The 8th International Macadamia Symposium (IMS) has just wrapped up, with a powerful sense of buoyancy and optimism dominating the 3-day event hosted in the macadamia growing region of Lincang, in China’s Yunnan province.
A decade ago, the global tree nut industry was beset with apprehension, yet today the mood could not be more different. The value and production of the global tree nut industry has grown significantly over the past decade, and forecasts show no signs of growth slowing anytime soon. Macadamias are coming off a lower base than other nut varieties, but the pace of growth is just as fast.
Global trends set up favourable market dynamics
Current and emerging consumer trends all point to a bright future for macadamia consumption, especially in middle income economies. Dominant trends currently include:
- A distinct shift to ad hoc eating or ‘snackification’ of meals, largely in response to the full and rushed days that have become the norm for consumers globally
- Small brands emerging to compete with major national brands, and mass marketing becoming mass personalisation. New retail formats are emerging to meet consumer needs, led by developments in the online space by major players like Alibaba Hema and Amazon Prime.
- Pleasure is a key purchase driver in multiple food categories, and nuts add permissibility to many foods
- Nuts are becoming a wellness food, with awareness of their potential to assist with a variety of health issues including weight management now well recognised among consumers
- Macadamias are loved as a healthy, luxury food item by consumers, however per capita consumption remains low in comparison to other nut varieties
China’s influence continues to build
China holds more market potential for macadamias than any other country on the planet, recording an 11-fold increase in macadamia consumption since 2012. Its power as a market was driven initially by e-commerce, and more recently, the Chinese government’s decree to eat nuts daily as part of its increased focus on improving the health of its citizens.
Before 2012, there were few strong nut brands in China. Fast forward six years and it’s a different picture, with numerous popular retail brands competing in the category including 3 Squirrels, Be Cherry, Bestore and Cha Cha. Chinese consumers want nutrition and health in the form of sustainable leisure food, and thanks to the efforts of major brands like these, consumers now have a better understanding of tree nuts and their health benefits than ever before.
Consumption is no longer limited to Chinese New Year or large format retail packs. Today macadamias are consumed throughout the year and in many different, non-traditional formats, with product development focused on particular consumer groups such as pregnant women.
Online is now expanding to offline, with the latter providing the in-store experience many consumers enjoy. However technology, and better and cheaper logistics and distribution has seen online platforms blossom, with purchases now typically delivered in less than an hour in major cities like Shanghai. For both online and offline, experience is crucial to keeping consumers interested.
Consumer expectations are becoming stricter in China, with ‘fresh’ becoming a highly valued proposition. The use of ‘fresh after harvesting’ is becoming a powerful marketing argument, emphasizing the minimal time between harvest and macadamias appearing on shelf.
For macadamia producers, there has never been a better time to promote our product and strengthen the momentum already achieved.
Macadamia innovation breaking new ground in China
China, like other markets, has seen macadamia innovation evolving largely in the snack category. In-shell is still the mainstay of China’s macadamia snack offering, however some unique packaging formats have been launched, including smaller format, stand-up pouches and cannisters. Kernel is gaining in popularity, with both raw and flavoured kernel lines introduced, and kernel featuring in daily nuts products.
Beyond snacking, innovation has been seen in the non-dairy milk category with the launch of macadamia milk, the confectionery category primarily in the form of nougat, and some use in traditional dishes in the foodservice sector.
However an additional layer of innovation is occurring in China, the likes of which has not been seen elsewhere. Product developers are embracing not only macadamia kernel, but also the husk and shell to explore possibilities in unexpected spaces, from building materials, flower pots and ingestible beauty capsules to drinking cups, lunchboxes and skin whitening products. It’s an intriguing innovation landscape, and exciting to imagine where it could lead next for our product.
Maintaining quality amid the growth
There has been much talk about macadamia production growth and the message from IMS was clear: growth in production is real and it’s happening fast thanks to the commercial opportunities attracting investors, and the potential macadamia farming offers for poverty alleviation in developing countries.
On the demand side of the equation, macadamias continue to be regarded as the ‘special nut’ and this is fueling strong underlying demand.
As the global macadamia industry continues to grow, the need to deliver exceptional quality will be more critical than ever. With consumer expectations high and rising, it is crucial we understand their needs, meet their expectations and guarantee an excellent macadamia experience, every time.
Grower education will be key to meeting the quality challenge, especially with a notable proportion of future supply expected to come from subsistence farmers. As an industry, we must commit to helping new growers understand that as a luxury ingredient, macadamias are different to other nuts, and ensure we supply appropriate quality product to the right commercial segments. Global industry collaboration will play a significant role here also, with established origins sharing knowledge and experience with emerging producers to ensure quality is maintained across the board.
While the path to a substantially larger global macadamia industry will undoubtedly present some challenges, the opportunities have never been bigger for growers, investors and manufacturers. It’s an exciting time to be part of this dynamic and rapidly expanding industry.
This year’s top 5 macadamia producers
1. South Africa
With current plantings of 32,500 hectares, South Africa is now the world’s largest producer, having experienced a steep growth curve, albeit slightly hindered by the worst drought in 100 years throughout 2016, with continued impacts into 2017. There is significant growth in area under planting with around 5,000 hectares being planted in 2017 and expectations of similar plantings in 2018. Investment in new processing infrastructure is progressing at pace in anticipation of continued crop growth, and the introduction of a new statutory levy will see greater R&D investment starting to flow through.
Current plantings are estimated at 25,000 hectares, with 3,000-4,000 hectares being planted this year. Production is expected to ramp up in coming years as new plantings come into bearing. Nurseries are at full capacity and the availability of nursery stock continues to be the primary constraint to further development. The focused investment in productivity has delivered major industry-wide changes over the last 5 years, especially in the management of older orchards. This, coupled with new plantings, bodes well for even greater consistency in Australia’s production in coming years.
Small plantations typify this origin, with around 200,000 small farms currently producing an estimated 32,500 tonnes in-shell. The biggest challenge for Kenyan growers is consolidation and transportation of product into processing plants. Medium and large-scale farming is emerging, with most of the growth coming from East Africa, Tanzania and Uganda, however further industrialization is needed. Certified nursery stock and improved seedling quality is needed for further growth in plantings. Currently new plantings are estimated at around 1,000 hectares per annum.
China now has up to 200,000 hectares under planting and will be the fourth-largest producer this year at around 20,000 tonnes in-shell. Up to 80% of farms in the largest growing region of Yunnan are owned by small growers, with the government supporting macadamia farming, and poverty alleviation a key driver of new growers entering the industry. Plantings are continuing and are reportedly expected to reach more than 300,000 hectares within the next 5-10 years, with China enjoying a counter-seasonal advantage over other origins.
Macadamias are the third-largest agricultural product in Hawaii. An identity crop with significant extra value from its tourist trade, the Hawaiian industry has just over 500 growers with three growers representing more than 80% of production. There has been very little recent growth with 7,300 hectares under planting, however yields have increased as a result of strong prices.