Nelson / Marlborough

Many companies struggle to assess whether their business philosophy and approach is actually working.  John McCliskie reckons that when you receive emails from people in Baltimore and Berlin saying they have never tasted an apple as good as his, then Heartland Fruit must be on the right track.  Those emails are, he says, pretty much the ultimate compliment.
 
Heartland Fruit, part of the Heartland Group, was created in the wake of the deregulation of the fruit industry in 2002. 

“The industry went from having a single- desk seller in the form of the Apple and Pear Board to complete deregulation literally overnight.  Suddenly, instead of one seller there were ninety exporters.  We operated for 53 years under the old Board but there were no structures set up to deal with the new situation,” says John.

With a touch of understatement John notes that situation was not ideal.

“It was sexy for everyone to jump on planes and fly round the world talking to buyers.  The growers all wanted to be exporters.  A day on a plane was better than a day up a tree I guess.  What it actually meant was a massive fragmentation of supply to the same or fewer customers.  The customer would have five or six New Zealand exporters at their door.  That is annoying for them but also drives the price of the product down,” he says.

After considering a range of options, a group of growers came together and decided to band together and set up Heartland Fruit. 

“We wanted to do our own growing, processing and exporting, carry the risk ourselves.  The key to our success has been the levels of inherent trust and commitment built up over the years.  It’s not the potential revenue that holds us together, it’s the shared values.  Every day we get out of bed and try to grow an apple the customer will enjoy.  It is about doing the best job with the product and providing the best service with the least hassle.  The aim is excellence in every facet of our organisation,” John says.

There were many challenges.  New Zealand is a small country and a long way away from the big markets.  The fruit industry here is vulnerable to worldwide market trends and requires a lot of up-front investment. 

“We got off the ground in about three months.  We had to set up the company, make grower specifications, organise staff, packing, storage, agents and shipping.  In this business, you have start spending a year ahead.  80% of the value of the fruit is spent before it even goes on the shelf and there is no guarantee of return,” he says.

“Our objective is to do a better job than the rest of the industry.  In the early days, there was no rules and discipline.  Companies were sending fruit which was not export grade and picking up customers they shouldn’t have.  That sullied New Zealand’s name a bit I’m afraid.  The number of exporters has dropped from 90 to 50 but a dozen do 90% of the volume.  That’s probably a good thing.  You can’t ship everything you grow to market thinking they will take it.  As an industry we had to move quality standards up – not down,” John says.

In a key step, the industry has set up a market information sharing system where all the companies share information about price, volumes and market conditions once a week.  It is designed to ensure the integrity of New Zealand supplies. 

“We got over some of the issues with confidentiality and co-operation because, in the end, it is better for the industry to share information.  People realised it was better for everyone to be part of an industry which had a good reputation around the world.  We have to get back to being number one.  New Zealand is competing with very cheap products from South America that we can’t beat on price alone,” says John.

For Heartland Fruit, their focus was making every apple a better eating experience for the consumer.  “It sounds trite but it works!  It has to taste good.  We know great apples are made in the orchard not the packing plant so a lot of our effort goes there.  After that, you can focus on the supply chain, timeliness and accuracy.  We want to minimise the need for repackaging or discounting.  Domestically and internationally, consumers can’t get enough of our apples,” he says.

It is not an easy industry.  Working with the vagrancies of Mother Nature and the exchange rate selling a perishable product with no fixed price is difficult.  One of the ways of meeting the challenge is to develop new varieties.  John says “we are always looking for new and better mousetraps.  We have spent a quarter of million dollars this year looking at the issue but it is likely to be a ten-year process to get them to market.  That is where our future lies though.”

 “We also invest a tremendous amount of time and money up-skilling our small yet dedicated staff through management courses and courses to develop personal skills.  There is a focus on helping the helping growers gain the governance skills required,” he says. 

The customer is the final link in the chain and most are visited two to three times a year, a practise which John admits is not cheap.  “To really pick up the signals from customers you have to be standing right in front of them.  It also allows us to tell them what we are doing over here.  They need a reason to turn to New Zealand and buy five products from five exporters when they could go to South Africa or Chile and buy everything in one place,” says John.

He also has his mind firmly fixed on two linked challenges to the industry – carbon emissions and food miles. 

“Customers are starting to demand information about the carbon status of products.  Britain leads the pack but will be followed by Europe and America.    Although it is not required yet, we have almost completed having our carbon footprint assessed.  This will show that, despite the distances travelled, our fruit consumes very little carbon.  We are meeting the early demand from our customers but even 2011 or 2012 is not far away.  We want to be accredited well before the requirements hit.  This helps us differentiate ourselves from our competitors and to keep up with our customers,” he says. 

The success of Heartland Fruit, John believes, is based on differentiation, customer satisfaction and, above all, the ‘wow’ factor when someone bites into one of their apples.

www.heartlandfruit.co.nz