In Chinese culture, sweet red cherries are highly appreciated as gifts, being associated with good fortune, prosperity, respect and affection for loved ones. This act of giving is never more fervent than at Chinese New Year - a time when the world’s largest human migration occurs; an event that sees the population cross land, laden with gifts, to return home for a family reunion. With the rise in this population gaining middle-class status demand is accelerating. Is this an opportunity staring New Zealand in the face?
New Zealand has the fortuitous combination of great soil, an ideal climate, and proven orchard expertise. In the cherry heartland of Otago where 85% of our cherries are grown are lots of interested parties scoping out potential cherry land. With great swathes of fertile land it could become New Zealand’s next big pot of gold (think golden kiwi!). Our harvest time from December to February is perfectly positioned to supply Asia without competition from the almighty northern hemisphere cherry giants.
This is not to dismiss our southern hemisphere competitors. Chile are cherry growers on a colossal scale; in 2018/19 it was estimated that they would produce upwards of 180,000 tonnes of cherries. By a long mile Chile is our biggest competitor - supplying 88%¹ of production from the southern hemisphere group (NZ produce 5%, Aus 5%). New Zealand will never be able to compete with the quantities produced by Chile, but it can, and does, compete with quality. The orchards have worked hard to not only manage, protect and harvest the fruit, but they have efficient systems in place to get them to market. Cherries need to be in the air 24 hours after harvest, which means a quick turnaround between picking, packing and travel to Christchurch airport. Air freight might be expensive, but arguably it gives us our competitive edge in offering a fresher product, versus Chile’s shipped equivalent.
Rather than being deterred by the Chilean domination, New Zealand stands to benefit from their marketing promotions. As they push into new markets and fund campaigns, the cherry gains exposure. They in effect leave behind them an open door; for us to follow with our ‘premium’, ‘luxury’ product adored by the discerning consumer. Leverage this quality over quantity correctly and our demand, at a premium rate increases. So revered is our reputation for quality that NZ cherries attract the highest prices in overseas markets. New Zealand has found it’s sweet spot!
Otago is being closely watched. High demand, excellent returns and government support in the produce means the investors are circling. For the new orchards currently raising capital they’ll be a 7-year wait for cherry income, but predicted returns of 30+% is an attractive prospect.
We have a quality, more superior, larger, sweet red fruit that we are proud to produce. Now is the time for New Zealand to prosper under a strong reputation for quality produce, and now is the time for investors to be part of this exciting growth industry. We have so much cherry potential.
To see our latest Cherry Orchard investment offers click here.
¹ Ministry of Business, Innovation and Employment (NZ), Investment opportunities in the New Zealand Cherry Industry, 2018
Ross Verry is CEO of Syndex and a shareholder. The views expressed above are purely his own. Please assess and research all your investment.