The ways in which consumers are shopping across the globe are having a profound impact on how the whole production supply chain operates. That was the message from three leading international market companies, speaking a presentation at last week's Hort Connections in Adelaide.
Michael Franks from New Zealand produce company Seeka says the migrants to his country are bringing with them a wealth of knowledge and experience. He told the conference out of the 71,000 new residents to his country, the majority are from Asia, where the cities are denser than in New Zealand. He says with major centres constantly expanding, local consumers are changing the way they shop, meaning growers, wholesalers and retailers must also adapt.
"In Japan, there is a microstore within walking distance of most department stores," Mr Franks said. "That microstore will be restocked between six to eight times a day from a revolving van. That revolving van never receives an order from the shop. Quite simply, the systems are so sophisticated that an analyst is looking at what is sold, when it is being sold, what price it is being sold at, and they automatically restock that store from the revolving van, just before it happens or just after it happens."
In China, Mr Franks adds that people are cutting down on time on the shop floor.
"If you want to buy your produce online, you go to a specific store, so if you wanted to buy kiwifruit, for example, you'd go to an online trader for kiwifruit and buy it and it will be delivered to the microstore right down the road from where you live. That is one of the new demographic trends that will change us."
Also speaking at the conference, was John Oxford from L&M Companies. He has also noticed the rise of the microstore in North America, adding that as people move into smaller apartments in crowded cities, fridge sizes are getting smaller, so consumers are shopping more often than the traditional once a week 'big shop'. But it is online where he says the biggest area for sales growth could be seen in the near future.
"In the U.S, Nielsen (The Nielsen Company) predicts that in 2025 online grocery shopping could represent 20 per cent, that's $100billion in annual consumer sales," Mr Oxford said. "But where does produce fit into that? According to Rabobank, fresh fruits and vegetables are quickly joining the ranks of the most profitable and rapidly growing segments of online shopping."
L&M is eagerly waiting to see how the battle of the supermarkets in the United States pans out. European supermarket Lidl is entering the American market in direct competition to Aldi, and expects to have 100 stores by 2018. Mr Oxford says they are focusing on delivering to a higher end of the consumer market than in Europe. But it will not only be a two-horse race, with American companies Wegmans and Publix also adding to the competition, especially in the company's home state of North Carolina.
"Everybody really is going to be competing for the consumer, which I think for the consumer it's a really great thing, but as a grower I am a bit concerned about what the price competition is going to translate to from our stand point," Mr Oxford said. "It remains to be seen whether this translates to increased consumption of our products, and whether all will be successful. Only time will tell."
While for other companies, taking advantage of new global markets and opportunities, beyond the domestic market has been the key to expansion and economic growth. One company who is already proved that is the Costa Group, who already has a major genetic footing in Morocco and China in terms of blueberry production. Berry General Manager Peter McPherson told the conference one of the major factors to the company's success is that it is ‘market driven’; so rather than growing with the hope of selling, it first knows its market.
Costa has licences with third party growers in Chile, Peru, Mexico, Spain, Portugal, and both sides of the United States. It also has joint ventures in Morocco and China, with hopes of another in Africa. Mr McPherson says the company's location means that Europe is at its beckoning.
"It comes online earlier than Spain, and the quality, liability and premiums we get out of our genetics is second to none," he said. "Europe has been asleep when it comes to blueberry consumption, but it is now just waking up. Our season is six weeks ahead of the main Spanish growing area, and we think that we can make that much earlier by going to parts of Eastern Africa. (Transport times) are two days to Europe, two and a half to UK and three days up to Russia. So it's a perfect fit."
Catering to Europe was one of the key drivers of the Morocco partnership, and in three years Costa forecasts it will have in excess of 500 hectares of blueberries, and future plans are to supply more than 15,000 tonnes in the January to June season. In China it is just as promising. It is recording 25-30 per cent premiums against product from Chile and Peru, as well as local berries, and Mr McPherson forecasts significant growth, saying by 2023 it will have more than 1,000 hectares. But he says getting the company in this position is not something that happened overnight.
"You have to have critical mass behind you, and you have go to the R&D," Mr McPherson said. "There are a lot of people out there who want to release a variety every year on a whim and no evidence to back it up, and that gives a bad name to everyone in the industry, so it is about ensuring that what you've got to offer to the growing community meets consumer expectations."
Another trend Seeka has noticed as becoming more common is the race for new licencing for varietals. He noted the most recent tender for the right to grow the Zespri SunGold product went for $254,000 for one hectare, netting the company $98million. Mr Franks says his company has had to take steps to maintain a fair share of the value of products brought to the marketplace.
"The problem you have as a grower is that you take all the risk," he said. "They give you the variety, and you cut it into the orchard but you are taking all the risk. They want to take a percentage of sales. We haven't typically entered into those arrangements. What we have done is enter a deal with the variety owner that says if we don't make any money, we don't pay you any money."