Bokeun Kang, Zespri’s regional market manager for Korea, has some bold targets for a kiwifruit market that is already punching above its weight in the company’s global portfolio, claiming fourth spot for sales last year behind Spain.
This has come on the back of double-digit compounding growth over the past decade, peaking at 20% in the 2022 season as Koreans’ appetite for SunGold kiwifruit continues to grow.
The sales of 12 million trays of kiwifruit last season consisted of about two-thirds SunGold and came in a crowded fresh fruit market that ranks kiwifruit at ninth, with consumers on average making 2.1 purchases in a year.
“Purchasing penetration is only about 30% , compared to bananas at 90%, and we can see significant potential in encouraging existing consumers to simply buy more frequently during the year,” Kang said.
The growth phase has coincided with the gradual rollback of the stringent 45% tariff that was on kiwifruit before the New Zealand-Korea free trade agreement was signed in 2015.
At the time the tariff was recognised as one of the most punishing in the world, costing NZ growers the equivalent of about $8000 each every year.
The tariff was phased out entirely by 2020 and Zespri has progressively bought the price of the fruit down, making it more affordable.
But Kang said it is not just re-pricing that has sharpened interest in kiwifruit, with a concerted, focused, marketing campaign aiming to build on Koreans’ affinity for fresh fruit in a country that grows 80% of its own produce.
He said the growth is also “thanks to our heavy investment in the Zespri brand, and the quality that implies we have given consumers confidence they will be getting a consistent product, something most other produce has not really been able to achieve, given its seasonality”.
With the new kiwifruit selling season just kicking off, he openly acknowledged the quality challenges the past season bought – something shared by most other Zespri markets – but said consumer confidence in the brand has been retained despite that.
He acknowledged the challenge of retaining the value proposition compared to price when NZ’s supply is looking variable, with a drop this year followed by a significant surge predicted next year.
Despite NZ’s supply constraints for this season, Kang remains committed to the bold goal of hitting a target of $300 million in sales for 2025.
But he is also going a step further, with United States produce giant Dole firmly in his sights. With its sales of NZ$370 million a year in Korea, Kang would like to knock it off its perch by 2027 to become Korea’s largest fruit marketer.
Gaining and securing valuable year-round shelf space to achieve that is supported by Korea’s home-grown Zespri fruit, much of which is produced on the southern island of Jeju.
The fruit has been grown in the country since 2004 through Zespri’s global supply programme, and the company has 200 canopy hectares and is initiating new plantings on the mainland for an operation now generating 500,000 trays. It is on target to reach 800,000 trays this year and 1 million next.
A battle for purchase platforms is also raging in Korea at present, as more traditional retail giants like Lotte and E Mart start to find themselves threatened by online ecommerce retailers thriving in the tech-savvy economy.
Overall Zespri’s sales are 40% retail, 50% wholesale and 10% on ecommerce platforms. As in China, ecommerce platforms surged over the covid outbreak, almost doubling from only a 6% share in 2020 to 10% now, and continuing to grow.
Because of consumers’ desire to “see, touch, smell” fresh produce, it is traditionally only about 9% of sales online.
But Kang said thanks to Zespri’s investment in quality consistency, achieved with even greater effort last season, it double that.
“For consumers, that Zespri brand is a guarantee the fruit they are ordering does not need to be seen first-hand to be bought.”
The ecommerce business is being boosted by collaborative work with YouTube influencers and aligning with the Naver online portal.
Sometimes known as the “Korean Google”, Naver also makes use of paid links aimed at boosting business to consumer contact.
Linked with YouTube real-time live shopping shows, it allows consumers to ask questions in real time and make purchases in a medium that is rapidly making traditional daytime retail TV channels redundant.
Despite Korea slipping in population size, down 128,000 in the past year, and rapidly aging, Kang said there is significant opportunity to increase demand from young families, currently 18% of the market.
Appeal is aided by the “Kiwi Brothers” animated kiwifruit developed three years ago; it is still popular with young audiences in both Japan and Korea.
Key account manager Jusu Jung said the aim is to achieve the sort of penetration bananas have, at 90%-plus.
“And we also see lessons to learn from the likes of pineapples where inconvenience in eating has been overcome by retailing without the leaves and spines.
“With our Fresh Cut project now underway, we aim to learn from pineapples and are working on a retailed fruit that has the skin removed and is pre-sliced for convenience, sold in sustainable packaging,” he said.
-Richard Rennie travelled to South Korea with funding from the Asia New Zealand Foundation.