Last year, Dutch sweet pepper growers celebrated the 50th anniversary of greenhouse cultivation in the Netherlands. During that past half a century, exports from the two leading cultivation areas – the Netherlands and Andalusia in Spain – have grown from less than 5,000 tonnes to more than 800,000 tonnes, which has resulted in a retail value of more than €2bn. After coming under some pressure, the Dutch sector is regaining confidence and efficient supply chains, with high-yield varieties and new attractive concepts key for future success.
After a fairly long series of difficult years, there has been in 2015 and 2016 a recovery in the pepper market for northern European growers. Greater elasticity in the UK market has played a role, partly due to the larger market share and price initiatives of the discounters, but also through more promotional retail activities. Another reason for grower price recovery might be the end of the ‘credit crunch’.
Reviving market growth in volume was only possible through price cuts, achieved through lower returns for growers but also cost savings in the chain with more traffic light packs and value lines. Spain, with a lower production cost, profited in the summer and kept growing. Meanwhile the Dutch reduced production area as smaller growers with a higher cost price dropped out, and switched to higher yielding varieties.
But what has happened other than cutting costs? Added value? If you look on the shelf in the supermarket or visit the Dutch and Belgian greenhouses, you notice over the last decade a gigantic revolution in creating added value for tomatoes. The shift from larger loose and cluster tomatoes towards mini snack tomatoes such as cherry, babyplum and cocktail has happened everywhere. More than half of tomato retail sales are now fine salad fruits or snack types. Both peppers and cucumber are still struggling to create more than 10-15 per cent of their retail revenue in finer, more expensive varieties.
In the south of Germany, supermarkets have added value by marketing local pepper production as ‘region’s own’, securing the supply chain by assisting local growers in keeping discounters out. The advantage of selling local peppers in one or two colours is that it lifts the retail price, and probably the profitability, for the whole category. Another typical German method of adding value is more marketing on organic, such as in weekly leaflets and in attractive displays. But the international supply of organic peppers, started by Israel, is relatively weak. It is a difficult crop to produce, but lately in Almeria organics are picking up.
Then there are new concepts that add value to keep the shoppers’ attention, and these new items are necessary. In that respect the Enjoya pepper (see box) is a very good example. New items are not always more expensive, and for retailers cheaper alternatives can be more profitable. Short conicals of the Capia type, packed in a bag with three to five pieces, seem to be such an example. Indeed, Morocco has created a position on the EU market with Capia.
If cheap Capia is available in store it is difficult to position luxury types such as Ramiro. To avoid confrontation, the long red conical is sold in a mixed bag with a yellow or an orange pointed one – in the coming years we expect better varieties to be packed in those bags. Even mid-conical types have appeared in the market, some suppliers creating a twin pack with only orange and yellow to make clear their upmarket position.
Can sweet peppers dig into a trend that mini tomatoes have been taking advantage of? Namely, for tomatoes sold under the name ‘honeytomato’ the driving force of suppliers is to create the image of a ‘fruity’ product, ultimately tempting shoppers to pay €2 per 100g of this snacking ‘fruit’. A disadvantage for peppers is the non-edible seeds it contains, although you can market peppers as a multi-coloured ‘bag of sweets’.
At Asia Fruit Logistica 2015, Chris Groot, produce chain manager of Enza Zaden, explained how his company noticed and anticipated this mini snack trend a decade ago. They bred a set of three colours of almost seedless mini conicals, and these now join the pick-and-mix concepts at Dutch and German supermarkets. Step by step coloured mini peppers are gaining market share and helping to create more value in the supply chain. Compared with the tomato category there is a long way to go, but there are certainly a lot of opportunities.
Hans Verwegen is marketing analyst at Dutch vegetable seed specialist Enza Zaden.
