Keeping ahead of the CURVE
Zespri chief Dan Mathieson has put his love of Japan to good use for New Zealand kiwifruit growers’ benefit, writes Andrea Fox .
Eyebrows rose when Zespri said its newly minted chief executive and long-time marketing globetrotter Dan Mathieson would continue to live and work out of Singapore.
New Zealand’s kiwifruit export marketer has, after all, a co-operative ethos, being owned by its growers. It’s a business culture that prefers to eyeball its leaders regularly.
That was two years ago and Mathieson appears to be following through to everyone’s satisfaction on his pledge to spend substantial time at Zespri’s Mount Maunganui HQ , in recognition of what he called “the huge importance of working closely with New Zealand growers and industry leaders . . . ”
Consequently much of his life these days is spent on a plane, travelling regularly downunder to meet Zespri growers, staff and directors and attend industry events, when he’s not showing his face in the company’s Asia, Europe and North America markets.
Mathieson, who at the time of talking to the Weekend Herald had just marked his 17th annual season with Zespri, is charged with making sure the near-monopoly export marketer achieves its goal of $4.5 billion sales by 2025.
Sounds like it’ll be a doddle. Mathieson says sales revenue — excluding licence sales income — is forecast to pass $3b this financial year, and, if all goes according to plan, the big goal could be reached before 2025.
The 45-year-old, who is fluent in Japanese — spoken and written — says remaining in Singapore, base for Zespri’s global sales and marketing division which he headed prior to becoming chief executive, makes sense for three reasons.
One, it provides easy access to Zespri’s 21 global offices. Two, Singapore has become the hub for many of the world’s leading FMCG companies and therefore employee talent, and three, “it’s a good place to be based, it’s got a nice mix of east and west”.
“It’s become a hub for our consumer research . . . [it has] different types of consumers we can tap into to look at, for example, whether our new varieties are going to be successful or not, whether our new pack types will work.”
Mathieson’s marketing leadership stints for Zespri in Tokyo, South Korea, Belgium and Singapore means his Japanese wife and their three children, aged 8 to 14, have become “a resilient bunch”.
With the children all born in different countries overseas, “it’s quite an international team”, he says.
“They’ve had to move every few years with new cultures, new friends, new things to learn. I think they’ve enjoyed that but as a family unit we’ve become stronger and learned to rely on each other because we’re moving all the time.”
The family holidays in New Zealand twice a year, with Christmas spent with Mathieson’s parents and family on Auckland’s North Shore, where he was born and bred.
Mathieson began his career with Zespri in Japan in early 2003. He had already been there five years, working in marketing and communications roles for technology corporates Omron and NEC.
From his days studying Japanese and communications back home at AUT, he had been keen for a job involving exporting New Zealand product and was ready to go home to chase the dream.
“I met a Zespri employee in Tokyo and they said, ‘Don’t go back to New Zealand, use all your experience so far to help Zespri here with this magic fruit’.”
The only Zespri job available was on the Japanese operations team which was expanding its base.
Next he was off to South Korea as Zespri’s marketing manager, building a team, before the call came to set up the company’s first office in Singapore as a platform for expansion in South East Asia.
Next Mathieson was made vicepresident of global sales and marketing, a job based in Belgium. Then it was back to Japan as president of global sales and marketing, followed by an appointment to lead an initiative to build a centre of excellence hub in Singapore for Zespri’s 21 global markets.
Today that hub employs 50 of Zespri’s more than 450 overseas staff.
Mathieson’s Japanese language skills are a byproduct of his youthful yearning to export a New Zealand product to the world.
When he was a student, Japanese, not Mandarin, was the language to learn. It’s a tough language to master by anyone’s measure — especially in New Zealand with few people to practise on — so the younger Mathieson got serious.
“I made sure I built relationships with Japanese students studying here, and to immerse myself in the reading and writing of it. I went through a period of three years where my whole bedroom was covered wall to ceiling in Japanese characters.
“I’d wake up and see the characters and go back to sleep and dream in Japanese. I think when you start dreaming in a foreign language you know you are making real progress.”
But it wasn’t until he attended Tokyo’s historic Waseda University on a year-long Nissan NZ scholarship and later worked for the Japanese tech companies that he became proficient enough to converse at business level.
Mathieson was also able to indulge his passion for rugby — he started playing at 5 — at Waseda, well-known for the game. He wasn’t eligible to represent the university because he was only a 12-month student but he went on its training camps and played for Japanese clubs until he was 33.
Japan taught Mathieson business philosophies he says he’s found valuable as a chief executive.
“One was making sure you’ve got everyone on the same page. That takes time. Sometimes we can be a bit critical of the Japanese for being a bit slow in decision-making but they do take an enormous amount of time to make sure key people are involved in a decision.
“They have a word for it — nemawashi — which means going round the roots before you make a decision. It’s something that’s really stuck with me — get their input, their contribution before you take the next step.”
Another lesson was in the Japanese strict adherence to schedules and timelines.
“Trains work, everything works on time with absolute precision and focus on detail. That’s always stuck with me and helped in my career.” So he’s never late?
“I try not to be and try to lead in that way. We’re all busy and we don’t want to waste people’s time.”
A third key learning was in the “incredible passion” Japanese bring to any commitment.
Mathieson says you only need to look at the underdog Japanese team’s heroic performance at last year’s Rugby World Cup.
“That is a good story to illustrate what Japanese do in companies all across Japan.”
Some might say Mathieson’s had a sweet ride as Zespri’s chief executive compared to his predecessors.
He came in after the industry’s spectacular recovery from the Psa disease that devastated North Island orchards from 2010 during Lain Jaeger’s tenure, and he hasn’t had to deal with howls of industry opposition to Zespri’s legislatively protected near-monopoly status, once led by former Turners & Growers chairman Tony Gibbs.
But what Mathieson has overseen — and surely can claim some credit for while previously head of global sales and marketing — is a big expansion in Zespri’s market spread and associated leaps in sales revenue and earnings.
Last year the company posted record revenue of $3.14b from global sales and SunGold fruit licence releases, a lift of 26 per cent on the previous year.
Net profit after tax increased to $179.8 million from $101.8m in the 2017-18 season. A total 167.2 million trays of kiwifruit sold in 2018-19, up 21 per cent on the 138.6 million trays sold in the previous season.
Total fruit and service payments to New Zealand growers were up 24 per cent to $1.82b, while average orchard gate returns to growers increased by 6 per cent to $63,622/ha for green kiwifruit and by 28 per cent to $145,991/ha for SunGold fruit.
(Zespri also contracts growers in the Northern Hemisphere to fill New
Zealand seasonal growing gaps.) For context, in 2015-16, revenue was $1.9b.
Mathieson suggests sales revenue alone for the 2019-20 season from New Zealand and Northern Hemisphere-produced fruit should exceed $3b.
Much of the fattening of Zespri’s balance sheet can be attributed to the market success of its SunGold variety, a sweet, smooth-coated fruit that was developed to replace the gold variety that fared so badly in the Psa attack.
Last year SunGold export volumes (74m trays) exceeded green fruit trays (73m) for the first time.
The gold fruit is in demand in Asia, Europe and is developing a strong fan base in North America. Green fruit is still in demand, particularly in Europe and Japan, says Mathieson, but volumes are expected to level off and maybe decline slightly.
Whenthe Weekend Herald met Mathieson, he had just returned from meetings with growers to explain the company’s five and 10-year plans.
He told them the market was signalling demand for SunGold and green volumes “were probably about right at 68 to 70 million trays”.
“If we get a lot more it will have an impact on value. Every year we’ve signalled to the industry we’re going to grow 700 hectares of conventional and 50 hectares of organic fruit and every year licence that [amount] out. Every year it’s been oversubscribed for that licence [amount] and we expect that to continue and then moderate downwards.
“At the moment there’s very, very strong demand [for licences]. We expect some green growers will be thinking about moving some of their green to gold.”
Last year the median price for SunGold budwood for planting was $290,000/ha — in 2018 it was $265,108/ha. Growers set the price by bidding in a closed tender.
Zespri recently announced it would commercialise its new red and sweet green varieties after successful consumer trials last year.
Mathieson won’t rise to the bait about having a smoother ride than Jaeger — or that Zespri is effectively a monopoly.
He says it’s a “monopsopy” in that there’s room in the regulations for competition.
However he concedes it’s limited — about three million trays are exported by independents, against Zespri’s 147m New Zealand trays last year.
He notes that these days Zespri works with its old foe, Turners & Growers — at least in Thailand where T&G handles sales and marketing for Zespri.
A recent vote among growers showed they still strongly supported Zespri’s legislative protection and support from the Government is also strong, he says.
And with the kiwifruit industry being “very interdependent”, there is fierce competition between postharvest operators who get the fruit from orchard to wharf, and to a lesser degree, between growers themselves.
As for what he’s brought to the chief executive’s desk, Mathieson will only say what he’s most proud of is “bringing in great people”.
Zespri’s tremendous growth, he says, is driven by having a great product that has survived Psa and thrived despite it, backed by strong teams who have driven demand ahead of supply.
“How we’ve been able to do that is by developing a very strong culture and purpose, built on very strong values. I’ve been focused on that, for sure.
“This organisation has a clear mission, which is to continue to drive sustainable returns for our industry and growers and to deliver this magic fruit to more and more consumers around the world.
“But we . . . have a bigger purpose and that’s to help communities and the environment do better as our industry continues to grow.” Challenges? He has a few.
Psa is indeed challenging, but so is the marketplace.
“We have more competition for our fruit today than ever before — not just in kiwifruit varieties but other fruits. Kiwifruit is still only 1.5 per cent of total fresh fruit consumption. We have a lot of opportunities but also a lot of challenges.”
Another is protecting Zespri’s intellectual property rights against counterfeiting of the brand and fruit origin fraud — particularly in China.
“It’s something we [deal with] daily. We’ve become a very valuable fruit brand in many markets . . .
“We get very strong support [in this area] from the New Zealand Government and that flows through to governments in markets we deal in. Also from local authorities which see IP protection as important for their countries.”
The one that keeps him awake at night though is biosecurity risk.
“We’ve got to be focused on that continually with the right systems and processes, but it’s always a niggle at the back of mind.”
A significant fruit fly discovery in the Bay of Plenty would be “catastrophic”.
“But every year as the risk increases, the [biosecurity] platform is strengthening as well. We believe we are in the best position we’ve ever been for protecting this industry.
“This is horticulture. We will see something come up and deal with it.”