Saturday, December 2, 2023

Supply chains deliver gains for hort growers  

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Zespri approach sets sector up to meet the needs of a more conscious consumer market.
Lincoln’s Dr Caroline Saunders says Zespri is an example of a food company that has undertaken to fully understand its customers’ needs and desires, and work back down the supply chain to deliver a return on that premium to its growers.
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Horticulture’s ability to deliver a sustainably produced product with a strong story behind it should put the sector in a good position to meet the needs of a more conscious consumer market.

In the final Our Land and Water webinar series on leveraging a “green premium” from product claims and delivering them back to growers and farmers, the horticultural sector’s opportunities were underscored by the successes of Zespri and the Boring Oat Milk company.

Dr Caroline Saunders, head of Lincoln University’s Agribusiness and Economics Research Unit, said New Zealand producers have made some headway in the past decade in advancing a premium for their products, but it is not necessarily consistent across all product types.

She cited Zespri as one company that has successfully recognised the need to build its premium on consumer-driven values.

Carol Ward, Zespri’s global sustainability officer, said this has been founded on understanding consumers’ expectations and responsibility for the fruit’s taste and quality. An ability to also communicate the health benefits is critical for capturing that premium.

“People want to know their fruit has been produced in a way that cares for the environment, that looks after its workers and their welfare, and is a brand that has purpose. It is through that wider communication of benefits we have been able to hold our premium in the markets and capture that value back for NZ kiwifruit producers.”

While acknowledging that rising food prices are putting pressure on consumers’ purses, Ward said Zespri fruit is benefitting from something of a “lipstick effect”. 

“You may go without a holiday, a new car, or some new clothes, but actually eating is something everyone does every day.”

She said the “lipstick effect” is the opportunity to treat yourself to something you do every day, like putting on lipstick, even if you do not have the new designer  handbag to go with it.

“So lower-cost items can still be part of that purchase basket. But it is tough, with the cost of living.”

Saunders said Zespri’s efforts around its “Taste Zespri” programme highlight its awareness of consumers’ values.

“The fruit into Japan had not been selling well because the sugar content was low, and it was not as tasty as they would like.

“They took that back to producers, and producers had to reduce their yield, and they pay a premium to producers for that. The whole chain picked up that value and it meant that market revived.”

For Boring Oat Milk founder Morgan Maw, the challenge has been to align her processing in NZ – a first for the sector – with processors who share her and her consumers’ values about sustainability and plant-based production.

“You need to find people whose values are aligned with your own because when push comes to shove, and you have to make financial decisions in a business with pressing costs, if you are not coming from the same place you are going to disagree.”

More recently this has involved aligning more with farmers who may not be growing oats, but who may be interested in the crop’s value as a nitrate soaker with relevance as an option for planting on some dairy farmland area.

As a crop, oats emit 93% less greenhouse gases than dairying, and the challenge for Maw has been to illustrate to dairy farmers that oats may not be a silver-bullet solution, but are another tool available to them.

Saunders said despite research showing some consumers searched out shorter supply chains and more local products during and after the covid pandemic, her 2006 Food Miles report showed food produced in NZ did considerably better in emissions terms than food produced in UK.

“We should really connect with those consumers in those markets, and almost market ourselves as local. Show that shipping it across the world is not necessarily worse for the environment than it being produced where it is.”

The full webinar can be viewed here

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