Exotics have taken a beating in recent months, with supplies of key lines proving hit and miss at the same time that persistent promotional offers are squeezing returns for growers and suppliers, against the background of mounting costs.
Kantar Worldpanel figures show the value of the exotics category in the UK has declined by 2.7 per cent in the last year, while volume sales have declined to a lesser extent but have still seen a fall of 1.7 per cent.
Fruit has been hardest hit, going through a “major crisis” in terms of “supply, costs and which countries sources want to send their produce to”.
Shoppers are, in fact, generally buying more per trip but buying less often. Sainsbury’s stands out as bucking the market trend, with volume sales up by 13.4 per cent. Marks & Spencer also posted impressive 43.9 per cent volume growth to reduce its undertrade, but overall the picture is a slightly disappointing one.
“It’s an expensive category so that’s going to have an impact in terms of recessionary spend,” says one importer. “There has been a lot of promotional activity on other fruit such as soft fruit and stonefruit, so exotics have had to fight hard but sales have still dipped.”
A barrage of three-for-£2.50 and three-for-£3 linked offers are trying to piggyback purchases across mangoes and pineapples, for example. “This type of activity tends to be more effective than promotions on a single product,” says an insider. “These offers also give consumers the chance to try some of the lower penetration lines.
“But there have been some big promotions on other fruit. Berries, for example, seem to be permanently on promotion and if you go into the fresh produce aisle with a view to watching your spending, that’s what you’ll go for.”
There is “no question” that returns are being squeezed by these tactics, growers say, with suppliers feeling the pinch as they try to meet the demands of the retailers and still pass on decent returns to their growers.
Retail prices are generally in line with what they were last year, varying only where the multiples stock different sizes. A mango, for example, is retailing at around £1.75-£1.99, depending on weight. Many are on two-for-£2.50 promotions and are occasionally included in linked offers.
The wholesale price of mangoes, on the other hand, was up by 145 per cent year on year at the end of last month.
Mango sales are declining year on year, but that has been rooted to a lack of availability both from key sources and exacerbated by increasing volumes being diverted from the UK to the continent, where prices are on the up. At the same time, the hurricane season disrupted Caribbean supply, cyclones hit southern Asia, shortages due to mild, damp weather have been reported in Australia and storms have devastated the Philippine supply.
“All the major retailers have been affected by availability,” says an insider. “There have been big issues that really affected the industry in October and November, when we had limited volumes. This had an impact on performance and retailers couldn’t do the same promotions as they had done last year.”
Peruvian supplies are set to arrive in January, when the category is expected to pick up.
But mangoes are not the only fruit to be hit by the challenges of supply and demand this year. Sales of kiwifruit alone have fallen by 8.6 per cent this year, at a time when New Zealand growers and exporters are dealing with outbreaks of disease Psa. This month, the industry established a separate, independent organisation to lead its response to the recent outbreak. Kiwifruit Vine Health Inc is registered as an incorporated society and will operate as a non-profit organisation to apply an aggressive containment strategy for Psa in New Zealand and develop and implement a long-term pest management and monitoring plan for the disease.
Pomegranates are only expected to get back on track with the start of US supply, which should mark a turnaround from the Indian season that was hit by rain and consequent shortfalls.
Passionfruit supplies have been hit in the last month or so, when the Colombian offer was hit by unseasonal rain and South African volumes were delayed until last week.
Across the board, the category is expecting both supply and demand to pick up after the New Year, when sources are on course for more stable volumes and consumers will turn their attention to healthy eating.
EISENBERG ON AVOCADO, DATES, AND HIS LOVE FOR BARCELONA
Ronen Eisenberg, exotics product manager at Israel-based firm MTEX, talks everything from changing consumer tastes to Barcelona FC.
How did you become the exotics product manager for MTEX?
I think the exotics sector chose me. The position was open and I was just in the right place at the right time.
What does your job involve?
I am responsible for fruit throughout the entire supply chain, from the orchard until it reaches the end customer. On a day-to-day basis, this can involve dealing with growers and packhouses, as well as co-ordinating logistics and talking with MTEX’s international offices.
How long have you worked for MTEX?
Five years.
What is MTEX’s position in Israeli exotics production?
In most of the exotic products, MTEX is the second-leading exporter from Israel, including our biggest lines, avocado and sharonfruit.
How has the production season been for exotic fruit in Israel in 2010 and what are your expectations for the season?
For our bigger items, the production volumes are affected by the fact that there are on and off years. Avocado, for example, is in an off year in 2010, so volumes are a little lower, despite plantings having increased. For 2011, we expect an increase of 10-15 per cent in our production volumes.
Has the exotics grower community in your country fared well in the last few years?
From what I hear, I believe the growers are happy and it shows as MTEX has been able to recruit more and more growers each year.
Have there been any changes in the demand pattern for Israeli exotic fruit in your main export markets?
I don’t think so - the trends are pretty steady and that is positive. Across our portfolio of products, we are registering yearly increases in both production and exports and hopefully it will continue this way.
Which markets do you concentrate on around the world?
We have a wide variety of markets for our exotic produce, in Europe, South Africa, the US, Australia and South America.
How do consumer tastes change in different countries?
There are some very obvious differences between markets. A good example is the current situation with avocado. The UK market has had a preference for Hass for some time now, but the rest of Europe has always retained its preference for green skin avocados. However, over the last year or two, there are signs that this trend is changing and a lot more European customers are starting to switch to Hass. The variety offers an excellent eating quality as it responds well to ripening and fits with the increasing consumer expectations for ripe and ready-to-eat product. The colour of its skin also makes a subtle change as it matures, so consumers can identify when the product is ready to eat. This has seen European buyers recognise the need for a gradual shift towards the premium product.
What are your hobbies outside work?
My main hobby, if you can call it that, is spending time with my family. Sport is my second passion, mainly football and basketball.
What is your favourite fruit or vegetable outside of the exotics category?
Citrus.
Favourite sports team?
Barcelona FC - they play the best football in the world.
Favourite music?
I love all kinds of music, but nothing extreme like heavy metal.
Favourite country to visit?
The US, and in particular New York.
How old are you?
31.
What have been the biggest successes of your career to date?
During the last four years, we have created a good market for dates, built from scratch. The export volume started at an experimental 20 tonnes in the first year, and this season we have set ourselves a goal of 1,500t, which is a huge increase in such a short space of time.
What do you hope to achieve in the remainder of your career?
I want to keep moving forwards, gaining more responsibilities and playing a full part in improving the results of our organisation.
No comments yet