Globalization lesson No. 452: Never get too comfortable. Just ask New Zealand. More than a century ago, a headmistress at a girls' college there imported seeds of the genus Actinidia to the tiny island nation and proceeded to cultivate a fuzzy little brown fruit they renamed "kiwifruit," after the flightless national bird. By the 1970s, the tangy little Technicolor orbs had come to symbolize the nation and its people (who, of course, refer to themselves as Kiwis too). And all was right with the world.
Until, that is, the world got smaller. By 1989, New Zealand found itself losing its dominant position in what is now a $2.5 billion global kiwifruit market to new growers in Italy, Spain, Chile, South Africa, and France; New Zealand had gone from being the fruit's only exporter to being just one of many. Faced with a threat to a major source of national revenue (kiwi sales represent nearly 40% of New Zealand's horticultural exports), growers responded with a strategy that was part Gregor Mendel crossbreeding, part newfangled patent protection. United behind Zespri International, a marketing arm owned by some 2,500 growers, they teamed up with the government-funded "fruit science institute" HortResearch to develop a new patented kiwi, introduced in 2000 under the name Zespri Gold.
As the name suggests, the new kiwi's flesh sports a sunny yellow hue, but compared with its tart green sibling, it has a sweeter, more tropical flavor. That shocking new color combined with a less-challenging taste seems to have dramatically expanded the kiwi consumer base. Last year, Zespri Gold had sales of $150 million, 50% more than two years earlier; by 2009, Zespri predicts sales will hit $650 million. What's more, growers elsewhere looking to capitalize on that juicy new market now have to pay a licensing fee and royalties to Zespri, which then passes them along to farmers in New Zealand.
Ideally, Zespri wants its brand to be to kiwifruit what Dole is to pineapples or Chiquita is to bananas. It is too late, however, for Zespri to patent the old, basic green kiwi, known in the trade as a Hayward. Back when it was first developed, plant-variety rights didn't exist, and no one thought to protect the fruit or the name. "In retrospect, these were mistakes, but in the early days it was not, of course, realized just how important kiwifruit would become," writes HortResearch scientist Ross Ferguson in an email. But Zespri is busily trying to recoup lost ground by developing additional varieties that can be locked up under a patent. A new red model (it looks like a mix between the green and gold but with a brilliant blood-red sunburst in the center) is now in the pipeline.
Ironically, in order to ensure a year-round kiwi supply, Zespri has come full circle, establishing a number of licensing deals with orchards in Italy, France, Japan, Korea, Chile, and the United States. Last year, non-New Zealand orchards growing Zespri-trademarked green and gold varieties topped 2,000 acres, up from 1,700 in 2004, and Zespri now controls 20% of global market share, more than any other company. For now, then, the kiwifruit seems to be again safely synonymous with its adoptive homeland. But remember the lesson: When the kiwi was first brought to New Zealand, after all, it came from China, and it may be just a matter of time before global competition heats up on an entirely different scale.
Mark Borden is a Fast Company contributing writer.
A version of this article appeared in the May 2006 issue of Fast Company magazine.