These are strange times for the dried fruit and nut category. On the one hand, fans have been helping themselves to more of the products in recent years, with a wide variety of lines available on retail shelves. But on the other, soaring prices on many products are threatening to derail the recent growth in the coming months and years.
The total market for dried fruit grew by 10.7 per cent to £256.4 million, according to Kantar Worldpanel [52 w/e 3 October 2010]. But although dried fruit and nut enthusiasts bought into the category more often and spent more per visit, Kantar’s senior analyst Cathy Cross points out that the number of shoppers buying into the category is down by 1.4 per cent, “which is having a slightly negative effect on the market”.
Price increases for raw product is also a concern and increased demand for most dried fruit and nut varieties looks set to continue to push prices up.
“There is nothing in our portfolio that hasn’t gone up in price in the last couple of years,” says Vittorio Friedmann of supplier Voicevale. “Most are up around 10-15 per cent, but some are up by 50 per cent. Everything is quite unstable at the moment with the financial situation across Europe, but also because of increasing demand from emerging markets such as China.”
A report by Mintel this September, entitled Nuts, Seeds and Dried Fruit - UK, warned that rising costs would continue to affect the industry. “It is unlikely that manufacturers and retailers will be able to continue to absorb costs such as rising wholesale prices, caused by increased worldwide consumption, the weak pound and poor crop harvests,” the researchers wrote.
And dried fruit and nut producer Besana’s general manager, Simon Melik, says it is likely that increased plantings undertaken by most supply countries in response to the booming global demand will not provide adequate quantities of fruit and nuts for at least another four or five years. “We can therefore surmise that nut and dried fruit demand will increasingly outweigh supply and in all likelihood lead to further price rises over this period,” he says.
He does point out, however, that product sourced from various ‘new’ nut supply origins such as Hungary, Croatia and Moldova are also being packed as competitive alternatives.
One of the biggest price rises in recent months has been for Turkish dried apricots, which went up by 19 per cent due to a poor crop after late spring frosts, according to Mintec’s September 2010 market report.
Adam Pedley, fruit, nuts, snacks and seeds category manager at NBTY Europe - the parent company of Holland & Barrett and Julian Graves - confirms there has been a huge increase on raw commodity price for apricots, trading at a 75 per cent increase on last year. “The increased cost for consumers has meant sales have dropped from 18,000-22,000 units to 10,000-12,000 units per week,” he reports.
The price for Californian raisins also shot up sharply this September, according to Mintec, rising 11 per cent due to increasing global demand. However, rising prices hasn’t put shoppers off their raisins yet - volume sales were also up, resulting in a healthy UK market value of £44.2m, up by 10 per cent on last year [Kantar].
Nuts
Nut prices are also on the increase, with the price of macadamias having increased by a third since the start of the year as a result of poor harvests in Australia and South Africa, as well as a drought in Hawaii.
And for almonds, lower supply in the US pushed prices up by 10 per cent in September [Mintec], although in contrast, back in July prices for US almonds had fallen by 19 per cent in reaction to a much larger than expected crop forecast.
Consequently, up until September consumers were often able to seek out good prices for almonds in the UK as retailers offered discounts. “For almonds there has been a more competitive raw price, so bigger discounts have been offered to both consumer bases (at Julian Graves and Holland & Barrett), and so volumes are up by 10-15 per cent on last year,” says NBTY’s Pedley.
It remains to be seen whether the change in prices for almonds will slow down sales in this market, but an increased consumer awareness of the health benefits of nuts has helped maintain the almond’s popularity. “More consumers are now well aware of the provision of vitamin E within almonds, as well as antioxidants in pecans, selenium in Brazil nuts and Omega-3 fatty acids in walnuts,” points out Besana’s Melik.
Snacking
Away from the pricing issue, the positioning of nuts and dried fruit in the snacking and home baking aisles is helping to boost sales for both sectors, according to Louise McKerchar, European marketing director at the American Peanut Council. She notes that shoppers are increasingly choosing nuts for snacking purposes. “Flavoured and coated snacking peanuts seem to be really big with consumers right now, with spicier options going down particularly well,” she says.
Health is also a focus. At Holland & Barrett and Julian Graves, there has been a significant reduction in sales of their salted ranges, according to Pedley. “Sales of salted peanuts are declining year on year,” he explains. “We now offer all our salted nut ranges in a raw, unsalted format.” The company has big developments planned for 2011, Pedley reports, such as a “scoop and go” concept in the style of a “fruit and nut pick & mix” within Julian Graves.
The snacking trend is also filtering down to younger consumers. Dried fruit is increasingly featuring in school lunchboxes, according to producer Whitworths. The company says its dried fruits recorded an 18 per cent growth last year, driven by “recognition from parents that dried fruit is a healthy snack for kids”.
A spokesperson at Glisten, which has the license for coated Sun-Maid products in the UK, confirms this trend. “Sun-Maid coated raisins (in yoghurt and chocolate) meet the needs of kids for sweet treats as well as mums who want healthier snacks for their kids. The next phase will focus on developing more appropriate pack formats to suit different occasions, such as lunchboxes, after school and picnics.”
There has also been a big increase in prunes bought for snacking purposes, according to the California Prune Board’s European director, Mark Dorman. Consequently, volume sales for prunes grew in the UK over the past year. However, the value of the prune market dropped by 1.2 per cent to £24.6m [Kantar Worldpanel], indicating high raw product prices.
“South America now has a free-trade agreement with the EU, so Argentina will now join France and Chile on a zero-based tariff compared with California’s 9.6 per cent tariff,” explains Dorman. “This puts California at a big disadvantage from the start, despite being the world’s largest supplier of prunes.”
Elsewhere, cranberries enjoyed an
8.4 per cent rise in value last year to £7.9m, in part due to higher volume sales.
The UK is the largest export market for cranberries, according to Toby Stapleton, marketing director at the Cranberry Marketing Committee.
The crop for this year does look like it will be down a little from last year, but there should be no fears for a UK shortage this Christmas as “supply of dried cranberries will not be a problem, since we came into this year with a surplus,” he says.
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