The Thriving Blueberry Industry in China: Insights from Industry Leaders
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| 2 November 2023
The Chinese blueberry industry has been on a remarkable trajectory of growth and export expansion, defying conventional market trends and economic conditions. In this comprehensive article, we aim to provide insights into the growth of the Chinese blueberry industry through interviews with industry leaders Michael Oates, the Managing Director of Haygrove China, and Huan Zhang, the founder of Twinkle Star Berry.
“What we’ve seen really in recent years in China is as the economy has slowed down, the blueberry sector in China has been expanding at an astounding rate, with a demand increase of approximately 40% year-on-year over the past five years, a stark contrast to the modest growth of many other major categories which have seen around 3-5 percent year on year growth,” says Michael Oates.
“The marketing efforts of companies like Driscoll’s and Joyvio have played a crucial role in educating Chinese consumers about tasty blueberries and the health benefits of blueberries, boosting demand. With more international players and breeding companies entering the Chinese blueberry market, it’s expected that further innovations and improvements will continue to drive growth, ” says Huan Zhang.
Several key factors have driven this blueberry boom, including the emergence of major players like NPS, which has gone from effectively 0 hectares as of November 2020 to around 1300 hectares within three years, rapid expansion in blueberry cultivation, and substantial capital investments have also played an important role.
“We’ve also seen a scramble, basically to plant blueberries, especially Southern HighBush blueberries for counter seasonal cropping in the January to May window, basically anywhere people can. It’s still at this stage of market immaturity that even if you are not a particularly good grower and not equipped with particularly special or in fact legal varieties, the opportunity for outsized profit versus various other fresh produce categories is high. For example, you have people who’ve typically invested in tech or real estate, who effectively have seen a spreadsheet that says their return for substrate blueberries is higher than let’s say real estate. And so they’ve parked liquidity there,” says Michael.
To address growing concerns about oversupply and economic uncertainty in mainland China, key distributors like Driscoll’s and Joyvio have initiated formalized export programs. For instance, Driscoll’s began exporting blueberries and raspberries to Southeast Asia, while Joyvio utilized its regional supply chain to export products from their joint venture with Hortifrut. These export programs serve as a hedge strategy to maintain premium pricing and explore new markets while addressing fears of oversupply in the Chinese market. These factors have led to an increase in exports.
China Fresh Export Volume By Partner | Cultivated Conventional
China Fresh Export Price History | Cultivated Conventional
“One noteworthy trend is the increase in fresh blueberry exports to Southeast Asian markets. This development is linked to the growing demand for Chinese blueberries and the need to explore new markets beyond the domestic sphere,” says Huan.
“Peruvian blueberries make their debut in July, extending through January. During the summer, the Chinese market typically lacks high-quality blueberries. Peruvian blueberries become available in China around July to August, constituting a substantial portion of the imports. In addition to imports from Chile, China imports a limited volume in the summer through air freight from the US, particularly from Washington and Oregon. This positions China as one of the largest importers of blueberries on the global stage,” says Huan.
China Fresh Import Volume by Partner | Cultivated Conventional
The Chinese blueberry industry faces several challenges. These include land zoning policies that prioritize staple crops over economically valuable ones, intellectual property theft leading to illegal propagation, climate change impacting crop management, and rising labor costs with limited incentive to invest in labor-saving capital with a longer payback period due to inability to own land.
“China, home to 15% of the world’s population but only 7% of its arable land, has prioritized food security over cash crops. A policy enacted since January 1, 2020, restricts land usage, primarily reserving it for staple crops. This limitation has caused the cost of developing farms, including land compensation and extensive civil engineering work, to surge by 30% to 70%,” says Michael.
In the fresh blueberry market, the dominant producing regions are primarily in Yunnan, Sichuan, and Guizhou, with Yunnan standing out due to its ability to produce counter-seasonal blueberries. There is also some presence in northern regions like Anhui and Shandong, although the quality from these regions is not as high, making them less suitable for the premium fresh market.
“Yunnan stands out as a focal point for blueberry cultivation, thanks to its ideal climate for producing low-chill and no-chill blueberries. This region is especially significant because it can supply blueberries during China’s winter months when domestic production is limited, coinciding with the Chinese New Year, ” says Huan.
Compared to global markets, the Chinese blueberry market is more fragmented, with numerous branding and packaging efforts to differentiate products. One unique characteristic is that there is no incentive for retailers to work with licensed legal growers, fostering illegal propagation and non-compliance with industry regulations.
The future of the Chinese blueberry industry is poised for further growth and international collaboration. As the industry matures and overcomes its challenges, players in the sector must adapt to navigate this changing landscape effectively. Huan sees this as an opportunity to connect international and domestic companies and facilitate knowledge sharing for the benefit of the entire industry.
According to Michael, the Chinese blueberry industry is expected to mature and consolidate over the next five years. The market will see increased competition and tighter profit margins, causing less efficient or skilled growers to exit. The industry may witness high-profile failures among companies that over-leverage themselves. Entry costs are rising, and returns are falling, prompting growers to contemplate increased capital investment to reduce labor reliance. The Chinese blueberry industry faces a unique challenge due to the inability to own land, which necessitates a delicate balance between capital investment and labor dependence. As the industry matures, players will need to adapt to navigate these challenges effectively and continue reaping the rewards of the blueberry boom in China. The industry’s future is marked by more international collaboration and innovation, making it one of the most dynamic and international agricultural sectors in China. As the industry continues to mature and overcome challenges, it is poised to remain a powerhouse in the global blueberry market.
Written by: Sarah Ilyas
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