While T&G Global experienced improved trading in Asia and Australia, strong results in the Pacific Islands and a positive performance in the US market, the company says its financial performance this year will be impacted by a difficult growing season and market conditions at home in New Zealand, largely due to the weather.
"It was a challenging operating environment in 2019," CEO Gareth Edgecombe said. "Adverse weather conditions in New Zealand led to harvested apple volumes and apple sizing being smaller than expected. Additionally, Europe had an oversupply which made it difficult to get our apples into the market. However, we are continuing to focus on apples and our premium JAZZ and Envy varieties in future. With growers in both northern and southern hemispheres, we can supply high-quality apples year-round."
Mr Edgecombe added T&G is actively future proofing the business by identifying growing regions, investing in new genetics and diversifying their product offer.
"While we attempt to insulate the business from volatile weather conditions, climate volatility is impacting our growing seasons," he said. "We have invested in one of the most exciting breeding programmes in the world along with NZ Plant & Food Research and IRTA - The Hot Climate Breeding Programme. The programme gives us exclusive rights to commercialise exciting new high quality apple varieties that are being developed to withstand warmer climates. We are looking to have our first commercial varieties launched in the next year or so."
2019 was about setting a clear direction and mobilising the business for future growth. Mr Edgecombe says the business strategy is based on realising the growth potential of the apples business, replicating the vertical business model with other produce, and leveraging and simplifying our existing New Zealand operations.
"We’re also focused on bolstering our international sales teams to be closer to our customers, and that will continue in 2020 as we capitalise on the lucrative Asian markets," he said.
The Auckland -based fresh produce company recently acquired the domestic division of Freshmax NZ (subject to approval by Commerce Commission). Mr Edgecombe says the purchase deal, valued at $30 million, shows a strong commitment to its domestic business, and is in line with the company’s strategy for growth.
"This acquisition demonstrates a strong commitment to our domestic business on which we were founded 122 years ago and signals the importance of having a vibrant home market for our Kiwi-based company with a global footprint,” Mr Edgecombe said. “We are proud to lead the consolidation of these two strong businesses which we believe will be a welcome catalyst of change to drive more efficient and effective ways of working with New Zealand growers and retailers."
The JAZZ apple brand continues to perform strongly in key international markets and T&G Global had success this year with the launch of JAZZ Snackers, a smaller sized apple, in Asia. T&G is focused on expanding JAZZ™ Snackers in China, Thailand, Vietnam, Japan and Hong Kong. The JAZZ™ Snackers brand was launched across key Asian markets and the distribution footprint is being expanded in retail supermarkets such Walmart, Yonghui, Huaguoshan and Hema Fresh in China. In Thailand, the brand is in Tesco stores, Big C and Family Mart.
T&G saw an opportunity in its Asian markets to supercharge sales of smaller apples and create brand growth. Launches have been rolling out since June 2019.
In New Zealand, another JAZZ product was launched in 2019; JAZZ™ Juniors, a bite-sized apple was becoming the new superhero of the lunchbox. The JAZZ™ Juniors campaign featured a family of fun apple characters, Aporo (Maori word for apple), Tuiti (little fruit in Maori) and Jazmin on the brightly coloured packaging. Due to the sales success of the convenient little apples in New Zealand , JAZZ™ Juniors could be appearing on supermarket shelves internationally soon.
T&G also continues to develop new categories – blueberries and grapes. In 2019 T&G partnered with selected growers to expand its position in the grapes category, under the vibrant Orchard Rd brand. T&G Global delivered high-quality grape programs across several export markets, with compelling marketing campaigns that included multiple consumer touchpoints.
"Singapore was one the market where our Orchard Rd grapes soon achieved great acceptance by retailers and shoppers looking for crisp, sweet and tasty seedless varieties," Mr Edgecombe said. "Other key markets included Japan, Thailand, Vietnam, Indonesia to name a few. Orchard Rd grapes are sourced from sunny California USA, during the Northern Hemisphere season and complemented by T&G Southern Hemisphere from Australia and South America to deliver continuous 365 days a year supply. Our plans for 2020 remain strong as we continue to expand our footprint for Orchard Rd grapes around the globe, including Australia and New Zealand. It is attracting new users to the category and appealing to everyone looking to add the goodness of fruit with more colours into their diet.”
It was not just new brands and varieties, with innovation again being a key focus for the business. This year T&G trialled the robotic harvester, using technology created by US company Abundant Robotics. It was used to pick a range of apple varieties including T&G’s proprietary JAZZ™ and Envy™. While it will be some years before all T&G orchards are harvested in this way, this first harvest with Abundant Robotics is an exciting step forward.
The company also purchased two CF105 Tecnofruit apple picking platforms. As well as health and safety benefits of taking pickers off ladders, it helps maximise that value through reduced picking damage and gentler handling of apples from the tree to the bin.
"Picking apples can be very physical work and not everyone has the ability to climb up and down ladders, in hot conditions, carrying a heavy bag,With these new platforms, the job becomes easier and more enjoyable, and happy pickers are generally more productive. The Tecnofruit platforms will be used year-round for picking, pruning, tree training, thinning and block establishment. With higher volumes of quality fruit making it to the packhouse, growers can expect an increase in pack out rates of up to 5 per cent.”
T&G's sustainability journey is another core part of the company's structure, which has been embraced by the people, customers and consumers, according to Mr Edgecombe. Cardboard packaging was introduced to the Beekist® tomato range, removing 100 tonnes of plastic, last year. While, this year it announced that it was investing in a biogas plant in Reporoa, which will transform tomato waste into energy to power up their glasshouses.
"The term Kaitiakitanga, which means respecting our land and people – is very important to us," he said. "Where we can, we are working hard to reduce our impact on the environment. Our Kaitiakitanga strategy is one of T&G’s key strategic pillars and remains top of mind in everything we do. We were delighted to have won a prestigious sustainability award at Countdown’s annual suppliers awards (one of the largest supermarket chains in New Zealand) recently. We were praised for our commitment to sustainability, social, corporate and ethical responsibility along with health and safety."
T&G Global was pleased to announce the sale of their Mt Wellington site in Auckland for $65 million in 2019. The company also sees a strong future for blueberries and promises more announcements about developments in that area early in 2020.