2021 Northwest Export Promotions Review

The 2021 season turned out to be a very difficult season for markets outside of North America as well. In the early spring of 2021, the Asia Pacific (APAC) region appeared to have the spreading of the Covid-19 pandemic under control. Then, in mid-April, Thailand, Malaysia, and Singapore all reported large community infections with the Delta variant. Shortly after, Japan, Australia, Vietnam, and Taiwan all experienced large community spreading of covid. The Delta variant emerged as a public health emergency that resulted in having a major influence on the economy and the outlook for consumption power. The outbreak prompted governments in the APAC region to reinstate several measures to control the spread, including travel and border restrictions, mandatory quarantines, drastically shortened business operational hours, setting limitations on people movements, and restrictions on gatherings. In turn, these resulted in lower consumer activities and diminished the demand for a wide range of products and services.

By late spring 2021, the opportunity for Northwest cherries (NWC) overseas business was faced with numerous challenges such as closed borders, city lockdowns, limited air and sea transportation, constraints on retail promotion activities, and a record production of late season California cherries. Demand for NWC from the APAC region started off soft as these markets were still flooded with inexpensive CA cherries. In some foreign markets, CA cherries were available in plentiful volumes until after first week of July. Just when the export volumes started to increase by the third week of June, the historical heatwave scorched the Pacific Northwest region and caused widespread fruit damage in both Washington and Oregon. Combined with the outbreak, sales volumes never did recover for most APAC markets.

The 2021 harvest volume was a slide higher than in 2020. Shipment volume increased by 2.6% from 198,281 tons to 203,422 tons and total exports improved by 6% from 55,835 tons in 2020 to 59,366 tons. The export to domestic sales ratio is just below the 30:70 benchmark at 29.2:70.8, respectively. Volume to China gained 10.38% to 1,196,698 20lb boxes and South Korea added 10.7% to 845,925 boxes. Both Japan and Australia benefited from the weak US dollar and lower FOB prices, Japan grew 10.5% to 265,429 boxes and Australia increased 53% to 134,283 boxes. Contrary, Taiwan’s volume decreased about 1% to 603,415 boxes, Vietnam plunged 51.5% to 154,283 boxes, and the rest of the SE Asia region tumbled 23% to 135,994 boxes. Canada shrank 2.7% to 2,087,061 boxes, while the U.K. continued to dismal to 28,615 boxes.

Mexico benefited from the affordability of our cherries, as volume to Mexico exploded this season, increasing more than 400% to an all-time high of 418,045 boxes. Regardless of the slow start and impact of Covid-19 outbreaks, demand from around the world was strong throughout the season.

South Korea, Taiwan, China, Vietnam, and Mexico continue to be at the center of focus. However, the 2021 season marked the first year that NWCG directly invested into India. Although India’s consumption power does not match that of China’s, there is a large pool of upper income families for NWCG to successfully target. The Covid-19 pandemic has altered consumers’ eating and shopping behaviors. At the NWCG, we have identified the changes to understand the significance of ecommerce channels in the pandemic. Thus, the NWCG allocated additional promotion budgets to emphasis on the NWC health messages and collaborate with e-retailers and online to offline (O2O) sales channels to push NWC sales. NWCG invested in various digital marketing campaigns, public relation (PR) events, and TV health talk shows to accompany the online promotions and to broaden NWC health messages. The result of this integrated marketing strategy resulted in positive NWC brand image and sales in all sales channels.

In select APAC markets, NWCG noticed increased competitiveness of lower cost cherries from Eastern Europe. This year’s large late CA cherry crop impacted early NWC sales in S. Korea, Taiwan, China, and Mexico. However, frequent comment received from the trade was the quality of competitor cherries were not comparable to NWCs but were priced for much less.

South Korea

Top priorities for the South Korea market are to solidify NWC’s premium image and to fend off cherries from Uzbekistan in early June. NWCG broadened our NWC health messages and positioned ourselves as the fruit to consume in the pandemic. The NWCG partnered with a top advertising agency to maximize the NWC health benefits exposures.

Impacted by the Covid-19 restrictions, the in-store sampling campaign had to be cancelled or modified. Instead, the NWCG created and printed various large NWC POS displays for the 4 key supermarket chain partners. We placed promotional spokespeople next to large NWC displays to promote NWCs and encourage purchases.

In July and August, the NWCG implemented a month-long consumer contest via Facebook and Instagram platforms. To further integrate our program, NWC videos were produced by a popular YouTuber in July to build excitement and increase awareness of the benefits of eating NWCs. A NWC wellness TV program was produced and aired on two popular health TV talk shows in the beginning of July.

The annual “Cherry Day” PR event was launched on July 2nd and over 50 media from all platforms were at the PR event to kick off the 2021 NWC season. The results of the kick-off event included coverage of our “Cherry Day” and health benefits articles were released through online programing channels, magazines, and social media platforms. Final results included more than 1 million TV program viewership, over 4 million views of NWC health message related articles through all online news platforms, and over half a million readers from the lifestyle magazine channel. The NWC health messages is estimated to have reached more than 5.5 million potential NWC shoppers.

Impacted by the Covid-19 restrictions, the in-store sampling campaign had to be cancelled or modified. Instead, the NWCG created and printed various large NWC POS displays for the 4 key supermarket chain partners. We placed promotional hawker ladies next to large NWC displays to promote NWCs and encourage purchases.

In July and August, the NWCG implemented a month-long consumer contest via Facebook and Instagram platforms. To further integrate our program, NWC videos were produced by a popular YouTuber in July to build excitement and increase awareness of the benefits of eating NWCs. A NWC wellness TV program
was produced and aired on two popular health TV talk shows in the beginning of July. The annual “Cherry Day” PR event was launched on July 2nd and over 50 media from all platforms were at the PR event to kick off the 2021 NWC season. The results of the kick-off event included coverage of our “Cherry Day” and health benefits articles were released through online programing channels, magazines, and social media platforms. Final results included more than 1 million TV program viewership, over 4 million views of NWC health message related articles through all online news platforms, and over half a million readers from the lifestyle magazine channel. The NWC health messages is estimated to have reached more than 5.5 million potential NWC shoppers.

To make sure we covered all sales channels, the NWCG aligned with the top three ecommerce companies SSG.com, Market Kurley and Coupang.com to increase NWC’s online presence and advertisements. Total impressions from 2 weeks of ad placement on the three ecommerce websites is around 68 million.

China

In late spring, another wave of Covid-19 outbreak in Guangdong Province severely affected the NWC shipments to Guangzhou. Under the execution of prevention measures, limiting the supply of NWC not only in Guangdong Province but also in Central and Southwestern China. These regions heavily rely on transshipments from Guangzhou while shipments from Shanghai increased to help the affected areas. Our strategy this season was impacted by the Covid outbreak and different levels of economic recovery; thus, we targeted Shanghai, Shenzhen, Beijing and the main second-tier cities in Southern China and Eastern China.

To increase the NWC awareness, strengthen the knowledge level of health benefits, and reinforce our competitiveness, we collaborated with 20 well-known fitness clubs in 4 key cities to promote a healthy living and healthy eating lifestyle. To expand interest from the media and public, we invited a pair of twin sisters who are the national champions of artistic gymnastics, to be the NWC spokespersons. They participated in the production of NWC promotional videos, hosted 4 NWC press conferences in Shanghai, Beijing, Chengdu, and Shenzhen. They interacted with guests and promoted the idea of “Delicious and Nutritious, Healthy Cherry and Healthy Life” ideology to the media.

Over the 4 week campaign period, the PR campaign directly exposed an estimated 54,700 attendees. In total, 417 media ran press releases for NWC with an estimate of 117 million clicks, and 21 million readership. The whole campaign generated an estimated advertising value over $15.6 million.

Growth opportunities for NWC in China lie in the expansion of the second and third-tier cities; however, current trade conflicts between the US and China are hampering our development. In the meantime, NWCG continue to target the middle and high income consumers in Southern China, Eastern China, and Beijing.

Turkish cherries are our main competitor in Hong Kong and have reduced our shelf space in Park’n Shop with lower price points and early availability. Park’n Shop would only import and sell NWCs after the Turkish cherry season was almost over. NWCG has been promoting NWCs in Hong Kong for almost 30 years. The NWC brand is recognized by the trade as premium quality, and it can be trusted.

Mexico

The pandemic dramatically altered consumers’ shopping experiences. Widespread Covid-19 cases and city lockdowns prompted supermarket chains to cancel in-store promotions. Costco, Walmart, HEB, and Superama only displayed our POS materials and allowed our merchandisers to service their produce departments. Offsetting the obstacle, NWCG reallocated the budget originally intended for in-store promotions to online ad placements with key retail partners to strengthen NWC’s online exposure.

Meanwhile, NWCG conducted a NWC season kickoff PR event. The objective of this event was targeting the affluent shoppers and create an experience of connecting NWC healthy living with our mind and body coupled with the concept of the start of the Northwest cherry season in Mexico. 13 influencers were invited to join the yoga meditation. These influencers ranged from life & style columns, nutrition experts, actresses, and athletes. 25 media representing print and digital platforms attended and reported the event. The event successfully demonstrated how to live a healthy life while familiarizing the benefits that NWC contribute to health. The PR event generated approximately 24 million impressions.

California cherries were widely available in Mexico until the 2nd week of July. Nonetheless, Mexico and many Latin America markets benefited from the affordability of the NWC this season. NWC sales volume to Mexico increased by more than 400% to a record high of 418,000 boxes (20 lb. equivalents).

Taiwan

Although Taiwan is not a growth market for the NWC industry, it is a market with the purchase consistency that the NWC industry can depend upon each year. Our strategy for this market is to sustain NWC’s superior brand image and expand cherry health benefit awareness. NWCG continues to look for new partnerships from regional retail chains and maintain collaborations with existing retailers.

The Covid-19 outbreak in May prompted the Taiwanese government to implement lockdowns and reduce supermarket operational hours. Originally planned in-store promotions were all cancelled. Only POS materials were allowed inside of the stores.

To reach NWC’s target audience and to continue emphases on the health benefits of eating NWCs, the NWCG commissioned a special NWC painting from an illustration artist in Taipei. The NWC art image was well received by consumers, and it was used on all marketing materials, giveaways, PR activities and in TV programs.

From mid-June to mid-August, the NWC advertisements ran on numerous multimedia channels. NWC images were wrapped on 100 yellow taxis running 16 hours a day in Taipei, on digital billboards inside popular subway stations throughout the island, on several social medial platforms, in lifestyle magazines, and on retailers’ websites. A 5 second looped NWC commercial played on digital billboards inside of the popular class “A” office buildings and department stores. NWC TV commercials ran during 20 different popular healthy talk programs with a total of 1,300 spots. From the social media coverage alone, more than 13 million impressions were estimated. Monthly foot traffic at the subway stations, department stores, and office buildings is estimated at 4.5 million people. TV commercials had an estimate of 4.2 million impressions.

Southeast Asia

The 4th wave of the Covid-19 pandemic hit these markets in May and June impacting NWC sales drastically. Trying to control the spread of the virus, Philippines, Thailand, Malaysia, Singapore, Cambodia, Vietnam, and the Australian governments all implemented a high degree of lockdown measures. The majority of retail businesses limited their operations due to restrictions on people’s access to shopping. Many traditional markets were closed across countries. Restriction on traveling affected the implementation of marketing activities during the season.

Supermarkets had to operate under shortened business hours and set limitations on the number of shoppers inside stores. Supermarkets and wholesale markets that were contaminated by the virus had to close for days to weeks to disinfect.

Almost all scheduled NWC sampling promotions were cancelled except for a few that were conducted in the middle of June in Bangkok. Restrictions made trade and merchandising visits to supermarkets and wholesale markets infrequent. The NWCG was able to swiftly adapt and reallocate promotion funds to online promotional campaigns.

We have intensively pushed for the NWC health messages in Vietnam and Thailand. We worked with KOL (key opinion leaders)/influencers across various social media platforms. We cooperated with key supermarket partners to increase product awareness and health benefits on their social media platforms and internet sites. We collaborated with major importers and wholesalers to run SMS campaigns to alert

NWC availability on their Facebook and Instagram pages and web sites. The final estimates of NWC health messages impressions from all marketing communication channels are 1.8 million and 8.6 million respectfully.

India

After carefully studying the Indian market for several years, the NWCG decided to make direct investments in the 2021 season. Indian has a population of 1.35 billion with a defined middle-class and high-income population of approximately 250 million. Out of this, approximately 50 million consumers can afford a high value fruit like NWCs.

Affluence in India is growing, and consumers are becoming more aware of nutrition and healthy eating especially during the Covid-19 pandemic. Modern retail including online sales is growing rapidly creating new supply chains. Products like imported cherries previously suffered because of lack of infrastructure.

Gourmet and high-end retailers are continuously looking for good quality cherries. Home cooking and baking have also seen manifold increase during Covid-19 lockdowns and if positioned correctly, NWC can be a great ingredient for creating special dishes during the summer holidays.

As expected, there is lack of product and brand awareness, knowledge of health and nutrition benefits of NWCs, and varieties and quality within both trade and consumer sectors.

After the initial experiment, it was proven that conducting a series of influencer led promotions backed by targeted advertising and partnership with key retailers will help widen the India market and increase the demand tremendously for the NWC.

The two largest hurdles preventing our success in India are the fumigation protocol and the 30% import duty on USA cherries. The quality of fumigated cherries suffered immensely in secondary cities. The primary markets remain limited to Delhi and Mumbai, which had direct flights from the US for our cherries. There were product quality complaints from important markets like Chennai, Bangalore and Cochin that bring in product from Mumbai or Delhi. An agreement to eliminate the fumigation protocol and adopt a systems approach procedure has stalled due to political issues.

Demand for NWCs will continue to grow in India. Many consumers, who tasted our product this season, confirmed that NWCs are the best they have eaten. Importers and retailers, who were a part of the NWC launch campaign, experienced good demand for our cherries.

The younger population in India is increasing. This new generation of consumers are open to explore and try new products. They are health conscious and trust brands they recognize. Rising affluence will be the biggest driver of increasing consumption. Of India’s five household income levels, the top two income classes (elite and affluent) are the fastest growing.

The Future for Northwest Cherries

Although sales volumes to overseas markets were still lower compared to pre-pandemic levels, the future of NWC in the Asia Pacific region is bright. The economy in Vietnam is expected to continue to thrive. Cambodia is positioning itself as a new manufacturing hub in the SE Asia and creating more affluent families. When life gets back to “normal”, shipment volumes should normalize for both Singapore and Thailand. Korea, Japan, and Taiwan should continue to be dependable markets. If the fumigation protocol is lifted, India has the potential to become a key market for the industry. As for China, a large population of unexploited targeted consumers will benefit growth in China; however, the current geopolitics instability between the USA and China is not favorable for high profile consumer acquisition developments. The U.K. market will continue to be difficult to sustain as the late season British domestic cherry crop continues to increase, production from its neighboring countries are expanding, and the lingering MRL regulations are major issues. I believe the NWCG must take a hard look at the feasibility of all future investments in this market.

It is crucial to recognize that cherry producing countries like Turkey and Uzbekistan are eagerly trying to chip away NWC’s dominance in the Asia Pacific region. China’s own cherry production continues to expand as their quality is improving. In a few markets, we have already experienced stiff competition for shelf space at the beginning of each season.

To maintain NWC’s dominance as the premium cherry, it is essential for NWCG to look for new markets to diversify risks, continue investing in market and brand developments, to remind consumers of the uniqueness and superiority of NWCs.

It is crucial to recognize that cherry producing countries like Turkey and Uzbekistan are eagerly trying to chip away NWC’s dominance in the Asia Pacific region. China’s own cherry production continues to expand, and quality is improving. India is a market with good potential; however, the fumigation protocol is hindering development of this market. The Northwest Horticulture is working tirelessly to rework the protocols between US and India. It is essential for NWCG to look for new markets to diversify risks, continue investments in market development and branding to remind consumers on the uniqueness/superiority of NWCs, and to maintain NWC’s dominance as the world’s premium cherry.

Northwest Cherry Growers
Yakima, WA, U.S.A.
nwcherries.com