Lain Jager, CEO of Zespri, heads an industry in full recovery, with sales revenues of $1.35 billion per year. He talks about the trials and triumphs of office.
Lain Jager, CEO of Zespri, talks about the trials and triumphs of office.
EXPORTER: When you tookook on your role at Zespri, what were yourour immediate goals, and what vision did you have for the company?
Lain: I was appointed CEO of Zespri in 2008. My immediate te goals were to rebuild the profitability bility of Zespri Green Kiwifruit and to continue to drive growth in the Zespri Gold Kiwifruit business. Our purpose e is to deliver the best returns to New w Zealand kiwifruit growers and deliver long term sustainable value for thehe industry.
However, not long into nto my appointment the kiwifruit fruit industry was impacted by the bacterial disease Psa, confirmed in Neww Zealand in November 2010. This s obviously changed the focus for Zespri to [one of] recovery from the impact.
EXPORTER: What have been the biggest challenges you’ve had too manage in your time at Zespri?
Lain: The advent of Psa a was a huge challenge. It forced a break in the industry’s growth story y and brought with it a focus on valuee growth and supply chain efficiency. y. The recovery from Psa is well underway way and that is testimony to the entrepreneurial, trepreneurial, innovative and cooperative ative spirit that has defined the New Zealand kiwifruit industry.
Zespri has managed d other significant issues, including the prosecution rosecution of a former Zespri importer r in China for under-declaration of customs ustoms duties between 2008 and 2010. 010.
We’ve learned important rtant lessons and have significantly overhauled our compliance practices to minimise the risk of this happening again.
EXPORTER: What gives you the most cause for optimism?
Lain: There’re several causes for optimism. Firstly is the resilience of kiwifruit growers in the face of Psa; their focus on innovation and willingness to invest in new cultivars. These qualities provide for a strong foundation.
Secondly is the quality of the products we are selling. Zespri kiwifruit have proven health benefits and are the world’s best for quality and taste. We are selling fruit in an increasingly health conscious world and into markets in China and Southeast Asia, which are going through significant economic development. Our challenge is to keep up with the growth.
The industry has rebounded, with sales revenues of $1.35 billion last year, and orchard values and fruit volumes back to pre-Psa levels. We sold 86 million trays of New Zealand fruit in 2013/14 in 53 countries around the world and we’re aiming to more than double export
earnings to $3 billion by 2025.
A big part of this export success is in China. As recently as 2004, trade to China was just one million trays. Ten years later, we’re looking at sales of over 13 million trays of Zespri kiwifruit. China is our third third-largest largest market, tipped to be our number-one market in five years, and earns premium returns for growers.
EXPORTER: The industry appears to have recovered from the Psa outbreak. Looking back do you think things could have been handled differently or better? What steps have been taken to ensure that anything like that never happens again?
Lain: There is Psa in kiwifruit producing countries around the world so we should have perhaps expected Psa in New Zealand to a greater extent than we did. Once impacted, we learned quickly about how to manage the disease. Another important factor was that we developed a successful recovery pathway through the Gold3 variety, enabling impacted growers to graft over from the Hort16A variety which was so badly affected. Continued R&D and proactive on-orchard management are also so important.
We have benefited from the creation of a purpose-built biosecurity body, Kiwifruit Vine Health. KVH manages the wider biosecurity readiness, response and operational role on behalf of the kiwifruit industry and works through partnership. Government support has been hugely beneficial. MPI, kiwifruit growers, New Zealand Kiwifruit Growers Inc (NZKGI), the post-harvest and associated industries such as beekeepers, pollen providers, nurseries and transporters, as well as Zespri, have all been involved.
EXPORTER: What needs to happen to achieve that $3 billion target by 2025?
Lain: A large portion of our growth will be achieved through Gold3. We have almost 5,000 hectares in the ground now, which should take production to around 50 million trays. We may also see more planting of green kiwifruit again, as we get some exchange rate relief, which will further support growth. We are also investing strongly to develop new varieties to support longer-term growth.
EXPORTER: Looking at the China market specifically, what’s your strategy for making it your number one market by 2020?
Lain: We’ve only just scratched the surface in China. We will take the opportunity to extend into tier two cities, extending our distribution and bringing our product to more consumers. It’s really about having the supply available to support growth.
EXPORTER: What other markets hold the most potential for growth, and why?
Lain: The South East Asia region is a great opportunity, with a population of over 600 million people and rapidly developing economies. Our volume growth is currently over 20 percent.
The Middle East and Brazil are also exciting markets. Our focus is on markets with rapid economic growth and strong fruit consumption. Rising income levels are leading to changing consumption patterns and a greater focus on health.
EXPORTER: What other new initiatives has Zespri introduced recently to help boost exports and look after its growers?
Lain: Our strategy is very focused. We are boosting export growth through bringing new products to market and commercialising Gold Kiwifruit, through positioning ourselves in rapidly growing new markets and through marketing health to consumers in places where we have a higher market share. From a value perspective there’s a fourth aspect, which is operating the most effective supply chain we can. To bring great quality fruit in optimal condition to market and to take cost out of the supply chain.
EXPORTER: What are some of the fundamental export lessons you’re learnt during your time at Zespri?
Lain: Quality is everything. Kiwifruit export is also complex because our product is perishable. This makes relationships so important. The fruit supply chain is characterised by deep expertise as fruit changes hands – from grower to post-harvest, from shipping to terminal operations, and from distribution to retail. It is important to be a predictable partner and contribute to a sustainable supply chain that brings value in the long term. The value isn’t captured in just one season.
EXPORTER: Why do you think Zespri as a brand has been such a major success for New Zealand.
Lain: Our success and the success of our growers is due to an unwavering commitment to quality and our ability to plan for the long term and invest in the brand, in category expansion and in R&D. Our integration allows us to capture maximum value from the market, which is returned to New Zealand growers.