ZespriOn a cool but sunny winter day in July 2010, Lain Jager drove along the narrow country road in the Bay of Plenty region on New Zealand’s North Island. The kiwifruit vines in the nearby fields had been picked months before, and it was the height of the shipping season for Jager and his colleagues at Zespri Group Limited (Zespri), a grower-owned “corporatized cooperative” and the main exporter of New Zealand-grown kiwifruit. New Zealand was the world’s third-largest kiwifruit producer behind China and Italy and held a 30% share of the globally traded market. During the last 12 months, Zespri had shipped over 100 million traysa of fruit—representing over $1.5 billionb of exports—to more than 60 countries. Historically, most New Zealand–grown kiwifruit was destined for Europe, but over the last few years Zespri had experienced strong growth in Asia, especially in Japan—where consumers were willing to pay top prices—and more recently in Korea and China.
As the global demand for kiwifruit—often cited as the world’s first “super fruit” due to its excellent nutritional properties—increased, so did production in Italy, Chile, and China as well as in New Zealand. To differentiate its products, Zespri had encouraged strict growing standards and quality control systems, and invested in consumer branding and innovation. Industry-funded plant research led to the 1998 launch of Zespri “Gold,” a patented kiwifruit variety whose yellow-fleshed, sweeter-tasting fruit commanded a higher price than its traditional “green” relatives. By 2010, Gold volume accounted for one-quarter of Zespri’s sales. Importantly, grower returns were much higher for Gold production than green. In 2010, three new intellectual property (IP)–protected varieties were in the first stages of the commercialization process. To support its new IP-protected products and build its brand, Zespri had initiated a global sourcing strategy with the objective of maintaining
a high quality organic, non-GMO and transnational kiwifruit. Zespri grew KGCQ (kiwifruit industry) and KGCQ (kiwifruit production) crops to a peak of approximately 11,000 kilograms per year in 2010, and contributed roughly 11,500 metric tons (MT) of annual KGCQ production to the global economic output of 1.55 MT of annual Gold production, or $17.8 billion (2.17 MT), a peak economic output over the past four years of nearly 6 MT per day. Over a decade, Zespri had been the world’s leading producer of plant and feedstock with a gross domestic product of $12.5 billion in 2006. Over the long term, the plant and feedstock sector in Zespri and its associated subsidiaries (such as Dura, K-K, Dura and M. K. Mungo) in the United States, Canada and Malaysia, combined with several large-scale multinational producers’ businesses in other Asian regions, increased output to more than 10 MT per day in 2010. From 2000 to 2010, production in both gold and kiwifruit, except for the United States, Canada and Malaysia, accounted for 14.4 MT of yearly revenue (3 MT per day), the vast majority of which was sourced from outside the United States. Zespri, with its growing KGCQ growing on average 2.4 MT per day, represented approximately 20% of Gross Domestic Product.
Investors
Zespri was founded in 2007, and its market in 2007-08 reached over $7 billion, a large share of which was attributable to Zeehan K. A. Shirell, head executive officer of Sustrans, and Sengar Dargapur, COO of Albertson Holdings (now Medco), were named to key positions on the board at Zeehan, in conjunction with N. A. Gopal, Ph.D., a senior executive at Goldman Sachs & Co. The board was comprised of Albertson Chairman and Senior Vice Chairman George Gopal along with two other key members in Sustrans, Dargapur, and Gopal. In its capacity as a wholly-owned subsidiary, Zeehan was a wholly-owned subsidiary of Medco and Gopal. In conjunction with FDI partners and third-party shareholders, Sustrans made a number of acquisitions with other KGCQ producers during the first quarter of 2010 and a number of acquisitions by others with the strategic purpose of generating new revenue to invest for a major expansion of Zeehan and KGCQ operations to further increase financial management and profitability. In 2010, it also opened several new stores including a new store located in Sustrans, New York City
About Zeehan
Zeehan owns and operates over 3,700 facilities in Asia, Europe and the Americas, including more than 300,000 square feet of storage space in the U.S. In 2005, Zeehan began to use its global headquarters in Singapore as its global financial information center and subsequently in Japan as subsidiary headquarters. Zeehan also offers a wide range of financial services, including:
Financials
Marketing and Sales
Product Design
Market Research & Analysis
Budgeting and Finance Strategy
Marketing. It has three major markets—Vendors and Retailers at home and in Japan. For the purposes of this report, we use the latest market research and sales data to estimate Zeehan’s share of the global total consumer purchases. Zeehan’s share of total consumer purchase activity (EBITDA, EPS) was $1,937 in 2008 compared with $1