China’s rising middle class and increasingly wealthy southeast Asian consumers are driving the demand for premium New Zealand cherries and specifically fruit from Central Otago.
Two $15.5 million projects, both spanning 80 hectares, are backed by cornerstone investors including the sheep and beef landowners at Lindis Peak Station and Mt Pisa Station. The landowners who wished to diversify their businesses and provide long-term security for their families, approached horticulturalists Ross and Sharon Kirk of Hortinvest to develop the projects on the strength of their first development at Tarras Cherry Corp, also in Central Otago.
Investors include a couple who started investigating opportunities in horticulture five years ago before buying into both developments.
Having observed first-hand, cherries being air freighted to North America and Asia, Andrew and his wife already understood New Zealand cherries were on a global growth trajectory and wanted a slice of the action outside the property investment space to sustain them after retirement.
“We looked at other corporate cherry investments but wanted something where we knew the people growing our cherries and where the service was personal. The Hortinvest model is hugely appealing. We like being able to talk directly to Ross and Sharon, see the trees growing and taste the cherries,” Andrew says.
“We have five to 10 years of working life left and can wait for the cash flow. We understand the risks associated with horticulture, especially with the weather. To split the risk, we’ve invested in both projects. We believe the long-term benefits will far outweigh the risks,” he says.
Cherry investment returns
Trees have been planted over the first 10 hectares in each development and are growing well. The second planting at Lindis River and Mt Pisa will be undertaken this winter. Returns range from 34-59%t based on 12-18 tonnes per hectare. Trees are set to reach full mature production in 2025-2026.
“China’s middle class is the largest emerging market globally. With some 400 million consumers, it’s larger than the entire US population and accounts for 55% of the world’s online sales,” marketing and sales manager Sharon Kirk says.
“The New Zealand Government has forecast cherry revenue to increase 25 % to $100 million over the next four years. Current plantings total approximately 800 hectares and the industry is currently producing less than 4500 tonnes for export. With demand far outstripping supply, a real opportunity exists to market more than 10,000 tonnes.”
www.hortinvest.nz E: invest@hortinvest.nz
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