cause of infection
Government support
Grower funding issues Testing process
New R&D learnings Offers of solutions
New statistics
Market access concerns
Customer queries
Management strategy
Vectors of transmission
Grower support
Insurance
Sampling process
Industry meetings
New on-orchard advice
Growers vote ‘yes’ to the aggressive management strategy
DECISIONS AND ACTIONS
• Led through IAC
• Understanding the issue
• Two-way communication
• Aggressive action
• Pastoral support
• Request to government
November 2010.
Implementing
the solutions.
Technology
Varieties
Management practices
June 2012 - Release of 2,068
hectares of Gold3 license, a
commercialised kiwifruit variety
with tolerance to the disease.
Innovation creates a pathway.
AGENDA
1.An overview of our industry
2.Strategy: growing demand and increasing supply
3.The recovery from Psa
4.Challenges ahead
Refinement of
packaging materials Managing waste
kiwifruit material
Supporting
biodiversity Preserving bees and
supporting bee keepers Taking care of our
people and our
community
Reduced reliance on
non-renewable
resources
Water use
efficiency
Carbon/greenhouse
gas reduction
Sustainability and environmental impacts
Orchard prices and orchard ownership
• More investment in kiwifruit
• Orchards attracting strong prices
• High demand for Gold3 licences
• What does this mean for access and
participation in the industry?
Grower demographics and succession
• Ageing demographic
• Need to support pathways into the
industry
• Need to invest in training and mentoring
• Industry programmes on governance
and leadership, hort scholarships,
careers events and schools
engagement.
Biosecurity: prevention and response
• Biosecurity risk has not gone away!
• Need for continued focus on readiness and
response.
• Supported through: joint investment in KVH,
through Government Industry Agreement
and operational agreements
• Plus ongoing investment in innovation