Another round of decline is sounding alarm bells for the exotics category as it approaches what should be its busiest time of year. Importers are fighting to get the volumes they need to back the price promotions that could turn the sector around.
The latest Kantar Worldpanel figures show that value and volume sales have fallen by 1.2 per cent and 5.8 per cent respectively, with fewer consumers now shopping the category, less often and in smaller quantities.
Sainsbury’s is the only big four retailer get more shoppers to buy exotics, with more of its customers buying more often, even with fewer promotions on the category.
The supermarket’s exotic fruit buyer, Ian Cambridge, singles out mango, pomegranates, persimmon and papaya as showing the strongest growth. He stresses that “good supply and availability of quality produce at competitive prices remains key to continuing our solid share growth”.
However, the way exotics are sold across retailers is changing. The position in store, the space earmarked for the category and special offers are evolving.
There has been a fall in the number of price promotions, though they have not dropped off altogether. Tesco has slashed the price of mangoes to £1, Marks & Spencer has introduced mangoes at two for £3 and Waitrose has persimmon at half price, for example, but there has been a move away from these types of offers.
Many fear that a fall in availability across some of the key lines such as mangoes will compromise future promotions, bringing on another slump at a time when the industry is hoping to boost sales.
Clive Bayston, procurement manager for exotics at Univeg, admits that “promotions seem to be our only tool to drive sales”.
“The market is difficult with consumers concentrating on core basics,” he says. “The cost price of tropicals remain high and with continental Europe paying growers higher values, the UK struggles to compete with the multiples’ margin aspirations and challenging exchange rates.”
The way the category is presented and merchandised is not helping either. “One of the big things that’s happening is the decline of space given to exotics in store, especially after the competitive summer months, when there is all kinds of fruit vying for the fixture,” says a source. “Retailers are under pressure to make ends work so much harder, so it’s much harder to get end space for exotics as well.
“Another problem is the switch to twin-pack sales, which is pulling down the overall cost per fruit and creating what looks like price deflation on the face of it.”
One supplier admits that “there is an awful squeeze on what’s available to sell and at what price”.
“It’s getting harder and harder because in the countries we are sourcing from, two things are happening,” he explains. “The first is that their economies are relatively strong and this is starting to create demand for fruit that would be shipped to the UK normally. The second is that there is a high rate of inflation on labour and other production costs, which is not reflected in the UK because if anything, prices are going down.”
But some lines are emerging as winners, even against the challenging backdrop.
One month into the season, sales of Spanish persimmon have already overtaken that of the entire season last year, which was a record in itself. In fact, sales of persimmon in Asda from mid-October to mid-January last year overtook sales of mangoes.
Pomegranates are also making progress, with newer plantings of popular variety Wonderful in South America keeping availability more consistent over the summer. “As we come into the peak season, people are already used to buying them,” says a source. “They are the perfect example of what you can do to drive sales when you have good availability at a good price.”
Sales are expected to grow as Christmas nears in what is normally one of the most promising periods for the sector as shoppers trade up. Many agree that performance will depend on how the winter plays out.-
A BRAVE NEW SOURCE
A notoriously difficult product to handle, supplying avocados is about understanding its characteristics, swift transportation and excellence in ripening. FPJ takes a closer look at Mack Multiples’ sourcing policy.
Mack is a major player as an importer of avocados in the UK and is looking to push significant growth in the category, supported by its sourcing plans.
British retailers want popular variety Hass, which means searching for reliable producers in key locations. The focus has been on Spain, Chile, Peru and South Africa to cover a consistent volume of fruit that meets demanding quality requirements.
The changeover period from the northern to the southern hemisphere is a difficult time to manage from a consistency, cost and availability perspective, with prices liable to double at pinch points in June.
Mack is taking a fresh look at the problem and creating new sources of supply to bridge the gap. The move is been driven by Rob Hooper, technical manager in the avocado department. Having spent years living and working all over Africa, he is familiar with the vagaries of African soil, with typical crops as well as political and cultural considerations. His local and technical expertise has been key to the opening of a new source of avocados grown commercially in Tanzania and to the successful creation of a new not-for-profit business based in Lusaka, Zambian Small Scale Growers (ZSSG).
The ZSSG nursery in central Lusaka is where young avocado plants grow from seed and where Hass scions are grafted onto those young seedlings. The ZSSG team get those young plants out to small-scale farmers within a 25-mile radius of Lusaka. So far, around 30 farmers have signed up to participate.
These farmers typically have small plots of land, tended by their family, with a range of livestock and commercial crops. Conditions are simple, with accommodation in mud huts and no access to electricity. Connecting dirt roads resemble the surface of the moon, with potholes the size of craters to negotiate for the lucky few with vehicles. Water is not in short supply, but has to be taken from a well. Irrigation is costly and rarely found on farm, so watering crops is laborious.
“Tree crops are an unusual thing to grow commercially in Zambia,” says Hooper. “While avocado trees aren’t particularly complex, there’s a considerable learning curve to manage with the farmers and indeed technically for the ZSSG team. Getting the balance between water, manure and mulch can be quite a challenge, but it’s really encouraging to see such progress each time I visit. We’re seeing trees that are well cared for and now bearing fruit, so all the indicators are positive.”
ZSSG is still a relatively young business, and the trees are unlikely to bear fruit in any saleable volume for another two years. ZSSG managing director Richard Theotis is working hard to find a commercial grower partner in Zambia and to increase the number of small-scale growers to a group of around 200.
Other milestones will include selecting a packhouse and arranging the outbound logistics, with potential to extend the crops in the scheme and to serve other markets.
Mack has funded and facilitated the ZSSG business, in conjunction with the NGO ComMark (now Trademark) funded by DfID, the World Bank and the Royal Agricultural College.
The initiative solves a supply window problem for avocados in the UK and demonstrates how far suppliers will go to source product in a socially responsible way. It provides an unusual, sustainable opportunity for farmers who would otherwise stand little chance of exporting, let alone of supplying a premium UK retailer. These avocados will provide a return that far outstrips anything within reach locally. This should encourage on-farm investment, bringing a brighter future.-
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