Asia’s exotic fruit basket is impressive. Thai longan and durian nestle among Chinese lychees and Malaysian starfruit at stores nationwide and some retailers have lined their shelves with other exotics designed to tempt the tastebuds.
However, the economic crisis is having a negative impact on exotic imports and concerns over the carbon footprint of these products is further deterring sales, according to some importers. Sales may be slower than hoped for, but supporters say that there are still opportunities to be had for some Asian tigers.
China has established a name for itself in the UK with Fuji apples and Nashi pears. Rod Hill, Capespan’s procurement manager for China, recently visited key growing areas including Shaanxi, Hebei and Shandong. Sales from China have fallen over the past two seasons and Hill says that this is due to a number of reasons, ranging from rising farm prices, a stronger exchange rate against weaker European currencies and higher prices.
The effect has been significant, from producers requiring more income to fight inflation in China, to a fall in trading of around 25-30 per cent on 2007-08 levels and declining sales in a market that is being dominated by low prices and value offers.
Wholesale demand for high-value products such as Fuji apples and, to a lesser extent, Asian pears has also declined.
“As predicted, the global recession is having an adverse effect on sales and there have been far fewer trial products arriving this year, purely because of the cost and risks involved,” Hill says. “Fundamentally, Chinese fruit has become quite expensive so it is always dependent on a number of issues, including exchange rates. Fortunately, freight costs have been very low this year, with the reduction of exports from the East Asia market.”
When it comes to specific fruits, Capespan has enjoyed the launch of Outspan pomelos in a very difficult market. Hill says the firm is also in the middle of a “very successful” lychee export season. “The fruit is expensive, but the quality has been excellent and well received,” he adds.
Furthermore, Capespan says that sales in the retail sector, where the quality of Chinese Fuji is appreciated, remain robust. However, whether conventional retailers will be able to muscle in on the thriving Asian grocery scene is up for debate. “This is an integrated business run by small importers that know what their customers want to buy and are focused on ethnic retailers,” says Hill. “I think it will be difficult for organised retailers to compete for this market, which is leading to a slight resurgence of the wholesale and independent retail sector.”
He points out that supermarkets are continually looking for innovations, new and different products and a low price, but it is getting difficult to achieve all three goals at the same time. Hill also argues that the innovation and higher-value lines have reduced and are being replaced by value-for-money lines. “Because of the recession, retailers know what will sell and every inch of shelf space is analysed for profit, so it is extremely difficult to introduce new products,” he adds.
However, Hill predicts that there could be product opportunities for exotics from developing areas such as southern China, Vietnam, Laos and Cambodia, where fruit prices are lower.
The varieties and flavours of exotic fruit grown in Asia are enormous, but the key issue is overcoming the long sea voyage times, as airfreight is expensive.
Despite the transportation issue, Thailand is another Asian force that has managed to make its mark in the UK. Naratchata Pisitkasem, deputy director of the London-based Thai Trade Centre, says the UK is Thailand’s 17th-largest market for fresh fruits and the third largest within the EU.
From January to June, Thailand’s fruit exports to the UK totalled £650,000, down 28 per cent on the same period last year. In the same six months, vegetable sales fell by 39 per cent.
Pisitkasem attributes the falling sales to the global recession, but she says exports of frozen produce are increasing as consumers opt for lower-priced food.
Despite the falling sales, Thailand supplies a wide range of fresh produce to the UK including babycorn and asparagus, as well as longan, lychees, mangosteen and rambutan. The country has found a willing recipient in Tesco, which is keen to increase its Thai range. The retailer has announced that it intends to double Thai produce imports and on June 5, Tesco welcomed a Thai delegation to its London Kensington store to view the new range of Thai exotics on its shelves.
The Thai Fruit: Healthy & Tasty initiative is the work of Tesco, the retailer’s Asian subsidiary Tesco Lotus and the Thai Department of Export Promotion. Tesco flew in 50 tonnes of Thai mangoes, longan, rambutan, mangosteen, lychee and dragon fruit for the event. “I believe Tesco is well placed to promote not just the UK in Thailand, but also Thailand in the UK,” said Kitty Wasinondh, the UK ambassador of Thailand, speaking at the event. This development comes at a fortuitous time, given that Thailand’s fruit harvest is estimated to be 30 per cent higher than last year.
Tesco is also eyeing opportunities in Vietnam and late last year, the retailer backed Vietnamese fruit exporter Bao Thanh Co. This firm is seeking investment to develop a large-scale dragon fruit farm and already exports to a number of overseas markets in Europe.
Vietnamese officials have also called for fruit farmers to be given greater assistance. President Nguyen Minh Triet has urged the Southern Fruit Research Institute to cross breed more high-quality strains to boost exports, while Huynh Quang Dau, vice-chairman of the Viet Nam Vegetables and Fruit Association, says fruit farmers should be given guidelines to plant high-quality hybrids that could bring them higher incomes in both domestic and overseas markets.
Companies such as Donatechno in Dong Nai Province and Vinamit in Binh Duong Province have provided funds to farmers so that they can plant trees to GlobalGAP standards.
The Philippines is eyeing the latest Asian developments with interest, as the country’s mango industry seeks out opportunities. Agriculture secretary Arthur Yap says the country plans to “pursue bilateral and multilateral negotiations, as well as aggressive marketing campaigns overseas”, to promote Filipino mangoes.
The Philippines exported 20,824t of fresh mangoes last year and is keen to develop contacts further in Europe, and also in Canada. Approximately 90 per cent of Filipino mango exports are marketed in Japan and Hong Kong, although the Middle East and the Netherlands also import limited quantities. According to Yap, the world export market for mangoes is forecast to rise by an annual 10 per cent in the next two years.
Thailand, China and Vietnam may have scored successes, but other countries have not fared as well in the UK. Japan is a major grower of fresh produce and although the country exports fruit juice to the UK (worth £48,000 in 2007), it has yet to ship sizeable amounts of fresh fruits and vegetables.
According to Hitoshi Takahashi, counsellor of the ministry of agriculture, forestry and fisheries, Japan is keen to gain new markets for its fresh produce exports. However, the hurdles that face other Asian countries are also applicable to Japan. Long transit times and strong competition from rivals that are geographically much closer to the UK stymie exports.
Taiwan shares the same dilemma. Peter Fan, manager of the Taiwan Trade Centre, says that Taiwanese fresh produce suppliers need to have the appropriate accreditation and assurance systems to sell products into the UK. High tariffs, coupled with the considerable effort needed to send products to the UK, are also significant challenges. “EU, African and Caribbean countries enjoy either duty-free incentives or good duty rates,” Fan tells FPJ. “Therefore, most Taiwanese fruit and vegetable suppliers export to Japan, Hong Kong, the US and Canada instead.”
Even though some countries and companies will inevitably fare better than others in the UK, those that have managed to establish a foothold are keen to hold onto their positions during these challenging times and strengthen their base when marketing conditions turn in their favour.
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