Just a few days after the cherry harvest season officially began in Ovalle, air shipments of fruit have begun to arrive in China, our main market, unleashing a real frenzy among wholesale buyers in the Asian country. One of the first companies to arrive with cherries at their destination was Watek Group, an exporter and importer of fresh fruit and beef with a presence in Australia, China, Uruguay and Chile.
“This cherry season we are starting with the focus on meeting the requirements of our customers, taking care of the quality and timing in the logistics chain, while at the same time seeking to add value to our producers,” said Nicolás Ossandón, Senior Supplier of Watek Group.
To date, Watek Group has sent 15 tons of cherries to China, reaching cities such as Guangzhou and Shanghai, where the Chilean fruit was received with great expectation.
“With regard to the market, we believe that this year it will behave similarly to previous years until the Chinese New Year festivities begin, with total uncertainty as to what happens afterwards. As for our program, we contemplate 600 tons to be sent from Chile and we will receive 150 tons from other exporters in China. In addition, we must consider that this year we have an increase in our costs as an industry, both in materials and logistics, but what will affect us most is the depreciation of the local Chinese currency against the dollar. This increase in costs will undoubtedly affect returns to producers.”, explained Ossandón.
The 2021-22 cherry campaign was undoubtedly a great challenge; although the Chinese New Year, a date that marks a before and after in cherry prices, was celebrated ten days later than what will be celebrated in 2023, logistical problems, Covid-19 restrictions, labor shortages and virus control at destination, led to a complex scenario.
“Since we focused on early varieties last year, we can say that we were doing well. We sent 100 tons from Chile and received a similar volume from other exporters in China. From a logistical point of view, it was tremendously challenging. Commercially, it pushed us to look for better alternatives within China; in short, it was a season of much learning and growth,” said Nicolas Ossandon.
Watek Group is fully aware of the need to diversify the market for cherry exports, however, they are confident that for now China is “the” destination and that they must continue working to grow in that market.
“It is an unavoidable issue, especially because when we see the congestion of cherries in China at the peak of shipments, we ask ourselves how we could solve this problem. Now, diversification is always a good concept in the development of any business, but in this particular product, let us not fool ourselves because in the short and medium term, China is the best alternative. Therefore, we must not only develop new markets, but we must also continue to develop and penetrate the Chinese market, getting used to shipping what the consumer wants, not what the market has.” Ossandón warned.
On the same subject, the exporter Watek Group also added: “If one makes an analysis considering that in 2008 less than USD 20 million were exported and in 10 years that number grew to practically USD 1,000, the question arises as to how much the cherry has developed in 10 years with that rate of growth. Have we understood what the consumer wants or are we still thinking about producing? A similar case for grapes and other species in China that have grown exponentially. China is a market that for us as fruit growers is still in development. We who are new to this business have to recognize the tremendous role that actors such as Garcés Fruit played in the opening of the cherry market in China, developing a market from scratch and we now have to contribute to our country brand in the development of new marketing strategies that help to further specialize the cherry market in China. We believe that although we can discuss to what extent China is capable of absorbing our offer, the focus should be more on how we continue to implement new advertising and sales strategies in what is now our largest commercial ally. While looking to the future, let us not lose sight of the present.” said Nicolas Ossandon.
“Joint Venture”: an interesting business model
Watek Group was founded in 2015 with the aim of importing Australian fruit into China. After two years in the fruit and meat business, they began operating from Australia and in 2020 they started their activities in Chile. Although they worked in the Chilean beef export market, today they operate in Uruguay in this sector, while in our country they are focused on the export of fresh fruit, including cherries, Dagen plums, grapes, kiwi and lemons.
“Our business model is to buy from producers in the field or on packaging, then we export, receive at destination and market ourselves. By integrating ourselves into the production chain, we believe that we can ensure quality for our clients. This business model does not mean that we do not work on other alternatives such as consigning fruit to producers or receiving fruit from exporters in China, which we have been doing since last year. In line with the above, this year through a “Joint Venture” we became associated in the production of a field with Dagen plums and cherries in the town of Coltauco, which allows us to reach from one end to the other in the production and marketing chain. This “Joint Venture” means that we share the risks and benefits of the production, export, import and marketing of the fruit, that is, we are integrated into the production and the producer in the export, import and marketing of the fruit. As for cherries, we hope to continue growing and advancing hand in hand with producers with whom we currently work and also with new ones.” concluded Nicolás Ossandón, Senior Supplier of Watek Group.
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