Riverland citrus industry value chain analysis (CT10029)

This is a final research report from Hort Innovation’s historical archives. Please note that as these reports may date back as far as the 1990s, the content and recommendations within them may be superseded by more recent research.

What was it all about?

A ‘Value Chain Analysis for the Riverland Citrus Industry’ examined two navel orange ‘supply’ chains, one domestic and one export, and was undertaken to better understand consumer preferences, attitudes and purchasing behaviour towards navels. It aimed to identify potential opportunities for differentiation and competitive advantage in the chains, in order to guide the development of a demand-driven industry for the future.

The methodology used for this project was broadly based on Sustainable Value Chain Analysis (SVCA) methodology as detailed by Bonney et al (2009)1. A flexible approach was taken where necessary to meet industry requirements and timelines. It comprised a combination of consumer research, data collection and analysis, a carbon and water life cycle analysis and value chain analysis.

The two chains studied were dominated by a supply or push approach at the time, with the production end of the chain driving the main activities. Instead, rather than consumer demand creating a pull-through effect in the chain, the production of fruit and its disposal or sale dominated the chain’s actions.

At the time, in the chains observed fruit was graded for size, colour and blemish as directed by the specifications of retailers, rather than by eating quality as preferred by consumers. A value chain that was driven by market demand responds to consumer preferences, generating a positive eating experience which results in repeat purchases and product loyalty.

In the retail marketplace observed, both in Australia and Japan, citrus displays were not highly visible and the product received little promotion in-store compared with seasonal fruits competing for the same consumer dollar. There was real and immediate potential for navels to be differentiated from other varieties, and given more prominence at the retail point-of-sale, raising the profile of the product in consumers’ eyes and highlighting the freshness and seasonal qualities.

In Japan, consumers were sophisticated and knowledgeable when it came to food, making very informed choices. In the research Japanese consumers stated directly that they would like more product information at point-of-sale, specifically stating they would be encouraged to buy more navels if given more information about their sweetness levels and clearing up confusion about when Australian citrus was in season. In addition, all oranges were instinctively thought to be valencias, delivering a clear opportunity for developing differentiation. Activities around these issues, both in the domestic market and in Japan, presented very achievable first steps in moving toward an effective value chain and delivering on consumer expectations.
Within both chains there was limited evidence at the time that the consumer played an influencing role in decisions and business activities around navels, but rather was acknowledged in the background. By better understanding and focusing on what consumers wanted, the chains could become more responsive, and improve their target marketing and engagement with consumers.