Zespri

On a cool but sunny winter day in July 2010, Lain Jager drove along the narrow country road in the Bay of Plenty region on New Zealand’s North Island. The kiwifruit vines in the nearby fields had been picked months before, and it was the height of the shipping season for Jager and his colleagues at Zespri Group Limited (Zespri), a grower-owned “corporatized cooperative” and the main exporter of New Zealand-grown kiwifruit. New Zealand was the world’s third-largest kiwifruit producer behind China and Italy and held a 30% share of the globally traded market. During the last 12 months, Zespri had shipped over 100 million traysa of fruit—representing over $1.5 billionb of exports—to more than 60 countries. Historically, most New Zealand–grown kiwifruit was destined for Europe, but over the last few years Zespri had experienced strong growth in Asia, especially in Japan—where consumers were willing to pay top prices—and more recently in Korea and China.

As the global demand for kiwifruit—often cited as the world’s first “super fruit” due to its excellent nutritional properties—increased, so did production in Italy, Chile, and China as well as in New Zealand. To differentiate its products, Zespri had encouraged strict growing standards and quality control systems, and invested in consumer branding and innovation. Industry-funded plant research led to the 1998 launch of Zespri “Gold,” a patented kiwifruit variety whose yellow-fleshed, sweeter-tasting fruit commanded a higher price than its traditional “green” relatives. By 2010, Gold volume accounted for one-quarter of Zespri’s sales. Importantly, grower returns were much higher for Gold production than green. In 2010, three new intellectual property (IP)–protected varieties were in the first stages of the commercialization process. To support its new IP-protected products and build its brand, Zespri had initiated a global sourcing strategy with the objective of maintaining