SEEKING SUPPORT FOR ZGS EXPANSION
Following initial consultation with the industry earlier this year, Zespri has now confirmed it will be seeking New Zealand grower approval for expansion of the Zespri Global Supply (ZGS) business in a Producer Vote concluding at this year’s Zespri Annual Meeting on Wednesday 24 August.
As noted during our initial consultation, the current approval of 5,000 hectares for Zespri SunGold Kiwifruit is not going to produce sufficient fruit to allow Zespri to achieve 12-month supply in key markets. By 2031, the current approved hectares would meet less than 30 percent of the demand in the New Zealand off-season. The proposed expansion of up to 10,000 additional hectares of Zespri SunGold Kiwifruit would allow us to meet up to 90 percent of that demand – achieving 12-month supply in key markets.
What are we asking for?
Grower feedback to date has indicated there is a support for long term planning and growers weren’t keen to undertake regular producer votes. However, growers also told us that keeping demand ahead of supply is very important. We listened to the suggestions that as ZGS supply grows, Zespri needs to regularly check that the planting plan is still appropriate to keep demand ahead of supply. To address this feedback, we will be asking growers to support planting of up to an additional 10,000 hectares of Zespri SunGold Kiwifruit by 31 March 2031 over two phases:
- The first phase allows for up to 6,000 additional hectares to be planted by 31 March 2028
- The second phase allows for up to an additional 4,000 hectares to be planted following an annual check that demand is at least 10 million trays above supply.
This is an extension of the existing approval and does not allow planting in either China or Chile. The approval will expire in 2031 and further planting after this date would require another producer vote. We will also be providing annual reports to keep New Zealand growers informed. We are also asking New Zealand growers to support an extension of the current new variety approval from 1,000 hectares to 2,000 hectares to allow for plantings of varieties that are not yet commercialised in ZGS, including Zespri RubyRed Kiwifruit. We are not asking for an extension of the approval for Hayward procurement as the existing approval of 20 million trays will be sufficient.
Why do we want to expand ZGS?
ZGS was set up over 20 years ago to provide fruit that could be sold under the Zespri brand when New Zealand grown fruit was not available. It has taken some time to grow the ZGS business and it has experienced significant disruption through PSA and the need to change to the Zespri SunGold Kiwifruit variety. In 2021, we achieved 12-month supply of Hayward in some key markets and we were able to supply Zespri SunGold Kiwifruit for up to 21 weeks in Europe in some markets. In the near future, we will have planted the 5,000 hectares of Zespri SunGold Kiwifruit allowed under the current approval, but it will not generate enough fruit to fill the gap during the New Zealand off-season. We need to expand planting of Zespri SunGold Kiwifruit to ensure we have enough fruit to meet demand for the full 12-months, helping deliver strong returns to New Zealand growers and communities.
Why is 12-month supply important?
The purpose of 12-month supply is to have high quality Zespri branded kiwifruit available to customers all year round. While we have a loyal following during the New Zealand fruit supply season, if our consumers can no longer buy Zespri fruit when the New Zealand season ends, they are likely to switch to buying something else – either another type of fruit or another brand of kiwifruit which is available. When the New Zealand fruit season comes around again, we have to convince our retailers to stock Zespri Kiwifruit and convince our consumers to buy Zespri Kiwifruit again.
THE RESOLUTIONS WE ARE ASKING OUR GROWERS TO SUPPORT
Resolution 1: Increase in planted hectares of Zespri SunGold Kiwifruit in overseas countries by up to 10,000 additional hectares
That producers agree to extending Zespri’s current 5,000 hectare approval for commercial planting of Zespri SunGold Kiwifruit in overseas countries (excluding Chile and China) to a maximum of 15,000 hectares, with the following conditions:
- Up to 6,000 additional hectares (11,000 total hectares) may be planted by 31 March 2028, progress on which will be reported to industry on an annual basis from 31 March 2023;
- Up to 4,000 additional hectares (15,000 total hectares) may be planted between 1 April 2028 and 31 March 2031, subject to the Zespri Board Producer Vote 2022 SEEKING SUPPORT FOR ZGS EXPANSION (in consultation with NZKGI) being satisfied and reporting to industry on an annual basis from 31 March 2028 that demand for ZGS SunGold production exceeds anticipated supply by at least 10 million trays.
Resolution 2: Increase in planted hectares of any new kiwifruit variety in overseas countries by up to 1,000 additional hectares
That producers agree to extending Zespri’s current approval for commercial planting of any new kiwifruit variety not currently licensed for commercial production in overseas countries (excluding Chile and China) from 1,000 hectares to a maximum of 2,000 hectares.
WHAT ARE THE BENEFITS?
The key benefits of the 12-month supply strategy include:
- Building and maintaining customer loyalty
- Holding shelf space for Zespri Kiwifruit and the Zespri brand 12-months a year
- Targeting a consistent consumer experience 12 months of the year to preserve consumer demand for New Zealand kiwifruit
Driving stable and consistent relationships with retailers to support long term commitment to Zespri and New Zealand grown kiwifruit. Other kiwifruit brands also have 12-month supply strategies and are looking to secure shelf-space and loyalty for their own brand. If we don’t fill the shelves with Zespri Kiwifruit, it will be filled by someone else which makes it harder to get Zespri fruit back on the shelves during the New Zealand season.
WHAT ARE THE RISKS?
The risks include:
- Protection of the brand — we have 20 years of experience and established systems to ensure that the fruit being produced meets the same brand promise as New Zealand produced fruit
- Protection of PVR — we operate in countries that respect PVR law and work closely with our partners to make sure our varieties and our intellectual property are protected
- Managing the season-cross over — achieving a well-managed transition between New Zealand and ZGS fruit is key to achieving 12-month supply. The key principle is that in achieving the transition between seasons, New Zealand fruit sales are prioritised. The season cross-over will be monitored and reported to Industry.
More information on risks will be made available to growers prior to the vote on the website and the information brochure.