U.S. Citrus Growers Test Appeal in China
An open market means one thing to Florida citrus growers and something entirely different in China.
Take the first regular shipment sent last season by DNE World Fruit Sales, the nation’s second-largest fruit distributor. The 32,000 cartons of grapefruit sat inside a Chinese warehouse for more than a month because the coding on the cartons didn’t match the coding on a master list.
Although Bob Eagan, vice president of Asian sales for DNE, was disappointed that his company missed a window of opportunity--he had hoped to have the fruit out for a May holiday--DNE has learned more about operating in the Asian country.
“It’s going to be a good market,” said Eagan. “But we’re going to have to go through a gradual evolution.”
China officially opened itself to the Florida citrus industry in March after years of lobbying and negotiation. During this upcoming season, the state hopes to export both orange juice and grapefruit. But the industry is finding that in addition to coping with the typical first-time pitfalls of exporting produce into a foreign market, it must also create demand for the fruit.
“The market is there, but you have to go make it happen,” said businessman Henry “Skip” Clements, who has been selling Florida’s first frozen juice concentrate to China since he received a permit from the Chinese government last year.
Part of the problem is price. Some of Eagan’s grapefruits are selling for $3.50 each, and Clements’ frozen concentrate retails for about $2, well beyond the reach of Chinese consumers earning an average $700 a year. Still, about 20% of China’s urban population can afford that, said Philip Lesser, a chief economist with the Florida Department of Citrus.
Until recently, though, there wasn’t even a Chinese word for grapefruit, said Dan Richey, chairman of the international committee for the Florida Citrus Commission. The variety of grapefruit produced in Florida is virtually unknown in China, where oranges and other citrus fruits are thought to have originated several thousand years ago and are still grown in the country’s southern regions.
At a food show this year in Beijing, people thought the Florida grapefruit on display was a bigger version of traditional Asian citrus, said Shoji Suzuki, marketing manager for Asia with the Citrus Department. But he thinks the fruit will be popular among the health-conscious Chinese.
The Citrus Department plans a marketing campaign in three major cities--Beijing, Shanghai and Guangzhou--where it hopes to introduce the fruit and its health benefits to Chinese consumers.
Many say China also currently lacks the infrastructure and its consumers lack the buying power to create a big market, particularly for the perishable fruit or frozen juice that needs refrigeration.
“It’s a market limitation we don’t seem to appreciate,” said Gene Albrigo, a professor with the University of Florida’s Citrus Research Center in Lake Alfred southwest of Orlando.
The current tariff of 40% will also keep prices high. The tariffs will drop to 12% if Congress approves permanent normal trade relations with Beijing.
The citrus industry has already had great success in Japan, Florida’s largest citrus export market. The state’s shipments of 8 million to 11 million cartons of grapefruit and orange juice are worth $100 million a year.
The state Agriculture Department, which opened an office in Beijing last year, hopes the Chinese market eventually will be three times bigger.
But “certainly China isn’t going to be Japan this decade,” said Lesser, pointing out that it took 20 years of painstaking work to take the Japanese market to its current level.
But Clements has been quietly doing business in China for more than a year--and it’s paid off. Clements said he’s made about $500,000 in sales over the past 12 months shipping his orange juice to half a dozen retailers in China.
Clements, who is planning to take his company public within two months, received a permit last September following years of visits to China and contacts with Chinese officials and businessmen. He hosted several Chinese officials, including the Chinese ambassador, while they toured Florida. That personal contact is key to doing business there, Clements said.
Businessmen such as Clements are on the right track, said Desmond Wong, Ernst & Young’s national director for China. He points to Coca-Cola’s success in converting Chinese tea and mineral water drinkers to soft drinks and thinks juice makers will have an easier time selling a healthier product.
“If I were a grower, I’d start the engines right now,” said Wong, who focuses on Western business development in China.
On the Net: https://www.floridajuice.com
