Omni-Channel retailing is sweeping the globe. Indeed, it so important to the produce trade that we created an entire conference dedicated specifically to exploring the junction between Omni-Channel and fresh produce. You can review some of the topics we discussed in these pieces:
10 DATA-RICH INGREDIENTS TO OMNI-CHANNEL SUCCESS
Kantar Worldwide To Highlight Fresh Data At Amsterdam Produce Summit
China is a leader in this area, and George Liu is one of the young players we’ve been tracking for some time with pieces such as these:
Young Entrepreneur: Fruta Cloud brings new model to Chinese fruit market
Imported cherries ‘no longer a premium product’ for China, claims Frutacloud chief
E-retail, not e-commerce: China’s fast-changing online market for fresh fruit
In London, we are fortunate to have George participating in the Global Grape Summit, on a panel titled Maximizing Online Retailing In China. George will also participate on the Perishable Pundit Thought-Leader Panel at The London Produce Show and Conference.
We asked Matthew Ogg, contributing editor at PRODUCE BUSINESS magazine and Fresh Fruit Portal, to get us a sneak preview of George’s thoughts as we head off to London:
George Liu
CEO
FrutaCloud
China
Q: The Global Grape Summit is just around the corner now, and you’ll be there talking about maximizing online retail sales in China. What are some of the key points you’ll be discussing?
A: We have been working with a lot of online retailers, including some new e-retail channels like Hema and also the regular ones like Fruitday and JD.com, and when we talk about online sales for grapes, we’re using a different strategy to offline.
When you’re doing offline, the customer is drawn to the appearance of the fruit, but when you’re doing it online, it’s much more important to have a story behind it, to have a good name and to introduce in words what is so special about the grapes.
I think that’s what has been lacking in the past, not just for grapes but for many other fruits. For example, in a lot of the green seedless grapes, the name was not so important in the past for the customer; you could talk about Pristine Seedless from Polar Fresh Group or Sweet Globe from IFG or Autumn Crisp from Sun World, and sometimes the customer didn’t know the difference.
But now because of online retail, they put emphasis on a lot of these different varieties to make sure the customer wants to try every one of them, and to make sure the customer remembers which one brought the best eating experience.
Q: For grape marketers themselves exporting to China, how best should they go about this?
A: Right now, a lot of the Chinese e-commerce retailers are switching to more of a service-provider model similar to Europe. So, the brand owners will talk to the supermarket about what they have to offer, about the seasonality, maybe even about packaging, and sometimes it will be about the pricing, but there will be some service providers in the middle to help them do the repacking and the supply chain.
This model is more developed for other categories; I would say for citrus, apple, kiwifruit, but right now there are a few really big grape brands trying to do this in China. Even though they cannot do this service end-to-end, they at least can talk to retailers directly about what they have to offer and what product or service they should use.
We at FrutaCloud sometimes act as a service provider to facilitate, to make sure all the plans can be executed well and the fruit can arrive fresh to the customer.
Q: And in terms of that consumer-facing message you mentioned, what are some examples of companies putting out a good story?
A: Right now, one of the star varieties is the Muscat Beauty, which is a muscat grape that is seedless, and Santa Elena [in Chile] owns the patent. Muscat Beauty has been growing really rapidly over the past two or three years, and FrutaCloud has been one of the major receivers and promoters of the variety.
I think this is a perfect example of how e-commerce and retail can really push a variety that is traditionally not well received in the wholesale market; part of the reason for that is Muscat Beauty is not a traditional good-looking grape.
People will say the Chinese market likes a lot of bloom and really big berries. Muscat Beauty goes against all of that. But one thing it does have is the taste, so when we are promoting Muscat Beauty, we position it as a royal enjoyment of having the taste you’ll never forget. I think this is something similar to what Cotton Candy is doing in the United States or even in Europe.
Q: So there’s a good opportunity with table grapes for flavor to come to the fore?
A: Yeah, I think flavor has already come to the fore, but, that being said, a lot of the flavor varieties are still in the nascent stages in terms of how to handle them. Varieties like Cotton Candy are a little bit more difficult to handle because of shatter problems.
So I would say even though there’s a big emphasis on flavor, the condition of the fruit is still very, very important because if you imagine the supply chain for e-commerce and new retail, they are delivering that piece of fruit to their customers either through a carrier or a bike messenger, for example, and the fruit is going to suffer a little bit more wear and tear in transit.
Q: We’ve been talking a lot about proprietary varieties, but what percentage do they make up at retail compared to your standard varieties like Red Globes or Crimson Seedless?
A: At Frutacloud, our customer base leans more toward the high-end, so we see the shift from traditional varieties to these new varieties in a very fast manner. Over the past two or three years, Red Globe used to occupy a big share of our supply to our customers, but right now Red Globe only accounts for maybe 20 to 30 percent. I would say the patented varieties have already surpassed over half of our volume to our customers.
Q: Is that to say Red Globes are only losing much place in your particular business model? Maybe someone else is still finding opportunities with those for a lower income demographic of people?
A: Yes, exactly. You have to always remember that China is a very big country, and the average income in China is still quite low. So you still have a huge segment of the lower end market where Red Globes can hit a sweet spot for the bargain seekers, and then also in terms of premium Red Globe, there’s still a good market as well. It’s just for the new retailers and e-commerce, because of how they promote their product it’s easier to promote new varieties.
Q: You’ve spoken about the importance of watching disposable income growth for understanding the Chinese market, and that figure grew by 6.5 percent in 2018. What can we expect from the Chinese economy and how e-retail fits in?
A: Even though the disposable income has grown a lot, as we all know the China market is suffering a little bit of a growth slowdown overall in terms of GDP, and I think overall that will affect the consumer expectation as well. I still think new retail is the way to go, and having fruit delivered to your house for the convenience is still a big point.
Now we are starting to see some trends in some of our customers that are putting more emphasis on reducing waste in the packaging. I think that’s a very good direction to go – it’s already been the direction for Europe and the U.S., where they really care about how much plastic you use in the packaging. On the flipside, however, the less plastic you use in the packaging the less protection you give to the fruit, especially when you have to deliver that to the door.
There is a big opportunity for innovation in the supply chain in how to deliver the fruit to the customer — protected and fresh while reducing as much plastic as possible.
Q: Do you feel this is something grape suppliers need to take on board in their programs?
A: I think it will be a collaborative effort between the grape suppliers and us… we need to find a way to repackage this fruit and protect it, and with good presentation as well, so there are multiple things we need to tick on the box.
Q: That’s very interesting. And are there any other topics you’re looking to discuss in London?
A: I’d like to talk about how we could go about introducing the patented varieties to be grown in China. It’s something everybody wants to do, but people are a little scared because of the copyright protection and all the infrastructure surrounding how to have a successful vineyard in China. That’s something we could explore together.
******
Many have long lamented the produce industry’s focus on providing beautiful fruit to the consumer. Environmentalists and social activists see this as a major cause of food waste. Traditionalists have seen this as leading to the abandonment of many good tasting heirloom varieties.
George Liu raises the interesting question as to whether a move to e-commerce might lead to a more analytic consumer – studying varietal tariffs through online education and marketing, rather than giving an emotive response to product right before one’s eyes on a store shelf.
He also points out that branding may have more significant impact if online purchasing allows consumers to better track what products they enjoy and set them for automatic re-order.
It is also true that appearance can be very important in online commerce. When product is delivered to a home, the consumer often will do a quick check and send back anything unsatisfactory. Even a minor imperfection can thus be very expensive.
In any case, we appreciate George flying all the way from China to share his insights.
Come to the Global Grape Summit and The London Produce Show and Conference to hear George’s explanation of how the Chinese market is developing and think about how lessons learned in China will reverberate through the global produce supply chain.
You can register for both events right here.
You can find the website for the Global Grape Summit here.
For The London Produce Show and Conference here.
And if you need help or have any questions please contact us right here.
