The Inherent Risk to New Zealand’s Brand from Commoditised Food Exports

New Zealand’s agricultural sector has been tasked with doubling food exports over the next decade. NZ Manufacturing business advisor and co-founder of Auckland public relations agency Impact PR Mark Devlin looks at why the drive to grow export volumes should be tempered with an understanding of the risk associated with a disproportionate focus on commoditised food exports.

With around $4 billion in annual revenue from more than 164 million trays of produce, Zespri is the world’s largest producer of green, gold, and now, red kiwifruit.

And with the NZ-EU Free Trade Agreement now in effect, eliminating the 8.8% tariff (around $47 million annually) on kiwifruit exports to Europe, the future for this single-desk seller looks increasingly promising.

The macro lens on this is attractive by any measure but from the consumer perspective how does this manifest at the point of sale?

For an FMCG marketer, foreign supermarkets offer fascinating insights into local retail cultures. Large-scale populations create the right environment for greater diversity and choice.

No matter where in the world you go, however, Zespri kiwifruit is the one ubiquitous constant appearing on supermarket shelves. 

Case in point – during a recent trip to Austria, I visited a local supermarket to explore new food product innovations.

As you can see from the image, there are three different kiwifruit offerings on the shelf.

The first is a paper-wrapped Argentinian brand “Bio-Kiwis”. The second is “Zespri Sungold” and the third is a generic “Budget Kiwi”.

This noticeable contrast between the packaging and price of the South American product and the cellophane-wrapped New Zealand offerings raised questions for me – specifically around the level of control Zespri had over the retail sale and presentation of its produce. 

I approached Zespri about this and they advised their product is shipped in bulk to Europe and from there is repacked according to customer and market needs, following one of the options below:

1. Fruit is sold to customers in bulk and remains as such until it reaches consumers in store (loose fruit)
2. Fruit is repacked into Zespri branded pre-packs, either from Zespri at one of our hubs, or their customers’ facilities. In both cases, Zespri fully controls both the packaging type and brand/design of the packaging
3. Fruit is sold to service providers – which pack the fruit in line with the retailer’s branding. In this instance, Zespri does not control the final packaging type or packaging design.\

I was informed that what I had seen in Austria (considered an emerging market for NZ kiwifruit) fell into the third category, however, this was more the exception as the organisation gains a foothold in this country, and most European retailers are using fully branded Zespri packaging. 

While Zespri has said they are dedicated to improving packaging sustainability in its global channels unfortunately for many Austrians (and other similar markets), this kiwifruit is their only exposure to New Zealand exports – so what message does this send them about us?

Zespri has done an exceptional job at growing our offshore earnings, however, this retail presentation gap underscores the inherent problem with commoditised food exports. When a strategy is centred on clearing larger and larger volumes of products, sometimes this scale will come at the expense of the brand. 

When country of origin labelling shows this product is from New Zealand, this has repercussions for that brand too.

If we circle back to the Government’s objective of doubling our food exports by 2034, we need to consider how this accelerated growth programme can be managed strategically and in line with the image we have invested so heavily in building as a nation.

The reality is that achieving this goal is not going to be possible by simply doubling the amount of fresh produce we send offshore. The sector needs to look at increasing the proportion of added-value products, particularly those that have a high dollar value-to-weight ratio, as we look to mitigate the geographical barriers we face accessing the borders of our largest trading partners.

This is where organisations like the New Zealand Food Innovation Network (NZFIN) come in. 

NZFIN is a Crown-funded applied science and commercialisation collaboration between the government, industry, research and education providers, it is unique as the only Government-supported national innovation network that develops and commercially manufactures added-value food and beverage products to open new consumer markets. 

Food producers and manufacturers bring their concepts and challenges to NZFIN’s team of food scientists, who then develop value-added ingredients, extracts, or consumer products tailored for both domestic and export markets.

The organisation was established in 2010 from the realisation that we need to focus on exporting value-added food and beverage innovations, internationalising New Zealand’s innovation by using our country for pilot scale commercialism of food systems and attracting co-investment from international partners to support its distribution to reach globally significant production volumes.

One of the more interesting fields that NZFIN is working in is the upcycling of waste into new added-value products. It is a similar approach to Fonterra’s historic shift from using whey protein as animal feed to unlocking its nutritional benefits as a functional food for the multi-billion dollar health and sports food industries. 

Fast forward to today and more than 1,000 companies around the country have worked with NZFIN to develop new products to support growing global demand.   

The reality is that innovation is critical to our export growth, and we need to do more to support our food manufacturers of all sizes in accessing these development pathways that enable them to create high-value, market-ready products to meet global needs.