Despite growth in 2021, China’s fruit imports face growing uncertainties under COVID

Despite headwinds facing international fruit trade, China’s fresh fruit import market remains strong. A recently released annual report by China’s Chamber of Commerce for Import and Export of Foodstuffs, Native Produce and Animal By-Products shows that in 2021 China’s fresh fruit imports have increased by 12% in volume and over 30% in value.

Top performing categories include fresh durian, cherries, banana, mangosteen, longan, kiwifruit, table grapes and dragon fruit. Top export countries include Thailand, Chile, Vietnam, the Philippines, New Zealand, Peru, Australia and South Africa.

However, market disruptions continue to exist due to local and regional flare ups of COVID-19, China’s adherence to its ‘Zero Covid policy’ and delays and high prices for international freight. Recently, major wholesale markets closed under outbreaks of the virus in Shenzhen, Guangzhou and Shanghai.

SOUTHEAST ASIA

Southeast Asian countries see potential in China’s tropical fruit market, and production and exports to China have grown steadily in the last few years. Some of China’s largest fruit imports in terms of volume and value come from neighbouring countries in Southeast Asia, including Thailand, Philippines, Myanmar and Vietnam.

Recent investments under China’s Belt and Road system in infrastructure projects across Southeast Asia are providing new transportation routes from the region into China. The China-Laos railway was employed earlier this year to transport fresh fruit from Thailand directly into China by rail. Thailand is expected to export 2.2 million tons of fresh produce to China in 2022. Thai durian production is expected to reach 740,000 tons this year, an increase of 240,000 tons. China’s is also Vietnam’s largest fruit and vegetable export market, accounting for 65-80% of the total turnover of the industry.

Yet recent, and persistent, COVID developments have hampered trade between the region and China. China’s strict border controls under its controversial “zeroCOVID” policy have brought mass congestion, frustrated traders and wasted produce on its long land borders with Laos, Vietnam and Myanmar. There have been on and off border closings with Vietnam and Myanmar, causing trucks to become stranded and fresh freight go to waste. Myanmar transportation companies have witnessed rotten fruit at roadsides, with border clearances decreased from 500 trucks a day to 10 trucks a day. A fruit trader commented: “China is becoming more and more strict in quality control, traceability, packaging. Their ‘Zero COVID’ policy makes it difficult for many fruit and vegetable exporters.”

Thai officials recently proposed their Chinese counterparts to hold a joint meeting with Thailand, China, Laos, and Vietnam to reach an agreement on a common protocol to speed up the import and export of fruits, with direct exports from COVIDfree certified exporters, but with little to no success so far.

As a result, as fruit and vegetable exports to China from the region face difficulties. Vietnamese enterprises started to invest heavily in systems and processing plants to sell their products in Europe and the US.

SOUTHERN HEMISPHERE TRADE

Import from Southern Hemisphere mar-

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process & packaging solutions

Topseal packaging

It has become quite impossible to imaging supermarket shelves without topseal packaged products. This is unsurprising when one considers the many advantages of this type of packaging. Topseal packaging is more environmentally friendly (using less plastic), easily printable, more efficient in the logistical chain and it ultimately ensures a better presentation in the store.

As topseal packaging extends the product’s shelf life, it increases sales and prevents waste. Research shows that some 30 percent of all food produced is not consumed, getting lost somewhere between farmer and consumer. The right choice of packaging can help to reduce some of this food waste.

Proseal Traysealers

The Proseal tray sealers offer the solution to professionally topseal packages and are able to 30 to 240 (semi-automatic vs fully automatic) packs per minute seal. Easy integration into packaging lines is no problem. In addition to the advantages of the topseal packaging, the machines also offer environmentally friendly benefits. The integrated “eSEAL system” is environmentally friendly, uses little air and is cost effective. ‘Hotrod”, the efficient heating system in the molds, ensures a higher output through reduced sealing time. The increasingly stringent environmental requirements are forcing us to also look at alternatives to plastic and as a result, we are now also able to produce packaging made from alternative materials. These include cardboard, pulp, sugar cane and recyclable plastic.

Innovation - Case Packer

Proseal has extended its product portfolio with the launch of a high-speed fully automatic case packing system. The new Proseal’s patent pending CP3 provides the ideal complement to Proseal’s extensive range of tray sealing machines to offer customers a complete primary and transit packing solution. The Case Packer combines efficient power consumption and a compact footprint with the ability to fill cases at up to 120 packs per minute.

Satisfied customers

In the course of an ever greater demand for topseal packaging, we have already supplied machinery to the following customers, to their full satisfaction: Fruitmasters, ASF Holland, Beekers Berries, RedStar, ABB Trading and the Greenery are some examples of satisfied customers who now own several modern tray sealers from Proseal. We intend to maintain and further develop our relationships with all of our customers. This compels us to be flexible and innovative and, when necessary, to collaborate intensively with our customers in trying to optimize their processes. Some references:

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kets also continued to grow in recent years. The years before the onset of COVID-19 were some of the best export years for producing countries such as Chile and Peru. Yet, uncertainties created by the pandemic, cost hikes and supply chain disruptions have also affected this import market, according to a recent report by the Southern Hemisphere Association of Fresh Fruit Exporters.

Recent COVID outbreaks and accompanying lockdowns in different places including Shenzhen and Shanghai have led to market closures and severe congestions at Shanghai’s international port.

Demand for premium fruits remains strong in China. Imported products are considered premium and sought after by domestic consumers. With the development of Chinese domestic fruit production and the emergence of Chinese domestic fruit brands, some Chinese fruit businesses are entering the same premium produce space.

Different supply markets have been affected by a different set of issues. Australian exports to China have been hampered by geo-political issues between the two countries, leading to an estimated 20% decrease in grape exports. Exports from Chile remained strong in the last two years. However, due to heavy delays at ports in Hong Kong, Guangzhou and Shanghai, some cherry shipments missed the profitable window before and during Chinese New Year. Work has been done in Chile to improve selection and packaging processes to meet specific demands from the Chinese consumers, who look for high quality goods. The industry is also investing in the marketing of late variety cherries tailored for sales in the weeks and months after Chinese Spring Festival. Peru is increasing its windows of supply for different products, including blueberries. Having planted new blueberry varieties in different regions in the country, Peru is making progress in early season supply, entering the market as early as August and September with some of it shipments. Recently, the South African Table Grape Industry (SATI) body said that this year may be the industry’s largest export season to date. Planned promotional activities have been postponed by COVID-19 and it remains to be seen if the Chinese market can absorb more of its crop. In short, market demand continues to grow year on year, but market conditions remain challenging.

Thijs and Lennart van den Heuvel

Thijs van den Heuvel hands over companies to son, Lennart:

„You used to have to gain a position in trade; now it‘s all about transparent chains“

At the beginning of this new year - a double-interview with the old and new owners of the Olympic Food Group. This Dutch group includes Olympic Fruit and Fresh Pack Logistics. On January 1st, 2022, Thijs van den Heuvel passed the torch to his son Lennart. Lennart has been director/owner of Hoofdman-Roodzant and FreshPride for the last three years. We discussed changing trade flows, the Russian market, and life after a career in the fruit and vegetable sector with them.

Thijs, could you walk us through Olympic Fruit’s start?

In 2000, after 27 years, I left Hagé [an import/export company]. I was the commercial director. Olympic Fruit was founded on January 1, 2001. We had a roughly 80m2 second-floor office at one of Hagé’s sites. We started with four people: Andries Verloop, Eddy Kreukniet, Lex Beije, and me. The business grew pretty quickly. I had made some good deals with The Greenery. I could trade anywhere outside the Benelux. Sander van der Laan was Unit Manager at [the Dutch supermarket chain] Albert Heijn (AH) at that time. He said he wanted to keep working with me. So, I made a new deal with The Greenery. I was to be allowed to supply AH in the Benelux as well. I’d signed a three-year contract with The Greenery, but I bought out of it after just 18 months. I was a free man then, and business went smoothly. I had a retail network in the Netherlands and abroad. I introduced 500g seedless grapes to many Dutch and other European retailers. After buying out the non-compete clause, the C1000 [then a supermarket chain in the Netherlands] contract boosted the company considerably. Within two years, we’d relocated, and stayed at that site until 2005. We grew from 80m2 to over 10,000m2 within five years. On December 12, 2005, we moved into the new Olympic Fruit premises.

And so, in time, the Olympic Food Group was born…

The Innofruit farm in South Africa, called Cederberg Farming

Things really took off then. At one point, the group included as many as 12 companies, from Chile to the Czech Republic. Hoofdman-Roodzant was the first company I bought in 2008. My most significant participation was in Terra Natura International (TNI). I held a 50% stake there from 2009 to 2014. At that time, the group included a fruit processing company, a bakery, and a software company. In 2013, we decided to sell some of those businesses. That was for strategic reasons. We opted for backward chain integration by investing in our own production. Then we founded Innofruit, of which I’m still director/shareholder. I’m not a grower and am well aware of the perils of own cultivation. But with skilled people managing your cultivation locations, growing your own produce is a unique selling point.

Innofruit has growing locations in South Africa and North Macedonia. In South Africa, we manage over 100 hectares. There, we’re currently growing around 50 hectares of table grapes. Thirty hectares more still has to be planted. In North Macedonia, we have 260 hectares, on which we now grow 25 hectares each of apples and apricots. We also have 18 hectares of cherries and four of plums. That still leaves about 200 hectares. We have a Dutch manager there, with local managers in South Africa. We’re very happy with both. The strategic and financial management is done from the Netherlands, where Innofruit has a very experienced team.

You used to be known as the top Greek specialist. Is Greek fruit still important for your company? Does the market still even have room for non-specialists?

We were, indeed, Greek specialists right from the start. However, that share has decreased significantly over the years. That volume is now, at most, ten percent of our total. We’ve always believed in product specialization. We’ve always focused on citrus, grapes, and stone fruit. In recent years, we’ve added soft fruit, a fast-growing category within our company.

Lennart, was your joining the company a given?

When my father began the business in 2001, I’d just finished school. I was interested in going into trading, but the company was still tiny at that time. Besides, we weren’t allowed to trade at all in the Benelux. I was bored to death. So, I went to Greece. There I spent four months with our shipping company, Balakanakis. I learned the language and enjoyed life. Then I was at Frutania in Germany for almost two years. It’s a global business now, but back then, I was Markus Schneider’s second employee.

We worked out of an attic. I learned a lot there, too. I was planning on going to Southern Europe. But then Olympic Fruit’s Eddy Kreukniet returned to Jaguar. He did the purchasing from Greece and sales to Germany. That fitted in perfectly with the experience I’d gained. I started at Olympic Fruit in October 2003. I began buying from Egypt, Turkey, and Greece and picked up a few sales. I did that until I transferred to Hoofdman-Roodzant in 2008.

Where does the Russian adventure fit into the picture?

We bought Hoofdman-Roodzant in 2008. Huub Hoofdman was 58 and had no successor. It was a great opportunity for us. Hoofdman was one of the larger exporters to Russia. I felt right at home. Huub retired in 2010, and I became managing director. It wasn’t the easiest of starts. Two of the company’s most experienced buyers left shortly after that. I was only 29, so it was a major blow. But in retrospect, I think it was a good thing.

Dojrana Fresh Produce, the farm in North Macedonia

It allowed me to form a young team. In Russia, supermarkets were springing up all over, and we jumped on that train. In 2008, after the acquisition, Hoofdman-Roodzant had a turnover of EUR70 million. By 2013, we’d built that up to EUR120 million. Putin closed the [trading] borders on August 8, 2014. That, naturally, hit us hard. We, nevertheless, did not make a loss.

How did you pick up the Russian thread again?

We were an all-round exporter. But Dutch greenhouse vegetable exports to supermarkets had become a spearhead in the years preceding the boycott. We worked closely with various grower associations in the Netherlands. We acted as their Russia export partner. Those volumes were cut right back. However, we also saw opportunities to sell overseas fruit to the Russian market. We decided to use all our market know-how to help those who still wanted to export to Russia. But we found it a difficult market.

We’ve successfully fulfilled this role for several producers from South America, South Africa, India, Egypt, and Peru. The time of the mixed truckloads of Dutch greenhouse vegetables was over. Still, we send about a thousand containers of goods from all over the world directly to Russia. Those range from top fruit, citrus, and grapes, to mangoes and avocados. We are market specialists, so we can play a role in a complex, risky market that producers often avoid. With our help, they can enter that market successfully.

That’s how we’ve transformed Hoofdman, and we still see plenty of prospects. We achieved sales of EUR35 million in 2020. Last year should be similar, and this year, we’re aiming for further growth. We have further diversified our sales markets too. And have increased trade with the Far East, Middle East, and Asia. Initially, we did this from Hoofdman-Roodzant. But, in 2016, we established FreshPride. We realized a EUR20 million turnover in 2021, so it’s starting to take off nicely.

Did you ever consider setting up cultivation in Russia?

Of course, that did cross our minds. A couple of people from Harvest House and I went to Russia to orient ourselves on Russian cultivation. In the end, we decided against it. When you’re in Russia, people treat you like a local. That didn’t appeal to me. Besides, I’m not a grower, and all the political red tape is off-putting. I’d rather supplement Russian supermarket programs with goods from all over the world. But from here. Growers everywhere prefer doing business with a well-paying Dutchman. And I think I’m allowed to say that because I’m married to a Russian.

Thijs, when did you start thinking about handing over the company?

For me, 2014 was literally a disaster. Lennart has mentioned the Russian ban. However, a few weeks before that, our son Walter passed away. That, naturally, affected us greatly. And, later in the year, our house was burglarized. I wasn’t very happy at the time. I wouldn’t call it a black hole of despair, but life had certainly lost some of its luster. That’s when you start to put your work’s value into perspective. In 2015, I decided to take a step back in January 2016. Initially, I transferred the daily management to an external management team. But that didn’t turn out to be what we’d thought. Lennart finally raised his hand in 2020.

ROTTERDAMSE HAVEN

ROTTERDAM We used to be a true brand company, which was our strength back then. You sold Italian grapes and cauliflower under those top names. Nowadays, retailers prefer everything under private label. Though, there does seem to be more room for distinctive brands now than ten years ago. For example, we carry the Bloom brand. This is for our Innofruit’s highest quality products. We also supply our Fruit&joy label to retailers.

NS STATION BARENDRECHT

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Why then, Lennart?

By 2018, I’d already taken over the FreshPride and Hoofdman-Roodzant shares. In those years, I didn’t have much to do with Olympic Fruit. There was an independent management team, and I visited once a month to discuss figures. Then Dennis de Wit announced his departure at the beginning of 2020. And that got me thinking. Olympic Fruit is a fantastic company. But the retail world changes at break-neck speed. So, a few things had to happen to get back on track. I didn’t want the other companies to have to foot the bill either.

But I have a stable management team. Patrick Slobbe and Christiaan Schouten are at Hoofdman and Dick Donker and Ilze Brand at FreshPride. They look after the day-today operations. That’s why I told Dad I was ready. Last year, we were hit by a fire. However, that means all the companies now have their offices at the same site. That gives the entire group renewed impetus. We’re financially healthy and grew more than 20% last year. The group is well energized and is, for instance, sharing a lot of suppliers and market information.

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branches of Fresh Pack Logistics

How has the job of a fruit importer changed?

In the past, traders were far more focused on positioning themselves. Nowadays, we’re increasingly moving toward a transparent chain. You have open partnerships and give your clients and suppliers insight into your costs. That immediately makes the cooperation a lot more intimate. Nonetheless, I’m convinced there will always be importers. Supermarkets can directly import many things. But they’ll never be able to match imports and required demand seamlessly.

That’s where we come in. That’s also why I want a significant portion of the company to be involved in trading. Supermarkets provide a stable base. Our close relationship with stores like Aldi and Superunie have made that abundantly clear in recent years. Yet only supplying retail isn’t good either. Trading with wholesalers and re-exporters ensures a good mix.

Thijs, Hagé used to have top brands like Enzafruit, Cape, Outspan, Zespri, and Carmel. Do these still have a place in the market? Fruit and vegetable salespeople often go elsewhere to work for good shippers. How do you deal with that? Is it healthy competition?

That is, of course, never ideal. Though, I’ll never hinder someone who’s upfront about wanting to start a business. Buyers used to represent significant value. But, nowadays, the person who maintains contact with retailers increasingly represents an important position in the market. Above all, you have to ensure that people want to work for you.

Our sector’s problem is that, over the years, people have been getting royal salaries. Even those who weren’t highly educated, left school at 15, were mouthy but had a bit of business sense. I say that with all due respect because I was trading from a young age. Those salaries were all good and well, as long as things were going well. But once there’s increasing pressure on earnings models, and client partnerships change, things begin to unravel.

Lennart: That’s why, in recent years, we’ve been hiring many younger people, whom we train ourselves. That costs money. But if you give these people the opportunity, it’s wonderful to see how they flourish. In the past, it sometimes seemed like a competition to see who could stay at the office the longest. That’s changing. With smartphones, you don’t always have to be physically present to maintain contact with customers and suppliers. As long as people meet their targets, I don’t have to decide how many hours they need to be at the office. However, I did like that everyone was keen to come back to work once the mandatory working-at-home COVID measure was lifted.

Lennart, where do you differ from your father?

My father comes from a different time, where you managed everything yourself. I noticed this, for example, when Russian buyers would file yet another claim. My father didn’t always understand why. I knew I wasn’t going to get through to him by arguing. You just have to keep at it, and sometimes that means taking two steps

forward and one step back. I think I give colleagues more responsibility too. I do not have to be a carbon-copy of my father, as much as I respect him. The Van den Heuvel surname is sometimes loaded for some people, but that doesn’t bother me at all. I simply want to do things in a way that will benefit the company most.

And then you gained a logistics company too…

My Dad said, “If you want Olympic Fruit, you have to take Fresh Pack Logistics too.” So, FLP was added to my plate. Fresh Pack Logistics specializes in fruit and vegetable refrigeration, storage and handling, cross-docking, small pack, and transport. It has four DCs and more than 30,000 m2 of storage capacity. In 2021, we recruited a new, experienced logistics management team to run FPL. They must expand its activities. I’m happy with where we are.

The Dutch Fresh Port is a strategic location, and we don’t want to move. With pioneers like Van Gelder and Bakker Barendrecht, Nieuw-Reijerwaard is being developed at lightning speed. And we, too, have reserved a well-accessed, high-visibility 4.8-hectare spot on that new site. The current four FPL premises are, fortunately, adjacent to each other in a single row. Once we’re in a single building, we’ll be able to set things up much more efficiently.

And Thijs, are you happy you could hand over your company in this manner?

Absolutely. I’m proud that the business has stayed in the family. And that I was able to transfer this vegetable trading company to Lennart. Lennart can also do it his way; I’ll certainly not interfere. I’ve been importing grapes and citrus for years; I no longer need to know how much a box of grapes costs. I’d like to advise all fruit and vegetable growers to start thinking about their business succession in good time.

I’m proud of all my children. They’re all doing their own thing. My daughter Dineke is involved in a [local] placemaking project and “Verse Grond” (Fresh Ground). My son Thijs is a true entrepreneur and owns Bergwerff BMW. He’s found his passion in selling cars. And our youngest son David works for LogisticDocuments.com, an innovative start-up.

What now? Time to pursue your hobbies?

I still own Innofruit and Emborion Prop-

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erties, so I still have plenty to keep me busy. A new district called Stationstuinen is being developed in Barendrecht, [the Netherlands]. There will be space for 3,500 houses. My son-in-law, Lodewijk van Meeuwen, is Emborion’s director, and responsible for that development. Those plans are currently in the final phase. The old trading centre will gain a suburb, most of it on our land.

But, I will be making more time for relaxation. After the terrible year we had in 2014, my wife and I had to really reevaluate our lives. We started cycling, and I’ve climbed Mont Ventoux [in France] twice now. We also regularly babysit our grandchildren, which gives us a lot of joy. The oldest is 11, and our 14th grandchild is on the way. After 48 years in business, it’s time for a new phase. I’m a blessed man. I can say the same as I did when the Olympic Fruit building officially opened in 2006: Soli Deo Gloria.

www.olympicfoodgroup.com

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