Onions New Zealand INC

CONSUMER INSIGHTS ON

NEW POTENTIAL ONION MARKETS

Kazi Talaska : Onions NZ Inc. market access manager

Expanding into new markets is essential for industry growth and a top priority for Onions New Zealand. Understanding what consumers are looking for in these markets is an important tool needed to successfully enter and gain or increase market share in a country.

Recently, Onions New Zealand initiated research with New Zealand Trade & Enterprise (NZTE) to size up the opportunity in some overseas markets, analysing market conditions, consumer preferences, and distribution channels. Below are market and consumer insights into some new and high potential markets: Brazil, South Korea, Philippines, United Arab Emirates, India and Saudi Arabia.

Consumer expenditure on vegetables

The United Arab Emirates (UAE) and South Korea spend the most on vegetables at US$221.00 and US$206.00 per year, per capita of the population. The incorporation of onions into the local diet and cuisine helps fuel a healthy demand for the product; which in turn, leaves more opportunities for imported products to help complement supply.

Purchase of organic vegetables

Compared to New Zealand consumers, Brazilian, Saudi Arabian, and Filipino consumers purchase more organic vegetables. For Brazil, this is an increase of 31 percent compared to the New Zealand consumer. This indicates interest from these markets in a healthy and chemical-free product but more specifically, a willingness to pay for these attributes.

Price-conscious

All markets except Brazil claim to be less price-conscious than the New Zealand consumer market. This is especially true for the Middle Eastern and Indian markets; this could mean these markets are more likely to pay higher prices for onions.

Importing landscape

Saudi Arabia and the UAE have the highest import value for onions out of all the countries in the list, with a value of US$96 million and US$86 million respectively. This indicates a high volume of onions purchased and greater market potential for incoming exporters.

Distribution channels

Supermarkets and hypermarkets are the dominant retail channels in all markets apart from India. A plus for the high priced premium New Zealand onion, that is more likely to be retailed in a supermarket and targeted to a high-end consumer. Exporters should consider the retail environment in a given market and what products the consumer is looking for.

Tariffs

Although modern market access is increasingly challenged by non-tariff barriers, tariffs themselves represent a big hurdle to breaking into a market. South Korea has the highest tariff from this list at 135 percent, while the UAE, Saudi Arabia, and India sit at zero percent tariff. It is difficult to justify the extra costs that will decrease return for growers, despite the market potential, thus tariffs represent one of the primary considerations.

BRINGING THIS ALL TOGETHER:

New Zealand Trade & Enterprise Te Taurapa Tu -hono

Next steps?

All things considered, the recommendation from this research was to invest in exporting to the United Arab Emirates (UAE). This is an affluent market with relatively high per capita spending on fruits and vegetables, with supermarkets as the major retail channel. Additionally, the zero percent tariff, high market growth, and onion import stability make it an attractive destination. Saudi Arabia, as another potential destination also stands out with similar market conditions.

Ultimately, market access is a continued challenge for the New Zealand onion sector. In recent years, higher momentum has been gained in Southeast Asia, with Indonesia taking the lead as a NZ$32 million market in 2021. In this space, the Philippines and Thailand also represent big next steps for the industry. Consumer insights such as these support our position for market access and help the industry make more informed investment decisions, where the time taken to develop a market and financial costs of market access are high.

Onions New Zealand members can access this resource and more through the website www.onionsnz.com and by navigating to the resource tab and the resource library. The resource library lets you access different reports, market intelligence, grower resources, innovation and statistics.