Amazing adoption of avocados
Chinese consumers just can’t get enough avocados with their popularity set to grow even further.
Few people understand the Chinese fresh fruit market as well as Loren Zhao, the co-founder of China’s largest online produce retailer, Fruitday.
He told the New Zealand Avocado International Industry Conference that over the past five years, China’s adoption of avocados has been amazing. The market increased 2000 percent from 2011 to 2017 with avocados now extremely popular. When Fruitday launched in 2009, it chose to promote two products, cherries and avocados. Today it supplies premium fresh fruit to millions of consumers in hundreds of cities across China and nine countries. Loren makes frequent trips to New Zealand to source premium fresh produce for customers, including avocados. He works directly with many NZ brands, such as Zespri. Fruitday was the first company to introduce Rockit apples into China about four years ago, and the first to promote organic NZ products.
Two years ago Fruitday bought supermarket chain, City Shop, which opened more channels to sell fruit, including online. It has investment from China’s second largest e-commerce platform, JD.com, and supplies the e-commerce giant with fresh products. Now Fruitday is moving from being a retailer to becoming a distributor, and is building of its first avocado
wrapping room in Shanghai.
Last year Mexico produced a record-breaking 1.99 million tonnes of avocados and exported 8800t to China. Chile
“Now Fruitday is moving from being a retailer to becoming a distributor, and is building of its first avocado wrapping room in Shanghai.”
which entered the market in 2015 has become one of China’s largest avocado suppliers with 16,700t sent there last year, a 44 percent increase from the previous year. Peru sent 6700t last year, an 88 percent increase on the previous season. It has a big advantage with a long harvest season and so a market window only it can supply.
Loren said it was important to factor in tariffs, which is zero on avocados from Chile and Peru because of a free-trade agreement, but Mexican avocados still incur a seven percent charge.
“The good news for NZ avocados is the free trade agreement, and I believe it will be zero,” he said.
The only other supplier is the United States.
“For Fruitday customers that means having a 12-month availability of avocado supply,” he said.
“This is another reason why retailers and distributors want to get involved with the avocado business because it’s easy to promote.”
The main markets for produce are still through wholesalers as China is so large an online delivery services can’t access all the cities. Less than 40 percent of fruit stays in the largest cities but in Shanghai, if people purchase online, product is delivered to customers’ homes in two hours from nearby shops. An avocado’s look, size and colour are critically important to the Chinese with the favourite size in the market right now 30-35 count in 6kg trays. Wholesalers want green, smoothskinned fruit with pitting or skin flaws being unacceptable.
“We have to target wholesalers – not just end customers.”
Six years ago the Chinese didn’t know how to ripen avocados or their optimum time for eating, with Fruitday’s research showing one out of every five was wasted. But last year with its retailers it provided them ‘ready to eat’, trying to convince customers to buy dark avocados.
It was difficult to educate the market as customers felt dark avocados looked ugly, and so they didn’t have a premium price at retail. And in the wholesale market, dark fruit had to be sold for lower prices because it had limited shelf life.
Another company, Superfresh, used coloured labels to show different maturity states, with 90 percent meaning the fruit is nearly ready to eat.
With ‘ready to eat’ a growing trend in China at least 10 companies are building ripening rooms for avocados. Previously, bananas were used but it’s dangerous because the process can’t be controlled, he said. In the future, professional suppliers of fruit-ripening equipment are expected to invent specially-designed containers which can be transported anywhere.
China did plant avocados 20 years ago but harvest volumes are small and the varieties are not the popular commercial types such as Hass. Of 500 hectares planted only 200t were picked, with an average harvest of 500kg/ha compared with almost 16t/ha from overseas orchards.
But a Californian avocado company has announced it will grow the crop in China’s Southwest Yunnan province, providing more domestic production in the next five years.
“The good news for NZ avocados is the free trade agreement, and I believe [tariffs] will be zero.”
NZ Avocado’s work in an innovative and dynamic environment was fantastic, Prime Minister, Jacinda Ardern told the recent New Zealand Avocado International Industry Conference.
“That’s why it’s so exciting to be here because the avocado industry demonstrates the potential in our horticultural sector,” she said.
She remembered a time when avocados were perceived by some to be a novelty, especially on a restaurant menu – “and now they’re being blamed for millennials’ spending habits”.
Her grandparents were dairy farmers but bought their first orchard in Morrinsville in the 1980s where they grew nashi pears. When her parents bought that orchard when she was at primary school, her job was to protect the fruit from birds.
Her grandparents then went into kiwifruit before buying an avocado orchard at Welcome Bay, Tauranga and she remembered walking through the trees, picking up avocados from the ground for lunch.
“But I also knew that it was hard work for them, and for those who continue in that field and are taking, what is for me, a nostalgic product to the world.”
She said the avocado industry was important to NZ as the country’s third largest fresh fruit export. In world terms, NZ is the sixth-largest exporter of avocados, topped only by Mexico, Peru, Chile, the European Union and the United States.
“Not only is the avocado industry important to our national economy, it’s particularly important for our regions, and the ones that we as a Government are focused on, including the Bay of Plenty and Northland,” she said.
The industry’s value to the country was set to reach $500 million by 2040 and according to industry estimates, global demand for the fruit was increasing by 10 percent annually.
They were increasingly being recognised as part of a healthy, nutritious diet.
“In fact, New York now has its own avocado bar where avocado is in every single item on the menu.”
And she felt it was only a matter of time before Auckland could have a similar type of eatery.
There was also increasing interest shown from Asian countries. In January, new market access into China for NZ avocados was a huge milestone as it was one of only four countries with access. Its total avocado imports were growing rapidly from under $1 million a year in 2012, to nearly $150m in 2017.
The recently signed Comprehensive and Progressive agreement for Trans-Pacific Partnership (CPTPP) could also bring new trade opportunities which NZ could tap into. But
“Not only is the avocado industry important to our national economy, it’s particularly important for our regions… including the Bay of Plenty and Northland.”
Ardern warned there were challenges to overcome. Export volumes and values were still driven by swings in the irregularbearing pattern of avocados, with the season to June being a low-bearing year which saw export volumes only half those of the previous record season.
A partial recovery is forecast for the 2019 year, with potential for another high production season the following year. The irregular fruit-bearing cycle of production makes it difficult to develop markets but she said she understood steps were being taken to reduce this. These include the expansion of Northland plantings where irregular- bearing patterns are not so great because of its climate. More investment and research into varieties and management techniques would help.
There were also many other ways the industry was striving to add value, including production of avocado oil, improving the quality of retail freshness by investing in cool chain infrastructure and capturing increasing market demand by extending the growing season.
As a result of the 2014 Primary Growth Partnership with Government, NZ Avocados Go Global, the industry had seen best performing orchards grow with the majority of them changing their practices as the new information became available, which Ardern described as a step change in the way the industry operated. Another programme led by Plant & Food Research and funded by the Ministry of Business, Innovation and Employment (MBIE), Avocados for Export, aims to identify the triggers for irregular-bearing at regional and orchard levels. And the Sustainable Food and Fibres Futures Programme launched in August would be accepting investment applications from October.
“We need to work with you to help all of us move to a smarter, more innovative space,” she said.
“I know there needs to be more collaboration in the areas of sustainability, supply chains and building on-orchard management capability, and we’re open to discussing all of those things with you.
“Thanks for the work you are doing, the innovation that you’re showing, and the fact you are lifting New Zealand’s brand as the best, most efficient, most sustainable growers in the world.
“We’ve a lot to be proud of and it comes down to a lot of you here today.”
The exhibitorsʼ area was packed with all things avocado.Avocados ʻa plentyʼ at the conference exhibition stands.Loren Zhao, co-founder of Chinese online fruit retailer, Fruitday.com
Prime Minister Jacinda Adern shared special memories.At the Olivado stand, from left; Andrea Dickinson, Pip Llewellyn and Georgia Smith.NZ Avocadoʼs stand was always busy.