On 16 January, Chinese fruit retailer Pagoda was successfully listed on the Hong Kong stock market, with its share price rising more than 20% on the first day of trading as well as garnering a total market value of 9.47 billion HKD ($1.21 billion), becoming the first fruit company to go public in the market arena.
Founded in 2001, Pagoda is a Shenzhen-based, large-scale fruit enterprise integrating fruit procurement and selling, planting support, post-harvest preservation, logistics storage and other fruit-based services. By shoring up its nationwide retail network, the fruit giant has seen aggressive development over the decades with its foothold now expanding to 5,643 offline shops across 140 cities in 22 provinces.
Pagoda has become the largest fruit retailer at home and despite the effects of the pandemic, the company still maintained stable growth in terms of sale revenue, which amassed approximately 5.92 billion RMB ($872.36 million) by the end of the first half of 2022, increasing 7% year-on-year.
It’s worth noting that the Chinese fruit market has incredibly lucrative potential with an expectation to reach 1.78 trillion RMB ($0.26 trillion) by 2026, with more emerging fruit brands on the horizon.
Despite the profitable fruit industry in China, there are a few hurdles awaiting Pagoda which need to be resolved to achieve even greater success. Regarding the vast diversities of geographical features and climate conditions in China, more fruit cultivation areas are sitting in the eastern part, meaning cold chain logistics technology is key in the fruit storage sector. The cold supply chain system is still at the early stages of development in the country and with room for improvement.
Furthermore, fruit is mainly sold in fresh markets and retail stores in China, leaving the online shopping and e-commerce segment with significant opportunities waiting to be carved out.
Some fierce opponents have already dipped their toes in the segment such as Hema Fresh, Alibaba’s new retail concept combining traditional shopping with a digital experience, and has approximately 6.83 million monthly active users as of September 2021.
Pagoda has charted its enthusiastic expansion further into new markets with up to 40% of new stores opened in 2022 in Tier-3 and Tier-4 cities at home, which hold a large fresh food field with a broad market and upward potential.
Having an IPO is the beginning of the fruit giant’s journey but in order to take over the market for good, equip itself with digital technologies to strengthen the bond with local fruit farmers, fulfilling online systems including marketing, sales and management remains of importance.