AFC 2011 Retail Panel

A high-powered retail panel kicked off the event

Asia’s burgeoning consumer markets offer unrivalled opportunities for companies across the global fresh fruit and vegetable business to market their products and services, but understanding these markets’ complex demands and finding the right partners within them are vital to success.

That was one of the many take-home messages from this year’s Asiafruit Congress, which took place on 7-9 September at Hong Kong Convention & Exhibition Centre alongside the region’s leading trade fair ASIA FRUIT LOGISTICA.

Attracting some 576 delegates from 36 different countries, the Asiafruit Congress cemented its status as the premier conference and networking event for the fresh produce business in Asia.

After kicking off with a high-powered retail panel, the conference charted the changing dynamics of the Asian markets through sessions looking at effective retail marketing, Peru’s emergence as a supplier, new logistics solutions, the future for fresh convenience and apple marketing.

Top retailers lead discussions

Senior executives from four of the largest retail chains in Asia took the stage first, with a panel featuring Shane Bourk of Dairy Farm Group/Wellcome Hong Kong, Jean-Paul Khaou of Tesco Group Food Sourcing Asia, John Glover of Metro Cash & Carry International and Nick Reitmeier of Thailand’s Central Food Retail.

The four headline industry figures sat down for a panel discussion on Asia’s modern retail scene, the starting topic for which was the modern retail sector’s competitive edge in the region. In the scrum for market share with traditional wet markets, the retailers identified a few key advantages.

“Wet markets are still the dominant force in retail, but they’re dwindling,” said Mr Bourke. “That’s down to the in-store environment. Customers don’t want the wet feet, they don’t want the smell; they want the convenience of supermarkets.”

Food safety was another big attraction for modern retail, according to Mr Glover. “As soon as there is an issue in the media about food safety, the modern retailers see their business increase rapidly,” he said. “There’s a higher level of trust with modern retail than with wet markets.”

The issue of food safety segued well into the next topic of discussion: direct sourcing. Establishing good traceability is one of the main drivers of the rise in direct sourcing in Asia, stated Mr Khaou.

“Many people think that direct sourcing means buying more from the grower and shipping product direct to stores,” he said. “For us, it’s more about a direct relationship with the grower, and transparency of that relationship.”

Rolling out global sourcing models for international retail chains in Asia also entails some unique challenges, however. “In Asia, retailing is a local industry,” said Matt Simister, Tesco’s director of Group Food Sourcing, speaking from the audience. “In Europe, the similarities overpower the differences, but in Asia there are many more differences.'

Mr Bourke also explained that there were opportunities for direct sourcing from smaller growers, particularly those who approached retailers with a plan for supplying regional stores with local product.

Effective retail marketing

With Asian consumer habits evolving rapidly, the second session of the conference provided case studies of effective retail marketing from the US, Europe and Australia, and considered the scope to apply such concepts or approaches in Asia.

A good marketing concept based on sound market research is not always a sure-fire recipe for success, however. John Pandol of Pandol Brothers gave a candid account of how its innovative packaging for table grapes, the Quick Rinse Cube, had failed in the US market, and looked at what lessons could be learned.

Nevertheless, Martin Kneebone of Australian consulting company Freshlogic underlined how important it was for the produce industry to keep developing new packaging concepts and to segment product categories to better meet consumer demands. The trend towards busier lifestyles meant that many people are shopping more frequently and buying smaller portions of pre-packaged items, Mr Kneebone observed.

'Amazing’ growth for Peru

Peru’s rapid rise as a supplier to Asia came under the spotlight on Day Two of the Asiafruit Congress. In the table grape sector, Peru’s success has been stunning, according to Jason Bosch of Shanghai-based importer Origin Direct Asia. “The volumes coming into Asia have just grown in leaps and bounds,” he said. “It’s amazing to see how the perception of Peru over the past 10 years has changed.'

Jesica Larovere Frigo of Pedregal identified opportunities for Peruvian grapes to extend their presence. “Peruvian supply meets demands in Asia like Chinese New Year well… `and Peru has` Free Trade Agreements with China, Japan and Korea, and is in the final stages of negotiations with Thailand and Singapore,” she said.

While Japan is the key Asian market for Peruvian asparagus with further potential for expansion, Jorge Aranguri of Danper identified lack of airfreight capacity as a hurdle to growth. But Don Okazoe of leading Japanese importer IPM Nishimoto singled out Peruvian mangoes as an area ripe for development.

Logistics extends reach

Latin America’s position as the rising star of Asia’s fruit import market was confirmed by Eric Eng, APL’s vice-president of global reefer, in a session that looked at how new logistics technologies and solutions were shaping opportunities. “In 2010, imports into Asia sped up by almost 12 per cent,” Mr Eng said. “The biggest growth here has been trade into Asia from Latin America.” Advances in seafreight technology that allow suppliers to ship products for much longer periods were key to this growth, he noted.

The lack of land-based cold chain logistics remains a major hurdle in several parts of Asia, but even here improvements are afoot. Lawrence Dunnigan of the Port of Oakland and Akarin Gaw of China Merchants Americold discussed a joint venture to provide complete cold chain solutions for US exporters to China.

Cut-through marketing

Asia’s changing marketing environment was a strong theme on the final day of the Asiafruit Congress, which looked at the future for fresh convenience and the fresh impetus for apple marketing in the region.

Winning consumer acceptance for fresh-cut produce may be the least challenging aspect to developing this sector in Asia, according to a panel of experts in the field. Fresh-cut produce is already available at many retail points in Asia, albeit prepared on site by the vendors before consumers’ eyes. Indeed, a bigger hurdle is marketing an engineered fresh-cut product amid the lack of cold chain or integrated production, with consumer concerns around food safety representing both a challenge and an opportunity. Dennis Foo of Chiquita China and Siebe van Wijk of The Fruit Republic in Vietnam offered engaging insights to their respective investments to develop fresh-cut salad lines and fresh-cut pomelos.

With its huge and rising apple production, China has shaped the sales environment for this product around Asia, and shifts in production and consumption there are changing the marketing landscape. Steve Leung of Alfa Fruit Packers explained why Chinese apple prices have soared in recent years, and why they’re unlikely to come down in the future amid the combined challenges of speculation, a rising currency and mounting labour and production costs. “Unless world apple prices increase, there is not much future for Chinese apple exports,” Mr Leung predicted.

With China’s own consumption levels rising and other huge markets such as India taking off, the outlook for imported apples in Asia is conversely bright. Indeed, opportunities are increasing in Asia to develop new or non-traditional apple varieties that were conventionally considered too tart for the consumer palates around the region, as a case study on efforts to develop Pink Lady apples revealed.

Extended networking opportunities

In addition to gaining expert information and insights, Asiafruit Congress delegates enjoyed extensive opportunities to meet and do business courtesy of a Welcome Reception on 6 September and hour-long networking breaks during the conference. They were also able to take part in organised visits to food retail outlets run by Hong Kong’s two leading retail groups.

The resounding success of this year’s Asiafruit Congress points to next year’s event being even bigger and better when it meets on 5-7 September in Hong Kong.

A full report on Asiafruit Congress and ASIA FRUIT LOGISTICA will appear in the October edition of Asiafruit Magazine. To order your copy, email to subscriptions@fruitnet.com