Counterfeits, name recognition a challenge for Zespri

Zespri Gold3 kiwifruit. Photo / Supplied

Zespri Group's expansion into China is continuing at pace, after the country last year overtook Japan as its biggest retail market, though the company is battling against counterfeiting and theft from local growers who want a slice of its market.

Lewis Pan, the fruit marketer's China country manager, says Zespri is focusing on brand recognition to shore up its dominance in the market. China delivered almost $300 million in revenue in the 2016 financial year, a 60 per cent lift on a year earlier, and accounting for 16 per cent of Zespri's total $1.91 billion of revenue that

China is the biggest producer of kiwifruit in the world, growing nearly 1.3 million tonnes in 2014/2015, about triple that of New Zealand, with all that fruit sold domestically. Zespri is still trialling growing the fruit in China, so it imports kiwifruit from Italy and France as well as New Zealand to ensure its brand is on supermarket shelves year-round.

The company sells into about 50 of China's 500 cities, more than double the number of cities it was in three years ago. Fourteen of those cities are what the company refers to as media-supported cities - places where it focuses on marketing and advertising.

Within large 'Tier One' Chinese cities such as Shanghai and Beijing, English literacy is fairly high and the brand has good recognition, but it's having to work harder to connect to Chinese consumers who don't speak English.

Zespri has also begun marketing itself using a local name, 'Jia Pei', which sounds similar to the Chinese word for 'double', and its slogan here translates to 'double the good life'.

"We're now probably at the stage that we need to go deeper," Pan said. "Our resources are only enough to support those cities, and we are not going to do more until we've done everything we can in those top 14 cities we are strategically supporting."

The flip-side of the brand's success is domestic counterfeiting - a problem faced by other large multinationals in China like Coca-Cola and Lay's. Local kiwifruit sellers use fake Zespri stickers, their own name with the company's large Z logo, or inaccurate references to the fruit being sourced from New Zealand, in attempts to mislead consumers.

For the past eight months, Zespri has doubled its efforts to fight against this kind of counterfeiting, Pan said.

"In China, once you have a well-known fruit with a premium image, people start to imitate it," he said. "These people are selling in the wholesale market, sometimes we can see them and we follow up with them. In one of the cases, it will maybe even lead to a prosecution of some people producing fake labels. We've ramped up those actions in the last eight months to protect our brand."

Last month, the company became aware that there had been some theft of its plants by growers in China, where it suspects the sale of a licence from one jurisdiction to another was in breach of Zespri's licensing rules. The issue is still under police investigation, Pan said.

"The understanding is there could be some people in China who have been receiving the G3 plant material and illegally growing it, and there is a dedicated team working on the case and trying to find out more information and how to contain the situation," he said.

"We have to manage the best ways we can and mitigate that risk where possible to our New Zealand brand interests."