Charles HughesManaging Director Tru-Cape Fruit Marketing
Please give us a brief description of your global business and the structure of your agricultural co-op.
Tru-Cape Fruit Marketing was formed in 2001 as the marketing arm of some of South Africa’s biggest growers and fruit packers. Pre-1994, fruit was a regulated industry in South Africa where volume rather than quality determined income. In today’s competitive market, Tru-Cape assists growers with market insights that translate into growing the right size and variety or cultivar of apples and pears to best maximize income.
What distinguishes the Tru-Cape brand and product?
While some varietals—Pink Lady® is a case in point—have registered trademarks and are supported by marketing infrastructure, most fruit is seen as a commodity and has to accept the going price on the commodity market. Tru-Cape is a brand in South Africa that consumers know, trust, and demand. It is also a brand that holds the promise of the company’s best-practice and top-notch client service so that trade customers, even those in markets where the consumer doesn’t purchase Tru-Cape by brand, make Tru-Cape their supplier of choice.
To what degree has country of origin helped or hindered your global marketing and trade relations activities?
Tru-Cape benefits from links to the brands “Cape” and “South Africa” in markets abroad. Mostly, though, South African fruit is marketed under the “Cape” brand and not under the “Tru-Cape” brand. Country of origin is a legal requirement and doesn’t have any impact; the Tru-Cape brand is more important than country of Origin. The “Cape” brand is a relatively minor part of the business and only has traction in Europe and in Asian markets. We are not marketing Fruit South Africa, but Tru-Cape fruit. What the South African industry is doing through a marketing fund propagated in the U.K. and to a lesser extent in Europe around Fruit South Africa is doing a generic job for the fruit industry. Tru-Cape supports this initiative as it is positive for the fruit industry as a whole and benefits us, too. It doesn’t, however, further our brand-specific aims. We are also helping the government understand the importance of South African fruit being sold in the U.K. and Europe. The generic campaigns are mainly feel-good, and while it has created a higher level of awareness of South African fruit with the major retailers, it doesn’t really drive the purchase of South African product. In the U.K., we have lost our Tru-Cape brand identity as we pack under the house brand; so for example, in Tesco you will find Tesco apples, which we supply but in Tesco packaging. We do believe that Brand South Africa is increasing the visibility of South African fruit to give us a marketing edge against other Southern Hemisphere competitors.
Who are the major competitors in your category, and how are you differentiated?
Tru-Cape is the only South African apple and pear brand that consumers demand. While we are the largest supplier of South African apples and pears, our competitors include other growers who supply what we can’t. Tru-Cape is differentiated by our marketing spend. We invest around R11 million annually in building the Tru-Cape brand in South Africa and supporting our leadership position.
What marketing programs do you have in place to increase consumption and further brand preference?
In addition to television commercials that feature Tru-Cape’s growers and entrench Tru-Cape’s position as delivering fruit the way nature intended it, Tru-Cape has a number of brand extensions such as a branded recipe book, a branded table-top apple peeler that also cores and slices apples and pears, and an apple cutter that breaks an apple into eight wedges in one movement while removing the core. Tru-Cape has also partnered with top chefs to demonstrate the versatility of our fruit, thereby expanding consumption. We also sponsor and promote healthy living events, such as the Tru-Cape Kogelberg Marathon and Family Day Festival. This year, Tru-Cape will replant the first apple varietals that Cape founder Jan van Riebeeck first planted in 1652. This will coincide with the release of a book that Tru-Cape has commissioned, entitled “Apples in the Early Days of the Cape,” that tracks the history of apple agriculture in South Africa.
Where are you seeing new markets emerge for Tru-Cape apples and pears, and how do these vary from your domestic market?
Growth areas include India and Far Eastern countries, as well as four-fold growth on the African continent, albeit off a small base. While Russia has shown potential, that market is fraught with obstacles that make trading complex and challenging. There has been tremendous downward price pressure exerted by the U.K. supermarket buyers, who, if unchecked, will inhibit the supply of South African fruit. A positive reality is that the UK is a primary market for South African apples and pears and will struggle to find sufficient volumes elsewhere. Trading locally in South Africa continues to be strong with consumers more interested in the brand and positive quality than in the price point. Our biggest challenge is to retain existing important markets. As far as new market access is concerned—and China and Thailand are great examples—we have to rely on our government to secure things. The government must understand that the key focus must be in retaining the markets we have. One of the key barriers to entry revolves around phyto-sanitary requirements. In particular, countries like Japan and Korea have zero tolerance, thus their consideration of our fruit is low. It is unlikely that we will be able to export to them.
Another inhibiting factor is political instability with regard to Africa and even some countries in the Middle East, which threatens trading and the building of long-term relationships. We must remain attuned to what’s happening in the Straits of Hormuz, for example. If Iran sinks one of our ships, it will mean that our ability to access Dubai, from whence we export to the region, will be compromised. We could experience a loss of 5 million cartons, as it is not practice to send product via Oman. Shipping costs are rising, which is a function of the world recession and the increased oil price. Now that cargo volumes have dropped, shipping lines have raised prices by $1,500 on a $4,000 container to cover the shortfall. There is also the Bunker Adjustment Factor to consider, which makes exports more challenging than before.
What are some of the challenges and complexities in bringing fresh fruit to market worldwide?
South African government agencies (such as the Department of Agriculture, Forestry, and Fisheries (DAFF) whose role it is to open and secure trade routes for South African produce) have failed to secure trade in a number of areas such as China, Thailand, and Indonesia. This, of course, scuppers our best sales efforts. Other complexities include freight management and stevedoring at Cape Town and Durban, where ships are not being loaded and off-loaded on a timely basis and harbor slots are being missed.
Delays at sea can mean shipments being rejected as too late or perishable fruit becoming damaged while in transit. Tru-Cape fruit meets the highest phyto-sanitary and most exacting growing practices as evidenced by GlobalGap, Nature’s Choice, and many other global quality awards for our fruit. However, some markets, largely as a barrier to entry, are making ever more stringent phyto-sanitary demands. The biggest problem in Europe is the imposition of new minimum residue levels, which we must comply with. The pressure from fringe elements and special interest groups is growing, and our government must fight for us. There will simply be no fruit available if this continues. We are accredited by GlobalGap as a food safe business. They say (and common sense agrees) that you must wash your hands with detergent before handing fruit, yet the fact that microscopic traces of detergent in minute quantities are visible has now become a concern to organizations like Greenpeace.