Mighty Market: Fruit Processors Expand Sales Overseas
With a population of more than 1.3 billion, China is an attractive market for many companies. Include local fruit processors among those who see the potential.
Brent Bradley, vice president of sales and marketing at Graceland, said his company’s China efforts actually started in 1999, but really ramped up more recently.
“We really focused on it four years ago,” said Bradley.
The figures bear that out. After shipping slightly less than one million pounds of fruit to China in 2012, Graceland Fruit exported nearly four million pounds of fruit in 2016. This year it’s on track for similar results, depending on other variables.
“It’s still early,” said Bradley. “We haven’t seen the impact from the currency (exchange rate).”
His counterparts agree that China represents a huge potential market due to a confluence of factors.
Brian Gerberding, director of sales at Shoreline Fruit in Williamsburg, said the emerging middle class in China is cognizant of the quality of products from the United States. While the country does produce some of the fruits being exported from here, the perception is that ours are better.
“The advantage we have is there is a growing middle class skeptical of its own products,” Gerberding said. “They are willing to spend premium dollars for a premium product. The opportunity is there.”
Brian Klumpp, director of business development at Traverse City-based Cherry Central, expanded on that theory.
“They want to try things that are popular in Western culture,” he said. “We’re offering things they can’t get as easily, that are unique, healthy and high-quality.”
“Blueberries are very popular and have a lot of health benefits,” Bradley offered, as an example. “They are not readily available in China.”
That novelty is another reason for the fruits’ increasing demand.
“People are looking for new things,” Klumpp said. “Their palates are becoming more sophisticated.”
By The Numbers
Jamie Clover Adams, the director of the Michigan Department of Agriculture and Rural Development (MDARD), said the market’s potential is very large, and continues to grow.
“By 2020, the middle class in eastern China, where we are focusing our efforts, is expected to reach 220 million people. Second, middle class incomes are rising by 10 to 15 percent each year. So, it’s a tremendous market opportunity,” she said. “You’re just not going to get that kind of income growth along with the volume of people anywhere else in the world right now.”
Michigan food and agriculture exports to China have grown steadily in recent years, reaching $70.9 million in 2015 compared with about $23 million five years prior, according to MDARD.
While dried cherries are de rigeur here in Michigan, they’re less well-known overseas. There, cranberries rule, thanks to industry leader Ocean Spray.
“Ocean Spray paved the way,” said Gerberding.
Graceland’s number one fruit export to China is cranberries, followed by blueberries and then cherries. Cherry Central says its ratio is about one-third each, while Shoreline says it does more with blueberries than cherries. It doesn’t process cranberries to any degree.
The vast potential the market offers doesn’t mean it is easy. Everything from regulatory issues to currency imbalances to simple cultural differences can create stumbling blocks. MDARD’s Clover Adams said establishing relationships with provincial governments can help address some of the challenges, while the local companies say working directly with staff representing them in China is a must.
“It’s a cultural thing. They want to deal with someone who is in the country,” said Klumpp, adding that person can offer a different perspective than someone stateside. “Someone in-country can identify applications we haven’t thought of.”
Clara Liu is the representative for Graceland in China.
“We’re very fortunate to have developed a relationship with a woman there and have feet on the ground in China,” said Bradley.
While they are all exploring ways in which to sell the products wholesale, often as ingredients for baked goods or other foods, they see potential on the retail side, as well. China’s largest e-commerce company, Alibaba Group Holdings Ltd., is hosting a conference in Detroit aimed at helping U.S. business to boost exports to China. The Gateway ’17 event, taking place at Cobo Center on June 20-21, is expected to attract more than 1,000 U.S. businesses.
Ultimately, representatives from all three companies see the potential in China.
“We’re a great fit for the market,” Klumpp said. While speaking specifically of Cherry Central, he might as well have been talking about all three companies. With more than a billion people, there is plenty of opportunity for all of them. Though they are competitors, they are not averse to working together for their mutual benefit.
The processors see all their sales abroad as having a positive impact here at home. The opportunity to export greater quantities overseas not only expands the market for local growers, it provides a fail-safe should the domestic economy falter.
“It helps create jobs in northern Michigan. We’re also bringing foreign currency in. And we’re not limited to what is happening in the U.S. economy,” said Bradley.