China: More Chilean cherry marketing needed for 2016-17 deal, says GWM

Editor's Choice More News Today's Headline
China: More Chilean cherry marketing needed for 2016-17 deal, says GWM

Chilean cherry growers obtained good returns with a shorter crop this recent season, but next year volumes could surge and they'll have to hit the market for an earlier Chinese New Year.

This is the message from Raymond Jin of Joyvio Golden Wing Mau, who told the recent season went very well despite the shortage of supply, with quality fruit and good returns for growers.

"The timing actually this year was perfect because Chinese New Year was around Feb. 7 and the majority of cherries were arriving before that," Jin said.

"Because the quality of the cherries from seafreight was good overall in December and January, the movement was good and the market was quite warmed up."

To cater to a Chinese market segmented extensively in terms of price according to size, taste and appearance, Jin highlighted the efforts of Curicó-based partner Copefrut to offer more precise grading of its fruit this past campaign.

"Copefrut made quite a big change. They invested in upgrading their facility, they also made a more detailed grading system," he said.

"I saw the process. When the cargo arrives at the reception side they’re already doing a lot inspection and hey’ve already graded the quality according to the brix, the appearance, the firmness, the stem freshness, and all's very strict.

"So they separated their plans into gold 1, class 1, class, so more detail, and we're seeing the market feedback is good for their premium grade."

Raymond Jin of Joyvio Golden Wing Mau

Raymond Jin of Joyvio Golden Wing Mau

He said the Chilean deal was well complemented by Australian and New Zealand cherries, while in the future hopefully Argentina would gain access to the market.

"The Australian and New Zealand cherries are of a much lower volume - the majority are is shipped by air, but their size is usually bigger on average than the Chilean fruit. It’s in the premium space with a much higher price; the comparison to Chilean cherry is much different," Jin said.

But how did the premium grade Chilean cherries hold up to their Australian competition?

"Usually the varieties are different – the Australian premium cherries are mostly dark-colored varieties with the majority on the bigger size, about 28-32 and up, whereas for Chile you've got the darker ones and the lighter, pinker ones," he said.

"This season [for Chile] the size was more on J and SJ, but this season there was not much XL."

The lack of XL-size fruit was complicated for some supermarkets as well, which had pre-sale programs made based on earlier season forecasts before there was a cut in projected volumes; this led to a need to balance retailer needs with the fact the wholesale market was bringing much better prices than the pre-set levels.

Owen Ou of importer Riverking said the overall sentiment was that this past season was a bit of a "rollercoaster".

"At the beginning we all thought the arrivals would be huge, and considering this year Chinese New Year was relatively early, which resulted in a shorter sales window, everyone thought it would be an even more miserable season than 2015," Ou said.

"However as the season went on, people realized that arrivals became less and less. During the seafreight period (mid-January) the total arrivals were greater than 2015 due to concentrated arrivals, but surprisingly thanks to the excellent quality of cherries this year, the market continues to hold with this greater amount.

"They were selling very well, and prices kept climbing up even when the arrivals kept coming into the market. The average price for this season was CNY320-330 (US$49.47-51) per box."

Ou added second and third tier cities could now receive better quality cherries as well thanks to logistical improvements, which will bring opportunities for exporters in the future.

"In addition, in first tier cities the purchasing rate has increased, as people now generally buy cherries for their own consumption, not just as gifts any more. So I think there’s still a lot of space for China's cherry market to grow," he said.

"Even if production is doubled next year, we have confidence in that the Chinese market is able to digest that volume as long as the fruit quality is good."

Looking ahead

Jin said production could potentially double for the 2016-17 season, given the 14 million-tray figure for 2015-16 was roughly half the 28 million trays initially expected, and that under ideal circumstances this year it could hit 30 million.

"We look at the Chinese New Year for next time, it’s even earlier so you’ve got even less of a sales period for the supermarket time, so more than double the volume and a less strong sales period, which may mean oversupply," he said.

"In our view for this volume to be sold in the Chinese market it's not a problem - it’s okay, it’s just a matter of return, whether it's higher or lower.

"The very important thing is that now the sales of cherries the majority is on the coastal cities because the economies are much stronger than they are inland."

He said in the inland markets were growing a lot but more development was needed with support from the Chilean government and Chilean grower associations.

"As we see, the marketing efforts from Chilean fruits are not enough," Jin said.

"This type of promotion is very short, so the sales are really driven by the Chinese importers and wholesalers, which is not good enough.

"We can see in the wholesale market that if today arrives 50 containers of cherries the sales are good, and if tomorrow 100 arrive, the price goes down. Only when you have bigger demand than the supply is when you don’t have problems moving the cargo out."

For now, Joyvio Golden Wing Mau continues to invest in its  distribution centers (DC) to improve opportunities for overseas and loca fruit - as an example it is building a bigger DC in Wuhan, Hubei.

"We just finished last year on our big DC in Shenzhen, but in the future we also need to upgrade and we’re also planning to build new DCs in Wuhan, Shanghai, Beijing, Shenyang, Chengdu; in these facilities we should have pre-packing, storage of course and ripening for bananas, avocados, papayas, and other fruits, to cover the whole of China."

Ou said Riverking was also making inroads inland.

"Chile’s cherry production volume is still growing and if the weather is good there will be definitely more volumes coming to China. And in that case we have to open up more sales channels," the executive said.

"We are taking the initiative to develop wholesale market partners in those markets instead of just waiting for them to approach us.

"This year our sales were particularly good in Wuhan, and we’ve also trialed in Zhengzhou, Xi'an, among others."

He said the company also sold three or four containers of cherries through its own e-commerce platform this year.

"We also were very happy about the strategic cooperation with, and we will continue to work together next year.

"In the future we will continue to look for new sales channels, so that we are not entirely relying on the wholesale market but establishing a number of new ways to sell our fruit."


Subscribe to our newsletter