In yet another challenging year for the Chilean grape industry, John Pandol of Delano, California-based Pandol Bros gives his take on the season so far and looks at the shifting trade patterns among Southern Hemisphere suppliers.
What is the latest you are hearing from suppliers regarding the quality issues affecting Chilean grapes this season?
John Pandol: Chile is heading into autumn and the days are shorter and cooler. As of this date very few grapes remain to be harvested, these being mostly in the VI Region and to a lesser extent in the V Region. Both maturity and coloration are delayed and with less heat and sunlight, photosynthesis is substantially reduced. Growers must make the decision whether to harvest with less colour or wait for the fruit to mature but risk the weather. It is safe to say that some grapes will not be harvested.
Earlier in the season we had more quality problems, mostly small berry size, and some issues with condition. The last few weeks we have received better quality but seen more problems with the condition of the fruit. These are not because of one weather incident but to a culmination of events such as direct rainfall and higher humidity throughout the summer.
To what extent are the quality problems affecting programmes to Asia, the US and Europe? Although no official estimate has been released, what volume do think will end up being shipped in total for 2015/16?
JP: As of the beginning of April, worldwide exports stood at 70m cartons compared with 80m cartons at the same stage last year, when the season total reached 95m cartons. Shipments to the US were at 36m cartons compared with 41m last year and we estimate that there are still a 1m-2m cartons left to go.
In early March, estimates for exports to all destinations ranged from less than 80m cartons to 90m+ cartons. When you consider that Chile’s export total has hovered between 104m and 108m cartons in recent years, talk of a grape crop below 80m cartons at the beginning of the season would have seemed highly unlikely. My estimate is that the total volume will reach the low 80s, with 38m cartons going to the US.
What impact has this had on the market generally?
JP: Markets are creatures of habit in which grocers tend to look at last year when planning for the coming season. There was no indication that Chile would be 10m cartons off last year and 20m off the volume shipped three years ago. The US was expecting 40-45m cartons of Chilean grapes and these haven’t come. Wholesale prices are higher, supermarket promotions aren’t happening and the supermarkets that import directly are going crazy. There were more promotions than usual in the last two weeks of March and the first week of April but that’s because everyone knows the grapes won’t last.
Which other suppliers stand to benefit the most from the lower output from Chile?
JP: On the front end of the season Peru and California storage grapes and on the back end Mexico, which has been learning how to produce grapes for an earlier and earlier harvest. The Mexicans no longer fear Chile in May (and even April) as they did five years ago. The big winners at US retail are competing products: California easy peelers in the January-March window, California and Mexican strawberries in March and April and Georgia blueberries from April onwards. These have experienced crazy growth because of varietal development.
What implications does this have for the medium to long term for Chile? Are we seeing a permanent shift in trade patterns in SH grapes?
JP: In retail, it’s hard to get your spot back. A season or two of low volume and retail no longer plan around the volume. When an importer’s biggest challenge is finding enough capacity to repack problem fruit, that’s not good. One of the big retailers who imports directly and also works through importers ordered everything to be repacked after the third week of March because there were so many consumer problems and wastage in its stores. Peru now exports about 8m cartons of seedless grapes and seems to be the anointed successor to Chile in the January-February market. But seedless grapes are harder to grow than Red Globes and we don’t know yet whether Peru can produce tens of millions cartons of good quality seedless grapes. We’re seeing a lot of new varieties being planted in regions without much history in grape production and it remains to be seen what will happen.
What advice would you give to the Chilean table grape industry to help it overcome its present challenges?
JP: Do not take a market for granted. The call for local produce in the US is really a call for seasonal produce. If it’s not good, forget about it. In the same way that many retailers have dropped Chilean stonefruit from the order guide they can drop Chilean grapes. Chains are building smaller stores so there is less room for items that don’t move and generate margin.
Chile has had a few tough years because of issues such as drought, exchange rates and labour disputes. The question becomes: what is Chile capable of exporting in a normal season? Is 85m-90m cartons the new normal or is this an atypical season? What is clear is that repacking 5-10 per cent of the crop at destination is unacceptable. Chile must do better than that. How about introducing a national goal of zero repack at destination?
