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Leading Chinese fruit retailers to go public in 2021

Leading Chinese fruit retailers to go public in 2021
Photo: Pagoda

For the first time, several of China’s leading fruit retailers are going to be listed on the stock exchange. Among the retail leaders racing to be the first to go public in 2021 are Pagoda Fruit, Xianfeng Fruit and Hongjiu Fruit, according to a report by Simfruit.

On June 1, Pagoda submitted its application to the international division of the China Securities Regulatory Commission with the intention of listing on the Main Board of the Hong Kong Stock Exchange, and the commission granted approval on September 10. However, the latest reports indicate that Pagoda has now changed its plans and intends to list on the China National Stock Exchange.

Plans for Pagoda’s IPO have been in the pipeline since 2015, when it secured its first external investments, with major co-investors including Tiantu Capital and Guangfa Xinde. That same year, Tiantu Capital developed a clear schedule for listing Pagoda, and Tiantu’s chief investment officer, Feng Weidong, stated that Pagoda was expected to go public within three to five years. Pagoda is expected to be valued at around 60 billion Yuan if listed on the China Stock Exchange.

Meanwhile, Xianfeng Fruit, the second largest fruit retailer in China after Pagoda, signed an IPO advisory agreement with CITIC Securities on December 30, 2019. Xianfeng Fruit has secured the support of Hongshan China, Jiuding Capital and Maison Capital in this venture. Similarly, Hongjiu Fruit signed an IPO advisory agreement with Dongxing Securities in December 2019, before moving to China International Capital Corporation as an advisory body in 2020.

 

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Pagoda and AgroFresh sign agreement to supply fruit-preserving tech

On September 7th, Pagoda’s meeting for global suppliers convened in Hong Kong. More than 200 people from Zespri in New Zealand, Sun World and AgroFresh in the U.S.A. and other giant farms from more than ten other international fruit-producing countries and regions attended. This year’s suppliers’ meeting was the largest in scope since Pagoda started hosting them 15 years ago. It was also the first time the meeting has taken place in Hong Kong. 

Among all the activities that night, the one that attracted the most attention was the ceremony in which Pagoda signed a cooperation agreement with the global in supplying technologies to preserve fruit for AgroFresh. With all the guests present bearing witness, the chairman of Pagoda, Yu Huiyong, and AgroFresh’s CEO, Jordi Ferre, contractually agreed to jointly set up an after-harvest processing centre for fruit in China. Both parties will invest in the project and make an effort to research the difficulties of processing fruit after harvest. Thus, they will be able to reduce the damage done to fruit during transport and storage periods, and they will be able to guarantee the freshness and quality of fruit while increasing its market value.  

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Pagoda: 1,540 stores by 2017

Pagoda, Asia’s leading fruit specialist, enters the Taiwanese retail market and launches an app

Last August, Pagoda took a significant step towards globalisation by opening its first experimental shop, in Tachung, Taiwan. It was designed along the same successful lines as Pagoda’s Chinese stores, with an area of 200 m2, an attractive design and display, and a wide assortment of premium products. With this move, Pagoda became the first Chinese fruit retailer to establish a presence on the island. By moving into the Taiwanese fruit retail sector, the company is enacting a long-held plan for its operations in Taiwan. It sees great potential in the Taiwanese market due to the relatively few fruit stores there. Pagoda now hopes to help develop the fruit retail market in Taiwan and strengthen its ties with local fruit businesses there.

The award-winning retailer has also launched its own digital application. “Our aim is to start selling our products online,” said Pagoda CEO Peter Zhu. And the chain continues to innovate with the launch of the new store concept Sarahpick, a convenience format serving fresh food based on fruit and vegetables. “Following the success of our first trial stores, we are now planning to open up to 200 by 2020,” Zhu said.

10,000 Pagodastores by 2020

Zhu also stressed the company’s ambitious target of opening 10,000 Pagoda fruit stores in Asia by 2020. “The other Southeast Asian countries have similar consumer habits to China, so we hope to be equally successful in those markets, too,” he said. Founded in 2001, Pagoda has since expanded rapidly, establishing a growing presence throughout the fruit sector in China. As a further demonstration of its vast ambitions, Pagoda acquired the large fruit supermarket chain, Guoduomei, in Beijing at the end of 2015.

On the logistics side, Pagoda is now directly sourcing about 80% of the fruit and vegetable volumes it distributes, supplying its stores via its 3 major regional logistics centres (in Shanghai, Shenzhen and Guangzhou) and its 12 city warehouses. As a boutique fruit retailer, Pagoda’s own brand provides premium quality fruit at affordable prices. To ensure the quality of its produce, it imports directly from overseas suppliers with whom it strives to maintain close relationships. About a third of its products are directly sourced from abroad.

Rise in cherry sales

Pagoda’s stores sell an average of 90 different items daily, with cherries, usually imported year-round, among the items seeing most growth. Its top Northern Hemisphere sources are the US and Canada, and in the Southern Hemisphere (November-March) it’s Chile, New Zealand and Australia. China’s own cherry season runs from March to June. “Melons are our second item in terms of growth,” says Zhu, “but we find it difficult to source overseas the kind of crunchy, sweet and juicy melons that Chinese consumers want.”

At the 2016 PMA Fresh Connections event in China, Pagoda took a big step towards securing a large share of the Chinese avocado market by signing up to a joint venture with US grower Mission Produce and importer Lantao. At the moment, there are few recognised fruit brands in China, so this represents a major opportunity to establish Pagoda as a leading brand. Avocados are still relatively new to Chinese consumers, with Mexican avocados reaching the market just four years ago, followed in 2015 by Peruvian and Chilean brands. Pagoda shifted its focus towards securing the Chinese market for avocados as the company believes it will represent a large part of the fruit market in years to come. 

Among the top 100 retail chains

This landmark joint venture agreement for Pagoda comes hot on the heels of receiving the prestigious title of Produce Retailer of the Year at the Asia Fruit Awards at Asia Fruit Logistica 2015. What is more, this year Pagoda was named on the list of the Top 100 Chain Retailers; the only Chinese fruit retailer to claim this honour. Pagoda places great emphasis on educating consumers about the importance of a quality diet in a healthy lifestyle, and there is now an ever growing interest in China, across all the generations, in consuming premium quality fruit. That’s why Pagoda promises consumers it will refund their money if not fully satisfied.

Pagoda, whose headquarters are in Shenzhen, is the largest independent fresh produce chain in the world with 1,500 stores across China. It is looking to grow its business and form professional partnerships with excellent fruit suppliers from across the globe. The company promotes Pagoda Orchard as “everyone’s garden.” 

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Pagoda: China’s ‘boutique’ fruit pioneer

Pagoda Orchard Industry Development Co. has achieved phenomenal growth in a few years, becoming a veritable icon in China for specialist fresh fruit retail chains.

Retail shops specialising in fresh fruit are a rapidly expanding sector in the Chinese retail market, and Pagoda Orchard Industry Development has been the pioneer and role model in this sector. That is why the Award for Produce Retailer of the Year in the Asian Fruit Award 2015 at Asia Fruit Logistica went to the company. It has achieved phenomenal growth in a few years, becoming a veritable icon in China for specialist fresh fruit retail chains.

“Receiving this award is an honour for Pagoda,” said Huiyong Yu, the president of Pagoda Orchard Industry Development Co. “With this prize, we have shown that the business model for fruit shops is not only well regarded in China, but also in the global industry.” Having opened its first shop in 2002, Pagoda has grown at an incredible rate. Recently it opened its shop number 1,200 in China, reaching a turnover of $4 billion.

Pagoda’s model is based on being a ‘boutique’ fruit retailer, aiming to select the best product for its customers. It sells only high-end produce, whether imported or domestic. This is why the company puts a lot of effort into maintaining a close relationship with suppliers, so as to always be able to rely on direct import sources. Contrary to the trend with other retail chains, Pagoda’s own brand is always in the premium segment with the highest fruit quality at affordable prices.

Another of Pagoda’s distinctive aspects is its work on the shop floor and relationship with end consumers. “We have worked hard with great success in educating consumers and introducing a wider range of products. Before, Chinese consumers only looked at the price; now, we have managed to teach them that a higher quality diet is closely linked to a healthier lifestyle,” Yu said.

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Thanks to strong management and intensive staff training programmes, Pagoda has succeeded in generating customer service of the highest quality. In its shops, which measure just 50m2, customers are treated in a very friendly way: the shop assistants identify the regular customers and call them by their name. There is a lot of trust and customers can return the fruit if it is not to their liking, even without a receipt. Pagoda’s shop assistants are also experts in fruit: they know where every product comes from and its added value.

Profile of Pagoda:
Pagoda is the pioneer in retail fruit shop chains and the first of its kind in China to operate with specialist fruit stores. Its headquarters are located in Shenzhen, using the Greater Pearl River Delta region as the hub from which to expand the company to different cities within mainland China.
At the moment, it has over 300 outlets and is still opening at a rate of 10-20 outlets per month. Pagoda has become one the biggest owners of agricultural bases in China and its vision is to become the worldwide number one brand in fruit shop chains.

Pagoda’s promise: To deliver the most delicious fruit, with a guaranteed refund if not satisfied.
Pagoda’s philosophy: To only do one thing in one’s life, and in our life we choose fruit.

Past, present and future
2002: First Pagoda outlet opened in China.
2007: Company approaches fast growth, reaching 100 outlets.
2010: Prefect management and profit system, reaching 200 outlets.
2012: 10 year anniversary, reaching 300 outlets.
2015: Total standardisation attained, reaching 1,000 outlets.
2020: All types of freshness problems overcome, reaching 5,000 outlets.
2030: Becomes no.1 and expands internationally, reaching 10,000 outlets.

MV