Just 10 months after launching its first avocado import campaign in the market with Mexican-grown Green Giant-branded fruit, Dole China is now sourcing differentiated product to meet ranging price points, and plans to make the most of its ripening expertise gained from the banana business.
At www.freshfruitportal.com we caught up with the company's product director Andy Zhang who discussed how to bolster demand for the fruit, as well as the long-term potential of the Philippines as a supplier.
The outlook could not be more different now, and in response in November last year Dole China imported its first container of avocados, sold through Walmart chain Sam's Club.
"We started using 18 and 20, large-sized avocados in Sam’s Club, and we also developed some nice packaging with four-pieces and six-pieces in clamshells and cartons," Zhang said, adding information was also provided about how the fruit ripened.
"Also we've promoted Green Giant’s model into Sam's Club with free tastings.
"It started with just one container per month and later because we knew there was a very good example at Sam’s Club, we wanted to introduce avocados to more customers so now all our customers in China are selling avocados."
This means Dole China is now importing a minimum of three containers of avocados per week.
"The volume increased a lot and also pushed us to look to more production countries. Mexico is not the only option; we can develop from Peru and Chile," Zhang said.
"In the first part of this year we launched Green Giant in all our channels, but later when we analyzed some of our customers did not want the same brand as their competitors – they want to switch to other brands, so I had to give them other options.
"In China my customers have more options – they don't only have to accept Green Giant but also from Dole China they can also choose Dole-branded avocados from Peru and Chile," he said, highlighting customers could also opt for independent brands.
Zhang said he could usually bring in the Peruvian and Chilean avocados at a lower price given no tariffs applied to these countries, compared to Mexico which has a tariff of around 10-11%.
"Mexico is not an APEC (Asia Pacific Economic Community) member so for their grapes and avocados we are charged 10-25% tax on their fruits into China," he said.
"Of course Mexico has more volume, more premium quality, and Chile and Peru are still a little behind and the volume is still low compared to Mexico.
"The window (for Chile and Peru) is also good but it’s short - you cannot do year-round, which is why we have to develop different brands from different countries to meet customer requirements."
An emphasis on service
Zhang said that as volume increased over the past 10 months, the group felt a need to improve service quality because customers are not only thinking about price and sales.
"They need to further develop packaging; more attractive packaging, easy and beautiful that looks nice and is easy for consumers to choose, and also to protect the product itself.
"Chinese consumers want to press, touch, smell - it's what can damage our product on the table so our customers need us to make some notes or words on the package so the consumers don’t push too hard, and so my customers reduce loss.
He said some customers also wanted to develop two-piece and four-piece packaging for different shops, with some also wanting ready-to-eat avocados.
"They know Dole are experts for ripening and we do a lot of bananas in China, so they want Dole to do ripening before delivering to some retail channels. This is something different we’ve added," he said.
"This is our advantage at Dole, we can already do it – we have seven distribution centers located in China, mostly on the East Coast but also we have small distribution centers."
He added foodservice was another area for potential growth, and Dole China has been working with some chains to see how they can incorporate avocados into menus.
"We start working with worldwide chain restaurants like Pizza Hut of Yum! Brands when they developed some fruit pizzas, and avocados one of the first things they put in their pizza; they had a full range with toppings like durian and pineapple.
"Second, they launched avocado smoothies with bananas."
But what about incorporating avocados into Chinese cuisine?
"We tested avocado with rice because people eat rice every day, so we thought what about if we mixed mature avocado with rice? It could make rice more attractive, more colorful, taste different.
"We're looking for some big chains of Chinese restaurants for an opportunity for them to put avocado into their menu.
"For us at Dole we’re mainly focused on the retail channel, but restaurants are a new option to grow our business."
He adds the simple avocado and rice option was also used in retail tastings, along with showing potential consumers how to make guacamole.
Philippines, supplier of the future?
Zhang emphasized China couldn't grow its own avocados but what if the fruit could be sourced closer to home than Latin America or Oceania?
"Dole also grows avocados in the Philippines in Mindanao, and now we have 370 hectares in the Philippines and already it’s got fruit - the project started several years ago.
"Ideally, avocado can grow in the Philippines, but the fruit is not so big at like 35-40. We didn't want to grow it this way so we divided into two parts - one is January until May, and the other part is August to December.
"Why do that? Because with that we can fix the volume and the size to guarantee the taste and dry matter in the avocado – we tried highlands, lowland, midlands, and finally the best was the highlands at 500 meters (1,640 feet) above sea level."
The only catch for the time being is that the Philippines does not have permission to access the mainland Chinese market, so the Dole Philippines' production currently goes to markets like Malaysia, Indonesia, Hong Kong and the Middle East.
"The top three Asian markets of Japan, Korea and China are still not open for the Philippines, but maybe after a few years that will change.
"When the markets opens we can launch it into China. Philippines only takes five days to ship the avocados to China and also zero tax, so I can see that we will have a really big advantage for selling it."
He added Philippine avocado supply would also bring logistical benefits.
"Now there is a small market for Hong Kong, Malaysia and Indonesia, so we can mix the avocado in with the pineapple into one container to these markets because the temperature is quite close.
"Avocados need 4-6°C (39.2-42.8°F) and for pineapples 7.2 (45°F) is an ideal temperature but you can have them at 5-8°C (41-46°F), so most of the time if the market demands more we can mix it in with the pineapples.
"Pineapples are Dole’s key item, so huge item, and it [the combination] will help avocados a lot in Asia."
But for the more immediate future, Zhang is curious to see what opportunities there could be for Californian avocados if the Chinese market is to open for the state.
"We did some panel tests in Hong Kong – on the price issue they all have different expectations. California would be the most expensive avocado so far. But demand is very strong.
"We are open to avocados from everywhere – for avocados from any country, I immediately can find the target customer. The demand in China has a big space to grow and we don’t have local avocados."