Beyond recovery:

Growth, value and

innovation in the kiwifruit

industry

Simon Limmer

AGENDA

1.An overview of our industry

2.Strategy: growing demand and increasing supply

3.The recovery from Psa

4.Challenges ahead

Industry stats

Waikato 3%

Hawke’s Bay 1%

Southern North Island 1%

Gisborne 1%

Auckland 4%

Nelson 3%

Northland 1%

Bay of Plenty 86% 2,435 growers

12,578 hectares

Hayward distribution

Grower demographics

Ave age: 53% of growers are over 60 years old

Size of orchards 0 – 2 ha 791

2 – 5 ha 1,508

5 - 10 ha 589

>10 ha 161

Average orchard size: Green – 3.5ha; Gold – 2.6 ha

All Varieties

0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000

Hong Kong

Belgium

North America

Netherlands

South Korea

Italy

France

Germany

Taiwan

Spain

China

Japan

Sales Volume (TE) By Market 2016

OGR per hectare (total)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Industry structure

NZKGI

Industry Advisory Council

Zespri Board

•Distance to Market

•Land costs

•Labour costs

•Exchange rate

•Scale constraints

•Capital constraints

•Population density

•Infrastructure

•Domestic market

Competitive disadvantages

Hayward cost of production NZ vs Chile.

* NZ based on USD/NZD effective

rate

-

0.10

0.20

0.30

0.40

0.50

0.60

0.70

2004 2005 2006 2007 2008 2009 2010 2011 2012F

USD/KG

Season

Chile Cost of production

NZ Cost of production

Competing in a crowded

marketplace

AGENDA

1.An overview of our industry

2.Strategy: growing demand and increasing supply

3.The recovery from Psa

4.Challenges ahead

Zespri’s purpose

Zespri was created to deliver strong, sustainable returns to our growers and shareholders.

Zespri’s strategy

Developing and

marketing the world’s

leading portfolio of

kiwifruit products for

12 months of the year.

The Zespri System

The Zespri System

The Zespri System is

the knowledge,

policies and

processes that embody the Zespri

brand throughout the

entire supply chain and consistently

allows us to live up to

our consumer

promise.

A premium branded product Investing over $150m a year in global marketing

Top 5 fruit brand

in 15 Markets Created New Segment

A growing international sales

and marketing team

Innovation from soil to spoon.

Over $20m Zespri

investment per year in :

• Production systems

• Crop protection

• Consumer research

• New cultivar

development

New cultivar development

- 58%

Sustainable

production -21%

Sustainable

delivery of fruit - 10%

Health and

consumer research - 11%

1 2 3 4

Commercial

Product • Zespri SunGold

• Zespri Sweet Green

Block Trials • 1 Red

• 1 Green

• 9 Males

Clonal Trials • 9230 New Cultivars

Female

Seedlings • 100,000

Female

Seedlings

World’s Largest Kiwifruit Breeding Programme

-

50

100

150

200

250

Gold9

Future New Varieties

Gold3

Green14

Hort16A

Hayward

207m We are here

PSA IMPACT & RECOVERY

Forecast Supply Volumes To 2025

Vo

lum

e (

mTE

’s)

Gold3 licensing

First licenced in 2010

Provided to Hort16a

growers as a ‘Gold

One For One’

licence or at a fixed

price

A pathway out of

Psa.

60% of growers now

have 2 varieties

New licence

release

programme in 2016

2,000 ha over 4

years

Closed tender bids

Gold 3 Licence release 2017

Auckland 6

Bay of Plenty 262

Waikato 2

Poverty Bay 12

Hawke’s Bay 4.2

Northland 2

Nelson 6

Item All bids

Median price (excl

GST)

$235,000 per ha

Minimum

accepted bid

(excl GST)

$221,000 per ha

Number of

successful bidders

550

Ave size of

successful bids

1.7ha

Total ha bid for 1,277

Location Hectares Note: not all locations of bidders disclosed

• Retain shelf space and maintain

consumer eating experience

• Growing the kiwifruit category as a

whole

• Maintain Zespri brand presence

• Zespri Gold, SunGold, Green,

Sweet Green, Organic Green

• Local presence and support in kiwifruit growing communities

Zespri Global Supply

Reliable Year-round Zespri Supply

Italy

France Japan Korea

(ZGS) Production Countries

China Portugal Spain Turkey

(ZGS) Production Forecast To 2025

-

10.00

20.00

30.00

40.00

50.00

60.00

Vo

lum

e (

mTE

’s)

ZGS Green ZGS Gold

1.An overview of our industry

2.Strategy: growing demand and increasing supply

3.The recovery from Psa

4.Challenges ahead

AGENDA

Hort16A $50.5M in R&D

investment,

lead to ZespriGold®,

a $7B product

An industry under threat.

Many uncertainties to manage.

New reports of infection

Potential cause of infection

Government support

Grower funding issues Testing process

New R&D learnings Offers of solutions

New statistics

Market access concerns

Customer queries

Management strategy

Vectors of transmission

Grower support

Insurance

Sampling process

Industry meetings

New on-orchard advice

Growers vote ‘yes’ to the aggressive management strategy

DECISIONS AND ACTIONS

• Led through IAC

• Understanding the issue

• Two-way communication

• Aggressive action

• Pastoral support

• Request to government

November 2010.

Implementing

the solutions.

Technology

Varieties

Management practices

June 2012 - Release of 2,068

hectares of Gold3 license, a

commercialised kiwifruit variety

with tolerance to the disease.

Innovation creates a pathway.

AGENDA

1.An overview of our industry

2.Strategy: growing demand and increasing supply

3.The recovery from Psa

4.Challenges ahead

Refinement of

packaging materials Managing waste

kiwifruit material

Supporting

biodiversity Preserving bees and

supporting bee keepers Taking care of our

people and our

community

Reduced reliance on

non-renewable

resources

Water use

efficiency

Carbon/greenhouse

gas reduction

Sustainability and environmental impacts

Orchard prices and orchard ownership

• More investment in kiwifruit

• Orchards attracting strong prices

• High demand for Gold3 licences

• What does this mean for access and

participation in the industry?

Grower demographics and succession

• Ageing demographic

• Need to support pathways into the

industry

• Need to invest in training and mentoring

• Industry programmes on governance

and leadership, hort scholarships,

careers events and schools

engagement.

Biosecurity: prevention and response

• Biosecurity risk has not gone away!

• Need for continued focus on readiness and

response.

• Supported through: joint investment in KVH,

through Government Industry Agreement

and operational agreements

• Plus ongoing investment in innovation