Many Latin American exporters see Asia as the holy grail, but they ignore traditional markets at their own risk
In recent years, one of the most important topics of discussion amongst the global industry has been the diversification of export markets. A well-balanced export structure reduces supplier vulnerability to demand shocks like the Covid pandemic and also creates some protection against price swings, as well as creating new opportunities in global markets.
When exploring new markets, for many, the obvious choice has been Asia. This market is attractive because of its large population (4.7bn people), growing middle class and future projected economic growth. Lately, Asian countries have also become relatively more politically and economically stable.
Latin American exporters, in particular, have put a lot of effort into developing the Asian market. However, looking at trade flows over the last 10 years, it is clear that traditional markets such as North America and Europe are still very important.
We have used four examples to assess how markets are changing and how successful exporters have been in moving away from traditional markets.
Grapes from Peru
Peruvian table grape exports have been growing rapidly. Shipments increased from 268,300 tonnes in 2014 to a peak in 2023 at 653,500 tonnes. This represents an impressive Compound Annual Growth Rate (CAGR) of 10 per cent.
Back in 2014, traditional markets like the US/Canada and the European Union together accounted for 45 per cent of total exports. By 2023 this share had increased to 71 per cent, with the US and Canada alone accounting for 50 per cent of total exports. In the 10-year analysed period, US and Canadian imports of grapes from Peru grew at a rate of 22 per cent CAGR.
In comparison, in the more emerging markets, such as Hong Kong, China and other Asian countries, Peruvian grape exports decreased, from a combined volume of 104,400 tonnes in 2014 to 84,500 tonnes in 2023. The share of total exports accounted for by these markets also decreased from 39 per cent in 2014 to just 13 per cent in 2023.
In this example, we can see how the role of the “traditional” markets has in fact become even more important.
Colombian Bananas
Total exports of Colombian bananas saw a CAGR of 2 per cent between 2014 and 2023, reaching a peak export volume of 2.37mn tonnes in 2022. As with Peruvian grapes, more traditional markets, such as the EU27 and the UK still play a very important role in exports. Shipments to this region increased from 1.27mn tonnes in 2014 to 1.67mn tonnes in 2023. This represents a CAGR of 3 per cent. By contrast, exports to Asian countries achieved a CAGR of 15 per cent between 2014 to 2023. However, the volumes exported were 9,700 tonnes in 2023, representing just 0.7 per cent of total Colombian banana exports.
Brazilian citrus
As with Colombian bananas, Brazilian citrus exports to Asian markets saw a CAGR of 41 per cent from 2018 to 2023. However, the level of exports to those countries is still very low overall, at less than 600 tonnes per year.
The overall and ongoing importance of the EU27 and UK markets for Brazilian citrus exports is clear. Exports to this region increased from 99,700 tonnes in 2014 to 157,000 tonnes in 2023. In that year, these markets accounted for a 93 per cent share of the total Brazilian citrus exports.
Chilean cherries
Chilean cherry exports have increased massively from 85,000 tonnes in 2014 to 414,000 tonnes in 2023 (a CAGR of 19 per cent). However, the situation is markedly different to the other three examples. In this case, China is now, by far, the main destination for exports, having increased its share of total exports from 67 per cent in 2014 to 91 per cent in 2023. This is an increase in CAGR of some 23 per cent.
In North America, imports of Chilean cherries also increased by a 5 per cent CAGR from 2014 to 2023. In the EU and UK, imports of Chilean cherries decreased by a 4 per cent CAGR in that same time period. And the share of total exports that went to North America actually decreased from 11 per cent to 4 per cent, while in the EU/UK it fell from 6 per cent to just 1 per cent.
Conclusion
Emerging markets like Asia are attractive but challenging and succeeding there is often far easier said than done. Favourable market access, efficient transport links and a high level of market understanding are all required for this to happen, along with a strong degree of commitment from growers and exporters alike to make these markets a future priority.
Growth rates for Asian exports often look impressive but start from a relatively low base. Markets in North America and the UK/EU, which have been built up over time, with lots of hard work, cannot simply be disregarded.
