Green Monkey targets Chinese appetite for high-quality foods

Concern about food safety standards in China is fuelling demand for safe sources of baby food, which has created huge potential for organic food suppliers, including Christchurch company Green Monkey.

Green Monkey was founded eight years ago by sisters Charlotte Rebbeck and Lizzie Dyer. The company makes organic baby food, but has also developed a toddler milk formula specifically for the Chinese market. It is also working on an organic milk formula for babies under one.

The company will ship its first order of formula – 27,000 cans – to China around March, along with 120,000 pouches of baby food made from organic New Zealand fruit, vegetables and meat.

Rebbeck said demand from China for safe milk formula had skyrocketed since melamine was found in milk powder in 2008. At least six babies died and more than 300,000 had fallen ill from the tainted powder.

Japan has been a major supplier of high-quality baby food to China, but concern about farm contamination near the Fukushima nuclear power plant had affected that demand. “A lot of people are very wary about buying Japanese food products, particularly baby products, because of the radiation threat.”

Green Monkey, which has won half a dozen food industry awards in New Zealand and Australia,
began exporting to China about a year ago. Rebbeck said the premium end of the market was challenging, because their organic baby food pouches sold for up to $7 each.

However, prices would become more competitive because, thanks to the Free Trade Agreement, tariffs on imported baby formula will disappear by 2013. Those on baby food – once 30 per cent – will drop to about four per cent.

Green Monkey director and part-owner Andy Macbeth said finding the right joint-venture partner was key to breaking into China, because of the different business cultures. “You can’t read the same things into conversations and meetings in the China market; it’s like a different planet. . . You have to be incredibly selective about the nature of relationships or partnerships that you enter into.”

The company’s first business relationship fell apart when their Chinese contact failed to deliver. The company had since teamed up with Rungroj Hemansutikun, a Thai-based businessman who has extensive experience in China and is setting up an organic food distribution network there.

Macbeth said the introduction had come about through a close friend, who had taught Hemansutikun’s son at a New Zealand secondary school.

“That endorsement was huge. The one thing you learn about Asian business is that a lot of time is taken to build trust. It’s less about business to begin with, and more about friendship and building trust. If you have the patience and there’s the right chemistry, then things can move incredibly quickly.”

After Mr Hemansutikun visited Kaweka Foods, which processes the baby food, and the Auckland factory that would manufacture the milk formula, he had ordered four container- loads of product.

Rebbeck said the relationship was a win for both parties. “They need us because they need a premium product, and we need them because we don’t want to be trading in China without some form of security that people won’t copy what we’re doing – making a cheaper product and selling it cheap on the internet.”

Though having multiple distributors might work in markets such as Australia and Singapore, it was not necessarily a good strategy in China. “You need a central hub so there’s not price gouging.”

In China, about a third of baby food is sold through specialist baby stores, similar to the proportion sold in supermarkets, and a lot is sold online.

Because of ongoing food safety issues, winning over suspicious Chinese consumers is important. On the advice of its joint venture partners, Green Monkey will retain its English packaging and apply stickers in Mandarin.

That way, said Rebbeck, customers would know they were buying a genuine New Zealand product, rather than a copycat Chinese one.

So far Green Monkey had not adapted its recipes, such as pumpkin, silverbeet and sweet potato, to suit Chinese tastes. Macbeth said wealthier Chinese were keen on imported Western-style baby foods, but Green Monkey could later introduce products suited the Chinese palate. “We’ll be led by the market.”

Macbeth was also investigating opportunities for selling a wider range of organic New Zealand food in China, honey being a prime example. “I think [China’s] appetite for high-quality foods is going to go all the way.”

By Amanda Cropp