Direct from Shanghai: Statement of Chinese Fruit market

Yesterday, during iFresh Shanghai 2013, Mr. Fangxiao LU, Executive Vice President of China Fruit Marketing Association has made a presentation on The Dynamism of Chinese fruit market. Fresh Fruit & Vegetable is a huge market in China. It represents not less than a third of the total agricultural Product value of China. From tradition to branded market

The market is also changing a lot, moving from tradition with small and numerous farmers to a real industry with dynamic companies with a clear business model and branded produce approach.

Plantations are getting more concentrated. These companies have recently invested a lot in automatisation in harvesting, in sorting, washing processes to become market champions. Some have sales over 300 Million €.

A Volume market and a Premium fruit market

Production increase reaches a dynamic growth rate of 7 to 8 % per year.

This has been possible thanks to a better efficiency in production, as the agricultural areas have only grown by 1% per year. Main products produced in China are Apples, Tangerines, Pears and Grapes.

The market shows 2 different faces:

a Volume market with poor quality fruits, specially apples and tangerines. This market is constantly in over-supply with low prices.

Apart from that, a Premium Market is developing fast with mainly imported fruits. This market is constantly in shortage. This is the place for quality fruit as gift market and organic market. Organic fruit market is booming in big cities like Shanghai. Prices of the organic market are impressive with prices that can be 4 or 5 times higher than the conventional fruit.

New investors coming in the fruit market In recent days,

Fruit market has seen the arrival of new investors who are diversifying their activities. Lenovo, the technology company has recently acquired 2 producers of kiwis and blueberries. Their objective is to organize a total traceability from seed to consumers’ plate in order to bring more safety for consumers’. QR codes will be used to prove traceability.

Today, some big players in fruit market are also on the stock exchange market.

Distribution: specialised retailers and e retailer are booming

As for distribution Mr. Fangxiao LU mentions that retail chains are still developing well. They represent now 50% of the market in large cities. Recent moves in distribution have been the quick development of Specialized Fruit Stores Chain and e-commerce channel.

Among Specialized Fruit Chain, Bai Lao Yen have opened not less than 500 franchisees in the last 10 years, reaching 2 billion RMB sales (approx. 240 Million €). The Specialized Fruit Stores offer more varieties, fresher fresh produce. Their opening time is longer and they are located inside the communities.

As for e-commerce, the market is growing fast specially in big cities as Shanghai with e-retailers focusing on quality products. This is the case for Fields (www.fieldschina.com) who delivers in Shanghai area 3 times per day! Most e retailers are offering the delivery for a minimum order of 180 RMB ( 20 euros )

E-commerce in china reaches an incredible growth of 71% per year while growth is 13%/y in USA. For specialists, China will be the biggest e-commerce market in the world by 2030.

In 2012, China export 4.864 millions tons of fruit, mailnly in Indoesia, Malaysia and Russia. Chinese imports reach 3.425 million tons (MOA Ministry of Agriculture sources)

Thanks to development of Premium Fruit and the higher margins made by professionals, most exporters are also importing quality products. In future years, Mr. LU forecasts that Chinese imports will be higher than Chinese exports, which offers great opportunities for a market with a fast-growing middle-class population.

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from Christophe DURRIEU

cd@fructidor.com