Driving Growth in Organic Demand and Sustainable Production

1



Driving Growth in Organic Demand and Sustainable
Production
Glen Arrowsmith GLOBAL ORGANIC Category
Manager Ronald Vianen Managing Director
Biotropic Holland November, 2009
2
Outline

• Role and Value of Organic to ZESPRI
• Striving for Organic Sales Growth !!!
• Case study Growing Sales in Japan
• European perspective
• Ronald Vianen, Biotropic Holland
• Questions and answers

3
ZESPRI New Zealand Kiwifruit

• Acknowledged global kiwifruit category leader
• Global marketing company - consumer and customer
  focused - NZD 1.4b global revenue
• 100 grower owned
• Leading organic exporter
• 4.1 million trays of GREEN and GOLD ORGANIC
  Kiwifruit and undergoing rapid growth.
• Integrated ZESPRI System
• Focused on research and innovation to deliver the
  future.

4
ORGANICs Value to ZESPRI

• Premium niche in the ZESPRI Kiwifruit Portfolio,
  with growing market opportunities.
• GREEN ORGANIC 4.6 by volume, 5.1 of Net
  Revenue
• 20 Net revenue growth in 2009 to NZD 53m and
  projected to exceed 62m in 2010 (16)
• Fruit integrity - Half the conventional storage
  losses.
• Focused development ground and benchmark for
  sustainable growing practises, leveraged by the
  wider industry.
• Different to mainstream business Partnership,
  autonomous, and strong philosophy of working
  together often leads the thinking.

5
ZESPRI ORGANIC Consumer Value

• ZESPRI(R) Kiwifruit Health, vitality,
  delicious, natural, fun, energy, invigorating,
  sustainable, innovative, fresh, leading, premium
  quality, integrity, consistent, GE free.
• ZESPRI(R) ORGANIC is ZESPRI(R) Plus !!
• All of the health attributes of ZESPRI(R)
  Kiwifruit, delivered from a pure organic
  production system.
• Certified to global bio/organic standards.
• Natural production techniques with no artificial
  inputs.
• Innovative growers committed to environmental
  protection and biodiversity.
• A smart choice

6
75 increase in Certified Organic Production

• Trend toward more sustainable growing practices
• Increased Biological production and certified
  organic

7
ZESPRI ORGANIC Sales Revenue

• 3.8 million trays (13,700 tonnes).
• NZD 54.1 million Net Revenue.

8
Achieving Organic Sales Growth In Japan

9
Consumer Purchase Criteria for Organic Produce
Japan /Asia

• Primary
• Health, Food safety
• Supporting factors / Much lower significance
• Low environmental footprint.
• But must meet trade and retailer expectations on
• Trust and integrity, appearance and quality,
  taste, consistency of supply, mutual
  profitability

10
Growing Organic Sales

• Japan
• NZD 19.4 million Net Revenue, up 42 since 2006.
  
• 5.6 of ZESPRI sales in Japan are organic.
• Rebuilding following market access issues and
  fumigation (destroying organic status).
• Category growth constrained by limited organic
  range
• Optimising distribution in food safety-driven
  Japan supermarket co-operatives
• Mainstream supermarket trials showing promise

11
Identify focused distribution partners and build
genuine long term relationships
12
(No Transcript)
13
Educate trade and retailers about ZESPRI ORGANIC
production. - Showcase the organic philosophy
14
Showcase the stunning New Zealand environment and
resources
15
Promote linkage between retailers, distribution
partners and growers.
16
(No Transcript)
17
(No Transcript)
18
(No Transcript)
19
(No Transcript)
20
(No Transcript)
21
Leverage the ZESPRI brand, offering a certified
organic certified organic choice
22
(No Transcript)
23
(No Transcript)
24
(No Transcript)
25
(No Transcript)
26
Growing Organic Sales

• South East Asia - Singapore, Thailand, Indonesia,
  Philippines, Malaysia., Vietnam
• NZD 990,000 Net Revenue, up 190 from 2008.
• Small volumes but exponential growth phase
• China / Hong Kong
• Market with Organic product in 2009
• Extreme growth through appetite for premium
  products
• Introducing focused distribution
• Taiwan
• Incremental growth but very niche.

27
Asia Growth Strategy

• South Korea
• Incremental growth / Constraints through duty.
• Vast range of organic products but slowing
  growth.
• North America
• NZD 5.1 million Net Revenue, up 62 since 2006.
• Specialized organic distribution driving growth.

28
O R G A N I C S F O R O N E W O R L D
29
A V I E W T O T H E O R G A N I C M A R
K E T I N E U R O P E P A R T I C U L A RLY G
E R M A N Y
by Ronald Vianen
30
B I O T R O P I C
1997 Establishment of BioTropic for import of
organic bananas rom the Dominican
Republic 2000 Import of other organic fruits and
vegetables 2002 BioTropic brand green
processed organic food 2007 Biggest organic
fresh food importer in Germany
31
What is BioTropic doing I

• Import of organic fruits and vegetables
• Distribution market Europe, with focus on
  Germany
• Warehouses and offices in Germany, the
  Netherlands, France and Italy
• Packing stations in Germany and the Netherlands

32
What is BioTropic doing II

• Banana ripening facilities
• Distributor of organic fruits, vegetables and
  processed food Naturkost West
• Organic supermarket Pro Biomarkt

33
P H I L O S O P H Y
Local BioTropic staff
BioTropic distrib. office
Whole- sale
Retail trade
Ultimate customer
Producer
34
Development of organic food sales in Germany
35
Non-organic / organic buyers in Germany
Non-organic buyer Organic buyer
36
Sales of organic products via German supermarkets
37
Development of new organic supermarkets in Germany
38
(No Transcript)
39
C U R R E N T M A R K E T S I T U A T I O N

• Market for organic food is under pressure
• Decreased demand due to economic downturn
• Discount supermarkets skipping organics due to
  high price difference between conventional and
  organic
• Temporary over production

40
(No Transcript)
41
What to do?

• Develop new markets
• Asia
• Eastern european
• countries

• Recuction of
• production cost,
• higher yields

• Dont panic

42
O R G A N I C S F O R O N E W O R L D
43
Organic Outlook ZESPRI Perspective

• Striving for growth through distribution and
  promoting generic organic category growth.
• Category must be consumer lead for a vibrant
  future.
• Likely to remain a premium niche but many of the
  underlying practices are increasingly going
  mainstream.
• Market demand holding the recession, but increase
  price focus and slower growth in many markets.
  
• ZESPRI investing heavily in research and
  innovation to drive the future

44

• Questions?

45
(No Transcript)
46
(No Transcript)