Germany: BayWa plans South American grape JV

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Germany: BayWa plans South American grape JV

German agribusiness and renewable energy company BayWa (DE: BYW) has signaled it plans to enter a joint venture to source Chilean and Peruvian table grapes, likely through its New Zealand-based subsidiary Turners & Growers (NZX: TUR).

Click here for the wrap of Turners & Growers' plans in 2014 with its CEO Alastair Hulbert.

At Fruit Logistica in Berlin, BayWa CEO Klaus Lutz told www.freshfruitportal.com the move was part of a long-term strategy in the business' fruit division, which also included apples and kiwifruit as key growth products.

"These are the most important fruit sectors in which we have invested, and where we want to invest more. Latin America is also crucial for us in the sourcing of grapes," he said.

BayWa CEO Klaus Lutz

BayWa CEO Klaus Lutz

He added the company's table grape sourcing plans also included California for ensuring supply during the Northern Hemisphere season.

During the event, Turners also confirmed on the New Zealand Stock Exchange that it was in discussions for a potential takeover of another New Zealand business, Apollo Apples Limited.

"One of the acquisitions we would like to make will make sure we protect our Braeburn [apple variety] volume because the demand, especially in the European market is still very high," Lutz told www.freshfruitportal.com.

"The specialists and scientists say we need more and more new varieties. That's fine, but for us the market and the consumer are key. If he says 'I would like to  have more Braeburn', we need to deliver Braeburn."

With a declining population in Central Europe, Lutz forecast a natural fall in EU fruit consumption over the next 10-15 years, which is why the company's internationalization strategy toward Asia was key.

"Through acquisitions we now have a gateway to Asia through Turners & Growers and Enza, and for us this is very important. Here I see the growth potential for our company. The potential is Asia, including India, and as BayWa we didn’t have access to these markets before because we were largely a local player, and it's a similar thing in the grain industry as well.

"I would say there is not yet an awareness around that within our [German] farmers’ group, but I think it's necessary.

"If we have a super harvest here and the prices are under pressure, and you have a high demand in China and higher prices there, we should offer our farmers to sell it through us to China, Indonesia or wherever - this is really a future opportunity for our growers here in Germany."

He said there was "no rush" to develop markets like India now, but they would become more relevant over time. However, he highlighted his company's investors were conservative and demanded good dividends, warranting a cautious approach to investments abroad.

"In India you can buy Jazz already in the retailers. We don’t have a branch of course in India but it’s a very interesting market, politically stable, and that's important for BayWa.

"We don’t invest in countries like the Ukraine or Russia; I was criticized for that years ago, but now nobody would like to criticize me for not investing money in facilities in the Ukraine."

He said the company had studied investment opportunities in South Africa, but for political reasons had decided only to source fruit from the country and not invest for the moment.

"South Africa is already a strong market and we source from there, but what we didn’t want to do is invest money directly into South Africa at this point in time, because now that Mandela has passed away, we don’t know if we will have a second Zimbabwe in the future.

"It's the same as in the Ukraine. Sourcing is fine if you can get the commodity out of the country, but to invest at this point in time I think it’s too early. It's not secure.

"I think the African continent is really a future opportunity for us to invest because we must be very careful where."

In terms of the kiwifruit business, Lutz said the focus would be on Turners' proprietary Enza Green, Enza Gold and Enza Red varieties, with sourcing from New Zealand and Italy.

www.freshfruitportal.com

 

 

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