According to market research platform Report Linker, the global fruit and vegetable market size is expected to reach US$14.4 billion ($19.5 billion) by 2025 from US$9.8 billion currently.
Demand is rising as consumers are becoming more aware of their health amid the pandemic and interest in plant-based proteins grows.
However, the fruit distribution business is notoriously difficult, requiring good knowledge of the fruit and logistics. While NutryFarm can look forward to growth, not all listed companies in the business are doing as well.
In 2017, electronic parts distributor Serial System under executive chairman Derek Goh, invested $1.9 million in a joint venture to acquire a stake in Musang Durians, a Malaysia-based durian company that manufactures, processes, trades and exports durian puree and durian related products.
Goh believed back then that durians could bring in additional income as it was a more profitable product to sell than electronic parts.
Serial System is known to have a knack for successfully diversifying into several other industries such as 3D printing services and distribution of medical equipment.
However, in FY2019 ended December 2019, the group decided to impair its durian business after Musang Durians reported losses in both FY2018 and FY2019 although the business was a small revenue contributor.
Another company diversifying into the fruit business is China-based Singapore-listed Dukang Distillers Holdings, which announced that it has completed its restructuring with the acquisition of the kiwifruit business and disposal of its existing baijiu business.
Changing its name to China Shenshan Orchard Holdings, the new company will be the first pure-play kiwifruit producer listed on SGX.
“The demand for kiwifruit has been growing over the years in the PRC, largely driven by the rising disposable income of the consumers as well as growing domestic consumer demand for premium-quality fruits such as kiwifruit,” says Hu Chao, executive director and CEO of Dukang Distillers.
“As Chinese consumers become more health-conscious these days, we believe that the kiwifruit’s tart flavour, pleasing texture, and low-calorie count will make it a delicious and healthy option for snacking, sides, or a unique dessert. We believe this will provide ample opportunities for us to grow the kiwifruit business to meet rising domestic demand and deliver sustainable long-term value to all stakeholders,” he adds
On the other hand, for SunMoon Food Company, fruit retailing is supposed to be its core business but as recent developments have shown, all is not going too smoothly.
Firstly, shares in SunMoon have been suspended since Oct 12, 2020, with shares last trading at 3.1 cents. This was because its parent company, Shanghai Yiguo, which holds 59.9% in SunMoon, had filed for bankruptcy.
SunMoon has been selling fruits to its parent company, which operates an e-commerce site selling fresh food. In turn, Shanghai Yiguo’s controlling shareholder is Chinese e-commerce giant Alibaba Group Holding. SunMoon had some $12.4 million in account receivables due from its parent company.
Since 2014, SunMoon has recorded consecutive full-year losses. For FY2021 ended March, it was able to turn profitable with earnings of $906,000, versus losses of $4.3 million in the preceding year. But the turnaround was due to new revenue growth from its recently-added animal protein supply chain business.
In a sign that SunMoon is moving further away from fruits, on May 12, it announced a joint venture to trade catfish from Vietnam.
Photo: Unsplash
