Home-grown strawberries are starting to tighten up now, following the weeks of oversupply and slack demand that have characterised the last three months and posed a number of hurdles for the UK market.
Suppliers agree that this turned into a “challenging” period for the soft-fruit sector and even though the sun has shone far more than in the last two summers, “sales of soft fruit have been very disappointing and the market has been oversupplied more weeks than not”.
A bout of winter frost and a slow start to spring before temperatures soared in the summer laid shaky foundations for the season, across all home-grown soft fruit.
British strawberries came on stream around a week later than normal, initially welcomed in May as a stream of top-notch fruit hit the market to replace the bad start made by Spanish supplies.
“Sales were strong, prices were up and even though we feared the poor Spanish crop would hit momentum, sales took off as soon as we put quality British fruit on the shelves,” says a source. “But in general, the market has been oversupplied in strawberries versus demand. Prices have been significantly lower than last season. At the same time, retailers in general have not promoted fruit as hard as they might have done, with a tendency to focus on margins. This has led to reduced tonnage sales and lower prices per tonne, so a double negative for growers.”
According to insiders, the last three months have been tougher than usual because of “lower than expected sales” and “low prices”.
The increased production caused by the late season and the hot weather created a level of oversupply across the industry, with considerably more fruit going through wholesale markets than last year.
A further blow came in the shape of the move by two major retailers into 400g instead of 454g packs, which increased costs and pushed down the net return for growers. At the same time, this has decreased the overall tonnage sold by some retailers. The situation came to a head in July, when the category had to battle to shift higher volumes.
Fast forward to this week, and supplies are more in line with demand but suppliers are expecting the second crop of Elsanta in two weeks, which will see another spike in production that will be “hard to manage, given that sales normally fall in August”, says one source. “The market is now short of fruit and retailers are going to have to pay higher prices,” warns another.
Home-grown raspberries have flooded the market, but many growers are concerned that they have been forced to sell premium varieties as standard and intend to address this in time for next year.
Blueberries are expected to overtake raspberries as the UK’s number-two soft fruit by the end of the year and sales have been “very, very good” this summer, according to suppliers. Demand has been up on last year, but the UK offer had a “mixed reception” from consumers, with some wanting to support local fruit and others claiming that the offer is no different to that from Poland, so plumping for the cheaper option.
Blackberry consumption is on a par with last year, but supply has been erratic with peaks and troughs throughout the summer.
Across the board, the soft-fruit sector is still heading in the right direction, even though growers and suppliers admit this summer could have been better.
Sainsbury’s announced that it was expecting to sell more strawberries this year than ever before, following a week of record sales. The retailer sold 1.8 million punnets in the last full week of June, when it became the supermarket’s number-one selling line across all of its food ranges. The chain sold 13.5m punnets of strawberries between July and September last year and this year, it is expecting to sell 14.5m, up eight per cent.
On the other side, many major berry firms have admitted to having to face up to a tough season. UK soft-fruit supplier Berry Gardens, for example, has revealed that its strawberry sales have fallen by seven per cent year on year following a late start to the season, a difficult winter and a decrease in overall production area.
However, the firm has been buoyed by a recovery in premium line sales and a “dramatic” increase in table-top production.
Speaking at Fruit Focus in Kent, Berry Gardens managing director Nick Marston said that after a “hard winter”, the UK strawberry season had started on average a week late. “As a result, we have sold seven per cent less strawberries to the week ending 10 July than in 2009,” he said.
In the next few weeks, the sector will have to contend with the upcoming spike in strawberry production and later, a delay to the start of the southern hemisphere season.
A TOTAL REVAMP: HOW IS THE BERRY BUSINESS SHAPING UP?
Total Berry has carved a strong identity for itself in soft-fruit circles since its formation was announced at Fruit Logistica back in February. Here, FPJ catches up with director Ian Waller and Richard Parke-Davies, chief operating officer at parent company Total Worldfresh.
How has Total Berry shaped up since it was announced at the beginning of the year?
Ian Waller: The formation of Total Berry was announced at Fruit Logistica in February this year. This happened to be the wettest February for 30 years and was preceded by the coldest January, which brought extreme ground frosts. As if that was not enough, we have since had to cope with disruptions caused by volcanic ash clouds over Europe and earthquakes in South America.
Richard Parke-Davies: We certainly chose a challenging year to launch our new brand. Nevertheless, the new name has been a huge success and has been very well received by both suppliers and customers. The Total Berry brand clarifies exactly what we are about - a focused berry business dedicated to satisfying grower and consumer needs across the full product portfolio. Our reinvention is partly a result of our continuous improvement programme and in spite of the challenges that Mother Nature has thrown at us, we have sustained good growth in a number of areas.
How has the new name established itself in the industry?
RPD: The new name was a serious attempt to differentiate ourselves from the rest, but it was not just a re-naming exercise. We wanted to seek recognition for the strength and depth within our Total brand and create a clear platform on which to expand our cost-effective business model in a way that will continue to benefit growers and customers.
Are there any new initiatives or projects that Total Berry is working on?
RPD: Total Berry has a programme of strategic plans that are being executed over the next three years. We have assessed our business dynamics and will continue to invest in growers, varietal development and consumer needs. Our Redeva Egypt initiative and African Blue joint venture are on target to deliver substantially over the next few years. In the UK, we continue to strive forward with our packaging innovation initiatives, residue reduction work and exclusive breeding programme, so watch this space.
How is this season playing out?
IW: It is fair to say that the start of the UK season has certainly been very difficult. In the early stages, the industry suffered a weather-related delay in production. This created a predictable concertina effect with a large volume of fruit being harvested over a much shorter period of time than we would normally expect. It became a real challenge to manage the vagaries created.
Has supply met demand?
IW: There is a constant need to appraise forecasted volumes from growers and balance this with projected consumer demands to ensure expectations are managed effectively. This is a continual process and Mother Nature does not generally produce to order. Given the circumstances of this season, the supply and demand equation has been managed as well as could be expected but we are always striving to improve matters.
How do you see the berry market developing over the next five years?
RPD: Berries continue to attract good attention from consumers who not only appreciate the benefits of healthy eating, but also regard the versatility and indulgent characteristics of berries as providing an excellent food source. However, the global economic crisis has impacted on consumer buying behaviour in the UK and it is likely that this will continue to be felt throughout the berry market. Promotionally driven activity forces producers to question the “costs to serve” and the viability of supplying certain marketplaces will come under increased scrutiny. Inevitably, there will be a reshaping as a result and it is likely that only the fittest will survive.
What are the long-term aims of the business?
RPD: The virtuous circle of developing, growing and promoting quality berries is continuous within Total Berry. Over the forthcoming years, we will continue to seek out cost-effective improvements in all areas of the business and supplement this with novel ideas and products aimed to support the grower and delight the consumer.Total Berry is also able to take advantage of the strength and depth of the Total Produce group, which is a global company with a turnover of €2.5 billion (£2.1bn). We are in an ideal position to support the berry market through initiatives across the UK and Europe.
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