Fruit Prices Drop — But Are Major Retail Chains Losing Momentum?

As fruit becomes more affordable and price transparency rises, traditional high-end fruit brands face a defining question: in this new era where cost-performance rules, what is the survival logic of premium fruit retailers?

For years, the fruit industry in China has been dominated by the “Three Giants” — Pagoda in the south, Xianfeng in the north, and Hongjiu in the west. Together, they once shaped the golden age of China’s branded fruit retail.

Yet, recent years have seen all three stumble. Hongjiu Fruit, once hailed as China’s “first fruit stock,” has been forced into delisting. Pagoda has reported its worst financial performance since going public. Xianfeng Fruit faces a liquidity crisis following a court-ordered freeze on over 300 million yuan in equity.

Meanwhile, e-commerce platforms leveraging “direct sourcing from origin + farm-to-door delivery” models are reshaping the landscape. They’ve cut out costly intermediaries, slashed prices, and won over consumers who increasingly prioritize quality and value rather than brand markups.

The question now looms large — as affordability becomes the new premium, how can traditional fruit giants survive and reinvent themselves?

The Downfall of the Fruit Giants

No company embodies the turbulence of China’s fruit industry better than Hongjiu Fruit.

Recently, the Hong Kong Stock Exchange ordered Hongjiu’s delisting over issues including incomplete investigations, questionable management integrity, and unresolved internal control deficiencies.

Founded by Deng Hongjiu in Chongqing, the company was known for its family-run structure and vertically integrated supply chain. Deng, a pioneer in fruit distribution, was among the first to bring Taiwanese fruit to Chongqing and later built factories in Thailand. His “tree-ripened durian charter flight” model turned Hongjiu into China’s largest durian distributor. When it went public in 2022, Hongjiu’s market cap soared beyond HK$60 billion.

But beneath the glory lay a fragile foundation. Hongjiu operated on a “high prepayment, long receivable” model — paying suppliers months in advance to secure fruit supply while extending long payment terms to clients. Though it fueled rapid expansion, it left the company’s cash flow razor-thin and highly exposed to risk. When the market tightened, the financial strain quickly crushed its once-bright prospects.

Pagoda, with annual sales surpassing 10 billion yuan, is facing its own crisis. In fiscal year 2024, the franchise-driven retailer recorded a net loss of 391 million yuan, with store count dropping from over 5,600 to below 4,700 — nearly 1,000 closures in a single year.

While Pagoda’s franchise model once fueled its rapid growth through standardized management and strong branding, its premium pricing strategy has become a liability. Consumers today are unwilling to pay extra for brand image alone when they can get equal or better fruit for less.

Xianfeng Fruit, the oldest of the three, hit a major setback in August 2024 when over 300 million yuan worth of its shares were frozen by court order. The incident derailed its IPO plans and further strained its cash flow.

From Hongjiu’s delisting to Pagoda’s losses and Xianfeng’s financing woes, the collective slowdown of these giants signals an industry-wide reckoning. They all thrived during a time of consumption upgrades and market expansion, but now those dividends are fading. Their heavy dependence on single growth models — Hongjiu’s capital-heavy supply chain, Pagoda’s franchise expansion, Xianfeng’s regional direct-sales focus — has left them ill-prepared for today’s volatile, value-driven market.

Why Fruit Is Getting Cheaper in China

In 1961, global per capita fruit consumption was 37.5 kg, while China’s was just 3.9 kg — barely enough for two weeks. Fruit was once a luxury, constrained by poor farming techniques, limited logistics, and high spoilage rates.

Today, China is the world’s largest fruit producer and consumer. Per capita consumption now rivals Spain’s, and fruit has evolved from an occasional treat to a daily staple.

Formerly premium fruits like Shine Muscat grapes, blueberries, and avocados are now common in supermarkets at prices accessible to all. Blueberries that once sold for hundreds of yuan per kilo now cost just a few yuan per box. Avocados, once 30 yuan apiece, can now be found for under 5 yuan.

This transformation is the result of structural change across the supply chain.

On the production side, massive expansion in cultivation has reshaped supply. The Shine Muscat’s planting area grew from less than 150,000 mu in 2015 to around 1.5 million today. Blueberries now cover over 1.4 million mu nationwide. With output soaring, the supply-demand balance relaxed — and prices fell naturally.

Technological advances have also driven down costs. Many large-scale farms now use computer-controlled nutrient delivery, AI-based monitoring, and precision irrigation systems. These upgrades increase yields and consistency while cutting labor and input costs.

Breakthroughs in logistics and cold-chain preservation have further widened fruit’s distribution reach. Take lychees — once confined to local markets due to spoilage, now shipped nationwide through pre-cooling, vitamin C preservation, and oxygen-reduction packaging. These technologies, combined with a robust cold-chain network, have democratized fruit access.

Emerging production regions like Yunnan have accelerated this shift. Its favorable climate has turned it into a hub for high-demand varieties like blueberries and avocados, reducing transport costs and pushing prices down further.

As efficiency improves and production scales up, lower prices have become the new norm. Coupled with more rational consumer behavior, this has eroded the premium once attached to imported or branded fruit. Platforms like Dingdong Maicai and Freshippo (Hema) — through direct sourcing and digitalized logistics — offer high-quality fruit at unbeatable prices, compressing margins across the board.

In short, fruit has transitioned from a luxury to a commodity. And that shift is forcing every traditional retailer to rethink its value proposition.

How Fruit Chains Can Break Through

Between 2015 and 2020, China’s fruit chains experienced a golden growth period, fueled by rising incomes, urbanization, and strong brand consciousness. Chain stores proliferated, quality improved, and retail experiences were standardized.

But as the macro environment cooled and digital platforms surged, that growth model lost traction. The challenges — high spoilage costs, heavy logistics investment, and declining price tolerance — are now industry-wide.

To adapt, fruit retailers must evolve from rigid, top-down management to agile, data-driven operations.

For Hongjiu, that means reforming its governance — introducing independent directors, improving transparency, and rebalancing its capital-heavy structure to ensure cash flow stability.

For Pagoda, the path forward lies in empowering franchisees rather than controlling them. Allowing regional flexibility in procurement, simplifying store design, and offering equipment rental options can help reduce startup burdens and restore profitability.

As for Xianfeng, it must prioritize financial health and operational efficiency, avoiding overreliance on regional markets and strengthening governance to prevent liquidity shocks.

Across the industry, survival depends on one core capability: supply chain optimization. Retailers must improve financial compliance, reduce cash-flow risks, and build adaptive pricing strategies aligned with local consumer demand.

In the short term, the focus should be on liquidity management and supplier coordination. In the medium term, on flexible product and channel strategies that align with the “affordable quality” trend. And in the long term, on digital transformation and vertical integration to enhance efficiency and resilience.

The age of luxury-priced fruit is ending. The winners of tomorrow’s fruit retail industry will not be those with the flashiest stores or the loudest slogans — but those who deliver true value, efficiency, and trust to the everyday consumer.