New Zespri chief executive Jason Te Brake has done two sweeps of core global kiwifruit markets since July. Photo / Supplied
Christmas probably can’t come soon enough for new Zespri chief executive Jason Te Brake.
After the board of the global kiwifruit marketer decided to this time have a chief executive based in New Zealand — former chief executive, Kiwi Dan Mathieson, was Singapore-based — Te Brake has unenviably spent most of the past four months on a plane getting around markets on the other side of the world.
He says he’s spent 70% of his time overseas since he started the job in July, making two rounds of visits to customers and staff.
But he thinks after Christmas things should become “a bit more normal” and he’ll be offshore only about 25% of his time.
“The first few months is essentially a bit of a moment in time when you’re building relationships and making sure you’re getting round the business... I still think it’s important that the CEO is close to growers and able to see what’s going on in their businesses,” he told the Herald from Spain.
”We’re midway through the largest (export) season we’ve ever done and making sure we can keep that momentum and sell well for good returns back to our growers, but part of it also has been about building relationships with customers as we transition from Dan to myself.”
Not that Waikato-born and raised Te Brake is new to New Zealand’s leading horticulture exporter, which in 2023-2024 reported global operating revenue, including grower licence sales, of $4.2 billion and global fruit sales of $3.99b.
He’s been with the grower-owned Bay of Plenty company for a tad over four years and was its chief operating officer when picked by the Zespri board after a global search for Mathieson’s successor.
Before joining Zespri, he was at milk processor and exporter Miraka for nearly five years as a key account and commercial manager, and his CV includes commercial accountant and sales and marketing roles with meat export companies, and an assistant manager at KPMG.
While Te Brake’s been offshore more than in New Zealand, he’s still been knee-deep in Zespri’s strong lobbying at home for grower support to expand the marketer’s overseas growing operations.
It’s Zespri leaders’ second attempt to win over growers to the idea — they failed to get support in a 2022 vote — and growers have told the Herald this time round it’s a “hard sell” with even Te Brake sighted driving up orchardist’s driveways to push the case.
The Zespri board is expected to make a decision next week on whether to test an offshore expansion proposal with a new vote. (There’s more than a commercial outcome riding on any vote — Zespri, which has the regulated authority to export all New Zealand kiwifruit except to Australia, has lost two producer votes in recent years, losing a third would strain its credibility.)
The draft proposal being driven by Zespri is “that growers support the allocation of up to 420 additional hectares a year of SunGold kiwifruit over six years across Italy, France, Japan, South Korea and Greece, subject to annual review by the board to confirm demand remains ahead of supply and the provision of annual reporting to growers.
Advocate for Zespri’s 2500 grower suppliers, NZKGI, has announced it supports the draft proposal.
Zespri’s first try in 2022 was for expansion of plantings of SunGold, its best-seller, in overseas countries excluding China and Chile by up to 10,000 hectares.
Zespri argues the expansion is needed to support its strategy of being able to offer the world Zespri-branded fruit 12 months of the year. In New Zealand, kiwifruit is a seasonal crop. Offshore plantings, now fully allocated, are now limited to 5000ha.
Zespri said in 2022 non-shareholding growers didn’t see enough benefits in the plan. Less than 50% of Zespri’s suppliers hold shares, a level the company is working to lift. Overseas growers are contracted. They cannot own shares.
Te Brake believes this time round there’s “very strong” support for the expansion and what was “a Zespri conversation has become an industry conversation”. To maintain orchard gate returns in the next five to 10 years Zespri has to be able to offer a 12-month supply or lose shelf space and struggle to maintain pricing.
“Sophisticated” fruit businesses need to offer 12 months supply “to remain relevant”, he says, a lesson reinforced this year when visiting Zespri’s core markets.
“Last time growers didn’t feel like they’d been consulted or had a chance for discussion... this time we’ve been quite deliberate about engaging well and listening.”
Growers not quite across the line told the Herald they wanted to know from Te Brake what the risks are and how the company plans to mitigate them.
“There are three key risks I can see, the main one is around maintaining fruit quality,” he responds.
“We need to make sure (offshore grown fruit) maintains the same quality standards as New Zealand fruit so we don’t have a negative impact on New Zealand returns or Zespri’s brand. So everything our New Zealand growers need to do... offshore growers have to do.”
The second risk, he says, is around over-supply and transitioning the window between the end of New Zealand supply in-market and offering Northern Hemisphere-grown fruit.
“(In that window) we always need to make sure we prioritise New Zealand growers’ (fruit), making sure we sell it out and get the best return for them.”
Zespri’s in “complete control” of that transition now, Te Brake says.
The third risk also touches on over-supply, via Zespri’s decisions about how much growing licence area to offer for sale in New Zealand each year.
But with demand for Zespri fruit well outstripping supply as it stands, he doesn’t believe there’s any “significant” risk of oversupply.
As to one industry player’s claim Zespri’s aim is simply to bump up volume to line its pockets with more sales commissions, Te Brake agrees there will be a benefit from more sales commissions but argues that money will offset Zespri’s operating costs which ultimately will benefit New Zealand growers.
True to his reputation for openness, Te Brake doesn’t shy from directly addressing other grower concerns that Zespri might consider sensitive.
Such as the cost and duration of its IT system foundation overhaul “Project Horizon”.
Undertaken to make Zespri “more agile”, the business processes and systems reform has so far taken four years and cost around $135 million, he responds.
It’s taken longer than anticipated due to setbacks such as the pandemic and a skills shortage, he says, but the results are good, derisking essentially unstable processes and systems of the past two decades.
Te Brake expects Zespri to spend another $60m to $100m on the project over the next three years, with further work being undertaken “in small chunks”.
The project is being funded out of retained earnings so shareholders are essentially paying for it, he says.
There’s some concern among growers on the outlook for fruit returns with claims they’ve been “flat” in the past two years and so is the outlook.
Te Brake responds that Zespri has in that time grown the value of fruit through its pricing strategies.
“Last year we lifted green (fruit) pricing in Europe by 20%, which was partly to do with a short crop and less fruit available. We pushed pricing quite aggressively in the market. This year we’ve had essentially four years of (crop) growth in one season so it’s been hard to maintain pricing.
“But we’ve managed to maintain pricing in pretty much all our markets with the exception of China, where we’ve stepped back slightly on the pricing due to the volume of growth we’ve had in one single season.
“I think there’s still opportunity (to lift value) provided we’ve got a more manageable pace of growth going forward. We’re seeing more consumers wanting Zespri fruit and more middle-class consumers wanting to buy based on health and wellbeing.
“So I think we’re in a position to continue that — provided we don’t have a 45% increase in the crop every single year, if we’re managing around 7% to 10%.”
Te Brake says he’s also focused on how cost efficiencies play into returns.
“How we reduce our costs to deliver fruit to the market... I think we can continue to try to remove complexity from our business, to simplify what we’re doing and ensure we’re getting the most appropriate costs for growers. That will help with balancing returns as well.”
There are also concerns among growers about the New Zealand industry having the infrastructure to support processing of some of the huge SunGold fruit production forecasts.
“My view is we managed to get through 192 million (export) trays this year and we actually had a lot of head space available, Te Brake says.
“We think we’ve got the capacity to get up around 220 million trays with about 145 million of gold. If we had a crop scenario of that sort of 145 trays I’m comfortable we can get through it from both a packing and cold storage and port infrastructure perspective.”
Te Brake says the industry needs to continue to invest in infrastructure to permit further growth beyond this.
“From my discussions with post-harvest (sector) it sounds like some are in that camp after a pretty strong season under their belt. They are now looking at how they invest capital, (while) others I think are taking a little bit of a wait-and-see approach. I think we will see investment continue in the onshore infrastructure.”
Meanwhile, Te Brake’s noticed more confidence creeping into consumer markets he’s visited in his second sweep.
While he says Europe’s economy hasn’t been as affected as much as some others in the global post-Covid crunch, unemployment and geopolitical concerns are still making consumers uncertain.
“People stop spending money. But I think we’re starting to feel that (change) not so much through the numbers but certainly anecdotally, and also with our customers.”
At the 2024 Madrid Fruit Attraction, one of the biggest trade fairs in Europe, Te Brake says he met two of Zespri’s largest Chinese customers.
“I’d seen them a month ago in Hong Kong at Fruit Logistica (Asia 2024) and I saw them yesterday and their mood was quite different on the back of the Chinese Government doing a lot more stimulation in the economy. They had been worried it was going to be tough for the next three years because the Chinese economy had been slow with lack of confidence but they’d seen confidence come back already.
“You’re seeing (economic stimulus) in other countries as well and I think it’s positive. It gives consumers a bit more confidence to get out there and spend money.”
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the $26 billion dairy industry, agribusiness, exporting and the logistics sector and supply chains.
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