The South American blueberry industry has been growing and gathering pace for the last five years or so, ever since Chile, Argentina and Uruguay saw the fruit as a new opportunity in the fresh produce trade. The three countries have collectively invested more than $250 million (£165m) in blueberry plantations and more than $90m in new packhouses and storage facilities - from both those involved in the produce industry and newcomers to the fresh game - to power this relatively new industry. The mission to grow the right varieties to the right standards and sell them at the right prices has so far driven the category.
But while this decisiveness paid off at first, the blueberry market has proven tougher than many had anticipated. This is especially so now that volumes from South America have reached a high, at a time when the downward pressure on prices is stronger than ever and the fluctuating exchange rate has hit returns from exports both to the US and the UK.
The major players in Chile, Argentina and Uruguay have now come together to raise awareness about their off-season blueberries, to make the most of the growing market for the fruit and to expand new and existing markets, in order to secure the long-term sustainability of the industry.
This jointly funded initiative, under the Blueberries from the South banner, has been organised by the berry committee of Chilean exporters’ association Asoex, top berry exporters in Argentina and Upefruy, the union for producers and exporters of fresh fruit in Uruguay. The campaign will build on the Chile-led Eat the Blues campaign, which is gearing up for its third year and will link up with Seasonal Berries in the UK to promote the fruit and increase its profile throughout the winter months.
South America makes up a key blueberry source for the UK market and together, the three southern-most countries will export some 54,000 tonnes this season. Number-one supplier Chile will send some 42,250t this season, up from 18,629t in 2005-06. Argentina is set to export 10,500t this year, having grown from 2,902t three seasons ago. Uruguayan supply will reach around 1,250t this season, building on just 55t in 2005-06.
All three countries are concentrating on the production of top-quality blueberries and are phasing out older varieties to make way for a newer and improved offer, including lines bred by the University of Florida such as Star, Jewel and Emerald. They are determined to achieve the best possible returns by striving to make their businesses as efficient as possible at every step of the way, from the field, through the packhouse and by switching from costly airfreight to seafreight where possible.
Now that Chile, Argentina and Uruguay are co-operating rather than competing, these longstanding aims could soon be realised to ensure the continued expansion and development of the sector.
Chile
Chile is a heavyweight producer and exporter of blueberries in South America, coming on stream last in the continent’s season with the highest volumes and enjoying a well-established reputation in the key export markets. The country is the fifth-largest exporter of blueberries in the world and the biggest in the southern hemisphere, in volume terms. The season stretches from October to mid-April, with peak production in January.
Chile is well positioned as a reliable provider of top-notch fruit to supply the UK market with what it requires.
Asoex supports the blueberry industry at every step in the chain, by investing in research and development, implementing training at all levels, offering technical assistance and marketing the fruit. The organisation set up a berry committee three years ago in order to establish long-term support for the industry.
Ronald Bown, chairman of the board of Asoex, hopes co-operation between Chile, Argentina and Uruguay will have mutual benefits for the three sources and that the Blueberries from the South initiative is just the start of their work together. “We want to reach a better understanding,” he says. “At the moment there is a complication in terms of supply, but if we can co-ordinate better, we know we can achieve better results. There is a good reason to do a better job. The volumes from Chile, Argentina and Uruguay are going to get higher every year and we need to make sure that consumers know what blueberries are, what they taste like and what their health benefits are, so that we can maintain prices and sell higher volumes.”
The groundwork for this has already been laid in the UK, with the set of promotional activities for Chile’s Eat the Blues initiative helping to boost both awareness and sales over the last two seasons. The Blueberries from the South campaign will build on this platform.
“We are trying to have better connections with handlers in different countries, especially in the US and the UK, because the industry is going to become increasingly global,” says Bown. “We need to be able to analyse and adjust our common needs and apply common actions, to increase our presence throughout the season. We have started on this in the UK - we know we need to compete, but also need to agree on common goals.”
But there are a number of challenges facing the industry, including fears that the economic downturn could hit blueberry sales, as they are often perceived as an expensive treat, as well as the effect that the fluctuation of exchange rates will have on trade. “We will need to maintain our approach in terms of letting the consumer know that there is high-quality product there to be had in supermarkets throughout the whole season - but we know we cannot block the sun with one finger,” Bown says.
In the meantime, the Chilean blueberry industry will focus on productivity and aim to increase its efficiency, while striving to move the category forward. “We need to be able to keep innovating in terms of new types of production and new varieties,” says Bown. “Good agricultural practices need to be maintained throughout the country.
“We have to work closely together with everyone. Innovation comes from that interchange of needs between suppliers and retailers and how you interpret consumer demand - every two to three years, we research consumer behaviour and we have to compare that with what is wanted by importers and handlers, and agree on modifications that will better reach the consumer.”
But the shape of the industry will inevitably change in response to market demand and the fierceness of the competition. There are likely to be more joint ventures between growers and exporters in Chile, Argentina and Uruguay as the sector continues to develop and move forward - just as some companies have already become international, with growing operations in other South American countries, as well as Poland, Spain and Mexico.
The UK is a priority market for Chilean growers and exporters, especially on the blueberry front. “The blueberry story is just beginning,” says Bown. “We can achieve higher consumption in the UK, but we know we still have a long way to go. The difference between summer and winter consumption is still significant and this shows the magnitude of the potential growth.”
Vital Berry Marketing SA has operations in Chile, Argentina and Uruguay, from which it exports berries all over the world. The soft-fruit giant is a major player in South America and in five years’ time, its exports will reach up to 15,000t. Felipe Silva, from the company, expects the Chilean crop to be some 40-50 per cent bigger this year, to continue to build on its growth. “We are working in all markets to promote blueberries, he says. “We want to persuade supermarkets to retain shelf space for berries and position our fruit at the ends of aisles, to attract attention.
“We know we will have even bigger volumes of fruit in the future and this is why we need to invest now.”
Hortifrut SA is one of the longest-established companies to supply blueberries from Chile, having started 15 years ago. The exporter, which sources from around 240 growers across the country, grows half the fruit it supplies from Chile and represents around 22 per cent of total exports. Nicolás Moller, general manager, says the vision for the company is to “supply berries for the world, every day” and to continue to open up new markets, in line with the major exporters in the country. But he admits that the blueberry category cannot expect the same premium as it has enjoyed in the past. “We believe that the fact we control 50 per cent of our production is a very important tool to control our image, our brand and our programmes, and protect them in the future,” he says. “The way we see our future is not selling to markets, but building markets…
“We are focusing on our organic programmes to build markets and I believe there is a great opportunity for blueberries to be a realistic player in that category - we think that, with the right technology, we will be able to produce organic fruit for nearly the same cost as conventional lines.”
Driscoll’s of Chile, set up as the South American arm of the US-based business in 2005, sources from around 250 growers from the IV to the X region and is another of the leading exporters in the country. Production manager Alejandro Sanhueza González is confident that the blueberry category has a strong future, even though the sector is facing another “complicated year”.
Driscoll’s has embarked on its first breeding programmes for blueberries, which could be on the market within the next four or five years. “We are planting new varieties in Chile to see if they can adapt to the growing conditions here, but they do not have names yet,” says Sanhueza González. “There are a lot of older varieties in Chile, but these are now being replaced.
“We have had great success with the quality and flavour of our berries, and their acceptance in the marketplace. Driscoll’s Chilean blueberries supply winter requirements and we have plans in place to continue to grow as market demand for our fruit increases.”
AgroBerries started producing blueberries five years ago and now sources from 100 growers, as well as from 500 hectares of its own production. Juan Pablo Vogt, deputy manager, insists the best way forward for the South American industry is for it to work together and focus on quality. “This season, prices have been depressed and it has been a hard year - but we have to be united,” he says. “There is a lot of production and if we do not get together and promote together, we will not be able to sell it. We need to be more co-ordinated than we have been this year…
“We have to focus on quality and this will be the main thing for us in the next five years and beyond - we need to produce fruit that looks good, tastes great and has high yields.”
Argentina
Argentina has had to face up to some very tough trading conditions this season, with the economic slowdown and fluctuating exchange rates combining with a massive production spike to push prices through the floor. Many growers visited by FPJ have been forced to leave around half their fruit on the trees because it was not worth picking and exporting it.
This season, growers and exporters in the country will send smaller volumes than were originally forecast, expected to be around 9,000t rather than the 12,000-14,000t initially predicted, with the majority of the balance set to be left to waste. The problems started when production reached a very concentrated peak, which was bigger than anyone had predicted, making it very difficult for growers to allocate their fruit, especially as the excess could not be sent to the traditional main market in the US, where prices had crashed. This looks as if it will be a season that the sector will want to close the door on as soon as possible, so that they concentrate on preparing for their next attempt.
But growers are determined not to let this happen again, or at least make sure they are in the best possible position if it does. To this end, eight of the country’s major blueberry growers and exporters have come together to support the Blueberries from the South initiative, based on their market share.
Tecnovital is the largest blueberry exporter in Argentina, working with 68 growers to manage more than 1,100ha across the country and supply around 55-60 per cent of the total blueberry exports from Argentina to the UK. The business, which was set up nine years ago, is partnered with exporter Vital Berry Marketing SA from Chile, which has been producing blueberries since 1999.
Tecnovital now holds 22 per cent of the fresh market share and 70 per cent of the frozen business. The production sites stretch from the early regions of Tucuman and Concordia, which come on stream in mid-September, to the north and south of Buenos Aires, which finish at the end of January. A total of 31 packhouses, owned by the growers, are spread across these sites to provide up to 19 different packaging formats for the exporter.
The team has homed in on the UK as its main market and sends more than half (55 per cent) of its fruit there. A partnership with UK importer BerryWorld has been forged to develop this market for the fruit.
Felipe Rodríguez, general manager at Tecnovital, says the business has always operated with its long-term position in mind. “The last two years have suffered from hail and frost, but we were able to defend our programmes because our production is spread out,” he says. “Between both years, we lost more than 1,200t in Tucuman due to the frosts.
“Now, we are keen to make our business as efficient as possible. The business is getting tougher every year so we have to decrease our costs by simplifying our business model and our logistics, and switching from airfreight to seafreight. Additionally, this will also help to flatten the supply peak and keep prices higher.”
Profits have been decreasing and the margins are very small - if growers do not have more than 20ha and low costs, they will not survive in the next few years.
“By supporting the UK, we have lost a lot of money in some years, while others were supplying the US for high prices; but we went for a long-term agreement and we think it will be worth it in the long run. However, this year alone we have lost around $2m because of the fluctuation in the exchange rates and this is a huge problem.”
Guillermo Bort, from Blueline, a supplier to Sun Belle Argentina SA, says the blueberry game has turned out to be a gamble for those involved. “The way I see it, you can either go to the casino, or you can grow blueberries - it is the same thing,” he says.
BGB Argentina is just one of many companies that has had to sacrifice around half of its production on its 200ha, because the low returns have brought the harvest to a standstill. The Concordia-based firm normally exports up to 1,400t, but this year volumes have dropped to around 700t. But this has not stopped BGB from creating its own packhouse next year to manage the expected volumes for next year, at 2,000t, which are set to increase to 3,000-4,000t in the next three years.
Gabriel Wasserman, commercial director, says the market has been very “complicated” this year and this has led to high wastage. “The issue with the UK is that we need to promote more so we can send more volumes, and that is why I stood up at the Global Berry Congress in London this year and asked how Argentina can get involved in the Seasonal Berries campaign,” he says. “This year has been tough because of the global economic situation, but we have to concentrate on opening new markets and convince consumers that blueberries are not expensive. We need to make an effort together to co-ordinate our offer in the off-season. If we tried to do this on our own, we would not be able to supply a sufficient offer. Together, we have more power and more efficiency, and we can put a clear message across.”
Uruguay
Uruguay is the smallest of the South American blueberry producers and exporters, but it plays an important role in kicking off winter supply and setting the scene for the season with high-quality berries.
Blueberries make up the country’s second-largest fruit for export, only after citrus. The majority of sendings last year went to Europe, including the UK, the Netherlands and Spain, but this year, sendings are expected to double and more trade with the US is anticipated.
The national industry, overall, is worth around $10m. The production areas are concentrated in the north of the country on the border with Argentina, in Salto and Paysandu, as well as around Montevideo and further east along the south coast.
Upefruy was set up two years ago to position Uruguayan blueberries in the international market, by supporting better production technologies such as improved irrigation, frost protection and post-harvest management, as well as
co-ordinating training at all levels. This proactive approach, with investment, research and marketing through public-private strategies, has helped put more than 800ha in production. The fruit and vegetable growers’ and exporters’ union was developed to facilitate exports to all destinations and its role now encompasses marketing and promotion. But the UK still makes up a relatively small proportion of exports from Uruguay, with 15 per cent of the country’s total exports sent to the UK.
A $500,000 government initiative aimed to help Uruguayan growers and exporters to improve production over the next two years is being backed by the National Institute of Agricultural Research and the National University, which are working on variety trials. The industry has contributed to this funding to help secure its future.
Marta Bentancur Servetti, international affairs co-ordinator at Upefruy and president of the Southern Hemisphere Association of Fresh Fruit Exporters, says Uruguayan growers and exporters have focused on fruit quality and safety from the very beginning, in an attempt to add value to their offer. “We want to make sure our blueberries are the best they can be for consumers,” she says. “At the same time, we make sure that within our industry, we have encouraged smaller growers to work together in co-operatives or strategic alliances so that they can compete with better logistics, and we have made a strong social framework for our workers.
“The government has realised the impact of the blueberry industry, both on economic and social levels… One of the strengths of the Uruguayan blueberry sector has been that it has had the vision to bring together its stakeholders, rivals, research institutions and transport operators, to increase the efficiency of the chain - this does not happen in other sectors. Besides, we see Blueberries from the South as a real strength to be able to add competitiveness in this business.
“The market is getting more competitive every day so we have to keep working to improve. The blueberry category demands investment because the fruit is grown almost exclusively for the export market, which requires the highest quality - so growers have to be cost-effective and professional, and they have to work together.”
The Uruguayan industry is dominated by three key grower-exporters, Midgold SA, Gamorel SA and Tecnovital Uruguay, which together supply 80 per cent of exports from Uruguay. The remaining volumes are provided by a number of smaller-scale growers, which tend to operate as co-operatives.
Horacio Ozer Ami, general manager of Midgold and chairman of Upefruy, expects Uruguay to produce greater volumes once its young plantings reach full production. The Paysandu-based company will export 400t this season and volumes are forecast to reach 1,000t when the one-year-old plantings reach maturity.
“UK consumers are looking for a medium-sized berry, with good flavour and good volume, as well as a long shelf life and we can supply that - we are very focused on quality,” says Ozer Ami. “The two biggest challenges in supplying the UK are fruit quality and the size of the programme, while weather conditions can easily change when the season starts and this can be a problem.
“But this season, prices have not been as good as they have been previously, because of the economic situation and because there was a lot of fruit on the market in one peak week.”
Fernando Carrau, a director at Gamorel SA and president of blueberry growers’ association Uproa, says one of the strengths of the Uruguayan sector is that all the major growers and exporters work together to grow the category. The Salto-based exporter, which is in the process of completing its own packhouse on site, grows on 120ha and produced 500t this season. Its volumes are forecast to reach 2,500t in three years, as plantings become more mature. “In terms of production, there are things you have to deal with internally, but in terms of promotion, everyone that is related to the blueberry industry from nurseries to exporters is in some way working together,” says Carrau. “The main goal of the sector is to produce top-quality fruit and we work hard to achieve the highest standards.
“Both production and exports will grow rapidly in the next three years, so we will have to continue to approach and develop new and existing export market.
“When we got into the business, we saw that blueberries were in demand, there was a nice window to be filled and we had trained agronomists that could get involved and the right facilities - so we knew we had a value chain. Now, when the citrus season ends, we move on to blueberries, so it ties in nicely. But we are not striving for volumes, we are looking for quality.”
The challenges faced by growers and exporters in Chile, Argentina and Uruguay may be many and varied but, now that all three sources have come together to promote blueberries in the UK, South American producers are in a better position to build new markets and expand on the work they have already undertaken. There is no shortage of investment in all three countries, where forward-thinking companies can only continue to develop and make the most of the growing market for blueberries all over the world.
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