23 February 2018
Ready for a story that will make you green with envy? Horticulture has been slow in positioning their products as premium brands. Not so for cooperative corporate Zespri… Being the world’s largest marketer in kiwifruit this company has successfully made differentiation their weapon of choice to fight price wars in commodity markets.
Departing Zespri CEO Lain Jager explains to FCI the company’s basis for differentiation is quality centered around five key elements: traceability, quality grade, food safety, social responsibility and sustainability. Working with 3700 growers around the world, it is clear that effectively managing supplier quality and compliance are the top issues at Zespri.
We ask Jager about the characteristics of the Zespri brand. He tells us that above all it is important to be clear about the basis of competition. “Is the market a commodity market where businesses are competing on a commodity basis? If so factors such as scale, cost to serve, proximity to market and cost of capital become important. In fact most fresh markets are commodity markets and there is nothing wrong with that.
“The other way to compete is to seek to differentiate your product so that customers and consumers will see that your product is different from other products and can therefore be positioned at a premium, consistent with its added value to the consumer.”
Jager continues: “Key questions are ‘what is the basis of differentiation?’ and ‘is that differentiation sustainable?’ Once these fundamental questions have been answered, the rest is implementation. Our basis of differentiation is quality. For kiwifruit that means growing higher dry matter kiwifruit than our competitors – we realize this by paying kiwifruit farmers for the dry matter in the fruit. We then deliver this superior offering with consistent quality through a well-managed supply chain, which is all about harvest and packing management and cool chain control. As well as partnering with leading distributors and retailers to deliver our product to consumers in optimal formats.”
Strong brand positioning
Strong brand design and positioning developed through rigorous research, consistent implementation across markets over time, an unrelenting focus on the consumer value proposition compared with other fruit offerings and strong quality systems supported by integrated feedback and continuous improvement practices are essential components of the company’s brand strategy, too.
“If I had to sum it up, I would say first comes the understanding of what is important to the consumer, then comes the product development and focus on consistent delivery and then our relationship with the consumer through our products. That’s broader than just product attributes such as consistent quality and food safety and extends to what our product embodies through health, vitality and lifestyle,” Jager adds.
Trade and consumer brand
According to Jager Zespri is both a trade and consumer brand but it means different things to different audiences. “For the trade this is about long term partnerships, growth, consistent quality and strong service levels supported by our fantastic people around the world. For consumers it’s about fantastic tasting, fruit that is part of a healthy, vibrant life style.”
Zespri has worked out a comprehensive quality system for every stage of the production process: cultivation, management, storage and transport. Working with nearly 3,700 growers around the world, it is clear that effectively managing supplier quality and compliance are top issues.
But how can you manage this worldwide? Jager: “You need a consistent global vision implemented locally by local experts. Not only Zespri people on the ground in 27 countries with offices in 22 countries, but extending this vision to our trade partners on a global scale. Comprehensive supply chain management is also important from orchard – inputs, maturity testing – to packhouse to ship to market.”
The Zespri quality system is centered around five key elements: sustainability, traceability, social responsibility, quality grade and food safety. “Traceability, quality grade and food safety are vitally important and we have very well-developed systems to support these elements in our integrated quality system. The areas of social responsibility and sustainability are the most challenging currently because we know we can do better,” Jager frankly admits.
Jager tells FCI Zespri is both product-supply-driven and consumer demand-driven: “Product- supply-driven in the sense that part of our job is to sell the crop that our growers produce every year. Demand-driven in the sense that we are investing strongly to develop new kiwifruit cultivars with superior attributes, and that our whole quality system is aligned to grow and deliver the best quality kiwifruit possible to consumers 12 months of the year.”
Synergy floral business
What kind of similarities and possible synergy does Jager see with the floral business? “Of course we are envious of the floral business – you have such beautiful, vibrant, products which bring color and joy to consumers’ lives. We know that in some ways the floral business is tougher than the kiwi business, because most of your products have a very short life and this means you are even more susceptible than we are to demand fluctuations and have little room for supply chain error. We have much to learn from the floral business.”