"Vertical Integration" key for BayWa, T&G Global

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Around this time last year German agricultural and renewable energy company BayWa made headlines with a move into tropical fruit, and it appears further acquisitions could be in the pipeline as the group continues on an expansionist trajectory that has been ongoing since its purchase of a majority stake in New Zealand company Turners & Growers (T&G) in 2012.

As T&G Global representatives and shareholders - including China's Joy Wing Mau - celebrated the company's 120th anniversary at Fruit Logistica in Berlin last week, chief executive Alastair Hulbert announced a projection for revenue of €1.3 billion by 2022.

This would be a significant achievement given the group's revenue in 2015 stood at NZ$813 million (€552 million), so during the fair we took the chance to ask Hulbert and BayWa CEO Klaus Lutz how such growth will be possible.

"First of all I think that T&G Global itself has great potential with regard to the three categories of green asparagus, berries and table grapes," Lutz told Fresh Fruit Portal

"We have to take into consideration that the retailers are trying to get more and more of a sharp grip on the grower side, on the harvest directly, so in other words we are in a strategic planning process right now where we expand our value chain.

"The key term is going to be ‘vertical integration’ for the fruit business."

But it obviously won't be just these three commodities that fall under this overall plan, with apples continuing to be a cornerstone of the business and further development likely within the Tropical Fruit Company (TFC) Holland operation as well.

"The second point is our pipfruit distribution in Asia has more potential – it depends on the growth rate of the growers, and what will be the output our own land over the coming years," Lutz said.

"We need to plant more Envy and Jazz apple trees – these two varieties have an enormous potential, especially Envy, in Asia."

Hulbert added Germany was a priority for production of these two varieties, while New Zealand was short of hectares of Jazz to meet consumer demand.

"We need to keep planting in New Zealand. We’ve committed to extra plantings in both France and the U.K., on a smaller scale, to meet consumer demand," he said.

"In Australia there’s room and I know that our partners in Australia at Montague have committed to further plantings, and that’s really to fill demand in those markets. If you take a market like Australia it’s really to fulfill domestic demand in Australia, whereas planting in New Zealand is for export to other markets.

"Right now there’s a new wave of plantings basically on the trucks, on the way to our growers in Weisenheim...there’s going to be a strategic roll-out of growing Jazz and Envy here in Germany, and elsewhere in Europe," added BayWa general manager for fruit, Christiane Bell.

While Asia has been in the market spotlight in recent years - particularly the countries of Southeast Asia and China - Klaus said the group was also busy expanding its distribution network in North America while Africa was also under the lens since a joint venture was announced with Barloworld in South Africa late last year.

"The basis of all the research is that the [African] population will double in the next 15 years ago, so here there are also growth opportunities.

"What we need to try and do is to expand our distribution network in the region of North America. We’re working on that, and third point is if we have a chance to make acquisitions, let me say for example in the berry business or something else, that’s another more transaction-oriented increase of revenue."

He said the drive within Africa was to try and find synergies and new potential among BayWa's different pillars.

"We are investing right now in the machinery business and the agri-technical business sector in South Africa," he said.

"Due to the fact that we are starting now to create infrastructure and use the infrastructure of Barloworld we see potential for expanding our fruit business as well. 

"Of course apples, in comparison to grapes or so, it’s much easier to organize and to handle the supply chain process and I think that Africa will be a key continent not only for the fruit business but many other agri-products too."




This story is exclusive to Fresh Fruit Portal. If you would like to reproduce any elements of it on other sites or publications, please make a request to our editorial team at news@freshfruitportal.com

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