Chilean fruit lacks branding, says Rabobank Asia rep

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Chilean fruit lacks branding, says Rabobank Asia rep

Chilean fruit exports to Hong Kong and the Chinese mainland grew 119% between 2008-09 and 2012-13, while for some produce items like cherries, China has become the biggest buyer. But for Paul Chen, who heads up Rabobank Asia's food and agribusiness research and advisory division, the South American nation is not approaching the market in the right way. This will have consequences as China widens its doors to more fruit suppliers in the future.

Chen says Chile's pricing is off, especially when considering its shortcomings in branding compared to the likes of New Zealand's Zespri and California's Sunkist. Paul Chen small

"Branding means money, and that's a big opportunity in China," Chen tells

To illustrate his point, Chen pulls out a picture of how apple prices from different sources vary in the same Shanghai supermarket. Imported Chilean apples cost the same as China's Shandong apples at CNY28 (US$4.80) per 500g, while an apple from New Zealand costs CNY15 (US$2.47).

He points out that while the Chilean fruits in the picture have a good appearance, there are not stickers or wrapping.

"There's no justification to charge more when it looks like this. Where’s the packaging, where's the display, and where's the story behind it? There is nothing," he says.

"This [Shandong apple] maybe even looks better. At least it has a name, and a little wrapping. But for Chilean apples, they don't even specify it's from Chile. Nothing is special. It doesn't stand out from afar. ”

"You need to make a cut somewhere - in New Zealand, they started with the Zespri kiwifruit. Chilean fruits are also more expensive, and I'm sure there's a way to have a story around it."

This "story" could be a picture of a Chilean apple grower with an explanation of how he grows the fruit.

"I think there's a story about fruits, especially expensive fruits. I'm not talking about bananas, but kiwifruit, avocados, and cherries, because they're unknown or less known, so maybe there are some nutrition values, and maybe there could be a little bit more emotional engagement."

Chen stresses the new Chinese generation marks the end of an era when consumers would buy fruits because they were cheap.

"I didn’t buy the cheap bananas or the cheap Shandong apples, and I consciously made a decision to buy Chilean cherries. But what is Chile doing to engage with me to consume them? Nothing."

Chen believes the root of Chile's branding problem lies in its self-position as a pure exporter.

"That’s what you get when you use a distributor. A distributor is there to move your fruits; it's not there to tell a story. Chilean companies think of themselves just as fruit exporters and all they care about is volume. That is wrong."

When it comes to price, Chen argues that Chilean companies are not differentiating their products sold in the market.

"There are different ways to sell in China, different price points. Depending on the distribution point where it's sold, you can command different prices. In a mid-tier supermarket and a more high-end one in Shanghai, the competition is totally different. But Chilean exporters are not doing it right now.

"Also the point is, if I can get the fruit right, packaged correctly, I'm sure at a second, third or even fourth tier city, people will want to eat cherries even at an average or high price. They've never tried it before."

"Look for opportunities, and it’s not only in Shanghai or Beijing."

The researcher also emphasizes that Chile has not been active enough in exporting its know-how.

"Transportation, packaging, growing, everything associated with fruits, the whole value chain of a commodity, is money. Even the cold chain is money.

"Chile can use and sell this knowledge in China to monetize it. But that's not happening."

A call to travel

While most Chileans clearly understand the sheer size of the Chinese market and the opportunities it presents, Chen argues that most know very little about the country they are exporting to.

"Harbin has 10 million people, but how many Chileans have been to Harbin? And how many Chileans go to San Francisco, despite a much smaller population in comparison? And there’s more money to be made in Harbin.

Chen thinks Chile's lack of understanding comes from the lack of its physical presence in China, or in Asia in general.

"Chile has won a very developed wing in the Americas because it sells a lot of products, food and fruits to the US. And Asia is the second wing it can grow. Geographic distance is not a big issue today. New York is not close either, but the Chileans are there."

He adds that Chile still has a lot of room to grow in the market, especially as the amount of apples and grapes it sells only represents 1% of Chinese consumption of those fruits.

To capitalize on these possibilities, Chen urges grower association Fedefruta to set up shop in China.

"Fedefruta needs to go to China. Long term -10 years, 20 years - they need to go. Export is a beginning strategy, but when is it ending? If Fedefruta sets up its Shanghai office, or a Beijing office, then they can do a little bit more wrapping, and they will know what's happening in the market.”

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