Agrexco’s UK general manager Amos Orr says that the 2003-04 results were merely confirmation of the untapped potential of this market for the Israeli growers’ co-operative. It is not often that market dynamics work completely in one country’s favour, but Israel came close last season. A combination of the strength of sterling against the euro, poor weather in competing growing regions and phenomenal yields in Israel provided the impetus for Agrexco to drive its business with UK customers forward across all categories.
The UK office was the company’s stellar performer; its huge sales increase outstripping a global export hike of 10 per cent, to £379m. In terms of overall international sales, pepper volumes rose by 10 per cent to 24,000 tonnes, potato tonnage topped the 50,000t mark for the first time, sweet potato exports climbed by 40 per cent, on-the-vine cherry tomato sales tripled, avocado volumes rose by more than 40 per cent, strawberries saw a 20 per cent hike, grape volumes shot up by 160 per cent, to more than 4,000t, citrus as a whole was 100 per cent up year-on-year, and herbs registered an 18 per cent volume increase.
That is a performance that any produce company would take with pleasure. “In the past, we haven’t quite used the potential of this office. We had big volumes available to us in the last year and I don’t know if we’ve reached our potential now - but we have certainly shown what is possible,” says Orr.
Agrexco will take that - and perhaps some more - in the season that has just commenced. There has been an even greater emphasis on export markets in recent times, Orr says: “Israel is a very small internal market and growers have suffered as it became flooded with domestically-grown products. So the focus has moved more firmly towards growing as big a volume of the crop for export as possible. Agrexco has only been selling in the Israeli market for five years, but we were also affected. I think this has had an impact on exports to the UK in the last year,” Orr says.
The key, he adds, is not having the product to hand, but the team in place to work closely with customers to place it. One of the team believes that the success is a result of a combination of the approaches of previous UK general manager, Rani Friedlander, who instilled a greater sense of discipline into the UK office, and growers in Israel who were supplying the UK market, and Orr, whose firm but amenable style has enhanced customer relationships. “Growers in Israel are doing the job in a way they weren’t before,” he says. “The understanding of the UK market’s requirements has increased and we are seeing the direct benefits of that.”
The stability of the weather in Israel, while growers all around the world have suffered to a certain extent in the last 12 months, ensured that Agrexco was able to both maintain its own robust programmes and find fruit and vegetables to fill the odd gap in the calendar from other sources. A solid performance in times of need rarely gets forgotten in the following year.
Agrexco accounts for more than 75 per cent of the horticultural export volume from Israel. Production of all lines is on the rise, as growers enhance techniques and take advantage of the stability of their weather patterns compared with their competitors.
Orr takes Journal readers through the Agrexco and Israeli spectrum.
“There have been significant increases in tomatoes, both loose and on-the-vine, as well as a substantial rise in organic sales. From a low base, we sold three times as many cherry tomatoes on-the-vine in the last year - they have become a very popular line with the UK multiples,” he says. “My opinion is that this line will continue to show healthy growth, and we are still relatively new as a supplier. This year we expect another 20 per cent increase on last season. Loose cherry is still the number one line in volume terms and, despite tough competition in this sub-category, we have more than maintained our position. Baby Maya, a cocktail type, has also performed well, and will increase in volume this year.”
Orr adds: “Potato volumes were 50 per cent up in 2003-04, and partly because of a drought in central Europe, prices were good in a short market. Our growers recognised the state of the market, prepared themselves very well and benefited accordingly. We maintained supplies of Carmel-branded Israeli product from December through to July. On top of that we have a hugely successful arrangement with British growers to supplement our Israeli crop with UK-grown mid potatoes. This is the only Carmel-branded product for which we have 12-month continuity, and it has worked very well for us. Sweet potato sales were very good too, and smaller items in the root category parsnips and radishes both enjoyed encouraging seasons.”
Avocado exports rose significantly last season, but Orr predicts an even bigger rise this time around, in a market starved of southern hemisphere product. “We foresee a 50 per cent increase of avocado sales in the UK this season,” he says. “We have already started of course, and the early prices for Ettinger have been excellent. We are blessed with a wonderful yield and, while France is still the number one export market by far for avos. The UK used to take a tenth of the French volume, but last season we sold a third of the amount that sold in France, as returns in this market were better. That won’t continue this season, as the higher volumes in Israel will be swallowed up by the French, but we will benefit in this office as the season will last with Hass through to May, which allows us to spread weekly sales nicely.
“Spain is a tough competitor in avocados, but Israel and Agrexco are pioneers in avocados, so we have good levels of recognition within the
trade for our expertise in the category. We won’t see the same success as last year, but the programmes are in there and we will perform well.”
In fruit, strawberries are moving forward at a great pace, on the back of a comprehensive quality control programme, says Orr. “They are checked in the field, at the packhouse, the airport and again on arrival,” he explains. “Our strawberries are airfreighted and therefore a high value product - the monitoring process has ensured that the proportion of rejected fruit is insignificant, which adds value throughout the chain. We will produce huge volumes this season and expect to see more than 100 per cent increases in the UK market for some varieties, beginning in December.”
The melon job performed satisfactorily during the last 12 months, but competition is expected to toughen up in the next season. “This year it is likely to be even tougher, prices are very low on Galia. We have focused on Trooper, which has better shelf-life potential than other varieties and holds its taste extremely well. The other varieties with longer shelf life are, in my opinion, lacking in aroma and taste. We will have Charentais available for two months in November and December and the market should be OK at that stage. We are using a SACMI F5 machine to confirm maturity and sugar levels before packing and this has allowed us to significantly reduce internal breakdown and softness. It gives us the capability to adjust the fruit to the requirements of our customers,” says Orr.
Israeli citrus, which is already eyeing another lucrative season as competing supply sources face wipeout from recent hurricanes, has come into this year on the back of an excellent performance. Agrexco’s citrus campaign saw a 100 per cent volume increase, with both the retail and wholesale customers reaping the benefits of a high-yield, good quality year. “This year, because of the disaster in Florida, the grapefruit market is extremely short and very hot,” says Orr. “We have very good volumes, but it is important that we are able to maintain our customers’ expectations. There is a real shortage in red, but also in white. We would have expected a good season even before the hurricanes, but again we expect to see 100 per cent more citrus coming into the UK this season.”
Shamouti, the one-time leader of the Jaffa gang, has seen a steady decline, but Orr believes the last two seasons have represented stabilisation. Easy peelers are showing encouraging growth too. “We have had early Israeli satsuma in the market for last month and it has performed extremely well. Nova and Suntina, which was a big line last year, will come through later and we will have some Or,” says Orr. “The UK market will take any volume that is available and we are in a good position to fill in any gaps that arise.”
To give Agrexco as close to a 12-month citrus option as possible, Israeli fruit is supplemented through the summer by Peruvian citrus, from market leader La Calera. “We brought in more than 200 containers of satsuma and minneola from Peru last year, and that will expand. La Calera is a very ambitious company and Agrexco is its exclusive marketing agent for the whole of Europe,” Orr says.
Sharonfruit tonnage is on an upward curve; Israel exported 2,300t of the alternate bearing exotic fruit last season, which was an ‘off’ season. It is a global fruit and the US, Far East and continental European markets are big consumers, but as the UK consumer becomes more aware of the characteristics of sharonfruit. It is making the transformation from wholesale speciality to retail line throughout its October to March window. Around 1,000t of an expected 6,000t crop could arrive in the UK this year - and this is forecast to rise in the coming years.
A new pruning system in Israel is allowing growers to produce figs for the prime-time December market. “The system makes the orchards look like vineyards,” says Orr. “It is a deciduous tree that should naturally be dormant at that time, but we have got it producing for December and later to fit in with market demand.”
Fresh medjoul dates have been proving an instant hit this year, brought into the UK in chocolate style presentation boxes. Orr admits that he can’t keep his hands off the juicy, sweet product, which is pinpointed for large-scale volume growth in the next five years, and customers have followed suit. “We have growers throughout the hottest areas of Israel producing medjoul,” says Orr, “all the way down from the Jordan Valley to Eilat. The best fruit needs 2,000 hours of temperatures over 18°C. We haven’t traditionally had much joy with these lines, but this year could represent the start of that changing. As well as medjoul, we have had yellow variety Barhi in the last two months, which has sold very well.
Agrexco claims to have more than three quarters of the Israeli herb business in its portfolio. “We saw an 18 per cent rise in volumes in the UK last year,” says Michael Caddy, who heads up the UK office’s herb operation. “Some are expecting another 20 per cent increase this season, but I think that might be a little optimistic. The minor lines have not grown significantly, but the major varieties, such as roccola and basil, are increasing consistently. This winter will be interesting - Spain has moved more into herbs and that will put us under more pressure. We will strive to work even more closely with customers to ensure that our offer meets the needs of the consumer. There is still an element of suck-it-and-see with herbs, but we continue to search for the varieties that will add value to the category in the future.
“We have herbs 52 weeks of the year from Israel and one of the strong points of the category is that it is split very nicely between supermarket and foodservice customers. It has become a more competitive sector at every level, but our growers are spread across the country, and we have product throughout the year as we move through the regions. The peak of the season has always been Christmas, and it still is, but we are now selling the same volumes in the summer as we used to at peak times, and increasing our volumes at Christmas too.”
A HANDFUL OF BRANDS
Israeli product is sold under the Carmel brand, but Palestinian grown produce is marketed across Europe using the Coral marque. “The Palestinians grow as many strawberries as Israel, and most of it is sold on the continent. Agrexco has traditionally had a very good relationship with growers in Gaza and both sides have been transparent with each other. We also take their flowers and tomatoes,” says Orr.
The Carmel brand has been given a revamp in the last few months, and introduced on new-season product from Israel in the last couple of weeks. “Growers wanted to focus more on the Agrexco name,” says Orr. “The new logo is cleaner and sharper and will continue to be used for all Israeli product except for our Jaffa branded citrus.”
Internationally sourced fruit is branded with the Alesia label, with only Carmel used year-round on one product line by Agrexco, due to a unique deal struck with UK potato growers last year.
“The Carmel logo is very strong in international markets, and particularly the UK,” says Orr. “We have only changed it slightly, modernised it, but it still represents high quality product and consistent performance across our entire range of products.”
ORGANIC GROWTH
The Agrexco organic range was worth £16m in 2003-04. Growth in the category has been achieved across a large variety of products. The number one in volume is potatoes - 7,000t in the UK last year - but avocados, peppers, tomatoes and herbs have all been snapped up in large amounts.
The organic job has a dedicated division at Agrexco, under the Israeli ministry of agriculture, which focuses on the attainment of certification and accreditation for growers. “We are by far the leading organic company in Israel,” says Orr. “It was initially slow to get off the ground, but as more people have seen the light, it has grown very quickly as a culture.”
The convergence of organics and conventional produce is gathering speed, he adds. “There is still a little distance between the two, but conventionally grown fresh produce has never been safer than it is today. That is only because of the standards demanded by UK retailers - the bottom line for consumers is that they are consistently eating the best product you can get anywhere in the world.
“I was in our New York office before coming here and didn’t necessarily recognise the merits of the UK approach. But I can see the benefits now.”
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