Citrus and Table Grape Exports to Asia:
An Industry Competitor Analysis

Executive summary

Asian imports of temperate fruits from Southern Hemisphere producers have almost doubled in the past ten years. This represents a one billion dollar increase in fruit imports. Over this same time period other Southern Hemisphere suppliers, such as Chile and South Africa, have been able to take advantage of Asia’s growing demand for horticultural products. In contrast, Australian exports to the region have remained relatively stable in both volume and value. In response to this shift in market share, an analysis of industry competitiveness has been undertaken.

The process used in a competitor analysis, as described by Bensoussan and Fleisher (2008), includes five steps. The steps are as follows: define the industry and market, define the competitors, decide what information is required about these competitors, gather the information, and assess the performance of each competitor.

As a result of analysis into the initial steps of the competitor analysis process, citrus and table grapes were selected as the industries, and Chile and South Africa were selected as the competitors. The competitiveness factors for assessment are: quality, understanding consumers, value chains and relationships, innovation, market access, cost of production and price, supply capability and logistics, marketing and promotions, understanding competitors, and economies of scale.

Interviews were conducted with representatives of the citrus and table grape industries in Australia and Chile, and Asian fruit importers. In total, 35 interviews were conducted. These interviews are supplemented by analysis of trade trends, and insights from government and industry publications.

The findings indicate that there are some key differences between Australia, Chile and South Africa in a number of the competitiveness factors. It is clear that Australian citrus and table grape exports to Asia hold an advantage over Chile and South Africa in product quality, understanding consumers and supply responsiveness while Chile and South Africa have clear advantages in price, supply volumes, supply continuity and economies of scale. Table 1 provides a summary of key points raised by interviewees and the resulting application to industry.

While Australia's current strengths include quality, agility and understanding consumers, there are opportunities for improvement in these areas. Particularly, value for each of these areas could come from getting a better understanding of end consumers in various market segments.

There is little difference in the performance of Australia, South Africa and Chile in innovation, marketing and promotions, value chains and understanding competitors. With regard to market access, Australia’s performance was considered to be better than South Africa, yet not as good as Chile.

There is scope for innovation in: quality control systems, packaging, creating novel approaches to marketing and promotions, and when relevant, through applied science. The prioritisation of these investment opportunities rests with industry organisations and chain members.

Comments on Australia's ability to manage product flow, information flow and relationships raise important considerations for chain members. In this area, there are three key areas that were commented on: consistency of product flow, information flow to the market and information flow from the market. The level of industry integration, collaboration and commitment to export markets may be limiting factors in this area. The citrus industry and to a greater extent the table grape industry could consider a move towards consolidating in-market representation. Such collaboration could build stronger relationships with both importers and retailers, improve information flow, aide market research efforts and improve quality control.

There may also be opportunities to collaborate rather than compete with other Southern Hemisphere fruit industries. To date there are very few examples of international collaboration between table grape or citrus chains. The Southern Hemisphere Fresh Citrus Exporter collaboration, for example, provides a good example of what can be achieved through investments in mutually beneficial market research.

Areas where Chile and South Africa hold an advantage in include supply volume and price. Attempting to increase production to simply gain ground with respect to the scale of production in competing countries would not be an optimal strategy. In those competitiveness factors where competitors hold a large margin in terms of competitive performance the best strategy for the Australia industry is one of minimising exposure to that factor. By pursuing a strategy of high quality products targeted at a premium market segment, price performance declines in relevance.

The important point to remember is that a competitor doesn't need to be the best at every factor to be successful. It's how the combination of factors is used to create a competitive advantage and how that is used to achieve their industry strategy.

Past strategies for Australia's table grape and citrus industries have provided a strong competitive position in Asian markets. The notable legacies of these strategies include: high product quality, strong relationships and an understanding of Asian consumers. This legacy has allowed Australian industries to remain competitive under increasing pressure from other, lower cost Southern Hemisphere competitors.

The future competitiveness of Australian industries will require clear and focused strategies, and an effective use of limited resources. Through collaboration, a commitment to export markets, improvements in market access, consumer orientation and strategic innovation Australian table grapes and citrus will be well positioned in the Asian market for the future.

Diagram 1. A visual representation of the performance of Australia, Chile and South Africa's table grape (left) and citrus (right) industries in each of the ten competitiveness factors.

Authors:

Simon Fraval, Project Officer, Market Access and Competitiveness, Farm Services Victoria

Ashley Paech, Project Officer, Market Access and Competitiveness, Farm Services Victoria

Jonathan Creese, Project Officer, Market Access and Competitiveness, Farm Services Victoria

Ian Lewis, Lewis Agri-Food Chain Solutions

Editors:

Clare Purcell, Program Manager, Market Access and Competitiveness, Farm Services Victoria

John Naughtin, Senior Project Manager, Market Access and Competitiveness, Farm Services Victoria

Acknowledgements:

Interviews across Asia were conducted by Market Development Managers in the Market Access and Competitiveness team; Thank you to Brendan Larkin, Bryan Balmer and Peter Myers for arranging and conducting these interviews. Interviews in Chile were arranged and conducted by Jonathan Creese. Interviews with Australian representatives were conducted by Ashley Paech, Marissa Shean, Jonathan Creese and Simon Fraval.

Technical input was provided by Jenny Treeby, Marissa Shean, Ross Clarke, Citrus Australia, the Murray Valley Citrus Board, the Australian Table Grape Association, John Naughtin, Ian Lewis and Lisa Nguyen.

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