It has been a rocky ride for exotics importers over the last few months, with difficult exchange rates making life especially tricky.
The exotics category has been hit hard across the board, whether dealing in euros or dollars. “I am not too concerned about the recession per se, but the cost factors because of the exchange rate mean we will have difficulties,” says one trader. “You can pass those rises on to your customer, but it means that you end up selling less.”
Higher input prices for growers are also pushing up prices on exotics. “Obviously there are some issues with high input prices,” explains one trader. “These are making trade difficult insofar as we cannot pass all the rises on to our customers, and it means our margins have been slashed and are now wafer thin.
“We have tried to pass on those cost increases to customers, but you have to do it in stages as some of those increases are incredible. Compound that with the devaluation of currency and the airfreight rate and it is making the exotics import side very tough.”
Price is not the only factor making life difficult for exotics traders - the poor weather the UK has experienced over the last few months has not been conducive to boosting sales of produce associated with sunnier climes.
Demand is fluctuating depending on the product - while some of the more mainstream lines are holding their ground, other items are no longer must-haves.
Availability is also tight, as overseas suppliers send fewer products to the UK. “Suppliers are sending less product and getting back the same returns,” says one wholesaler.
Lines such as passionfruit, figs, pomegranates and dragonfruit have fallen off shopping lists as prices have soared. However, even mango sales are struggling, along with other more mainsteam exotics, reports one insider. “Prices have really rocketed. Baby corn used to sell for £4 as a standard price, but now we are at £8-12 for the same volume,” he says.
Chefs are opting for more staple fruits such as strawberries and blueberries for their dessert menus, rather than figs or passionfruit. Traders are having to keep all the exotic lines in stock in order to offer the choice, but a lot of produce is ending up dumped, say some traders. “But this is not just a problem on exotics - once people have switched to more basic products the prices of those will also go up and it becomes a domino effect, making everything very difficult,” says one trader.
People are shopping around more, with those customers who may have placed 100 per cent of their exotics order with a single company perhaps reducing that to 60 per cent or so, and searching for cheaper lines elsewhere to supplement their volumes.
Another insider comments: “So far the volumes we are bringing in have been affected, but not to the draconian extent I had feared. But this doesn’t necessarily mean they won’t be affected if prices rise much higher.”
However, some insiders remain confident that sales can continue even in the downturn. “Overall demand may go down a bit - however, when people’s backs are against the wall, they might cancel a holiday, but the comfort factor for many is not cutting down on the food they enjoy,” says one supplier. “Demand will not collapse as some fear - there may be some retrenchment, but not a collapse.
“But a lot of our volumes are programmed with small farmers abroad so we feel we have a responsibility to them - we cannot turn the tap off even if we wanted to. We have had to juggle a bit and pay all our growers in full, but our margins have suffered. We can stand this for a good period of time as we have entered the recession in good shape, so we can weather it and come through improved the other side,” he adds.
Exotics players predict a shake-out over the next 12 months, with only the strongest and the fittest left at the end. “People who have not invested in their working capital or a good supply network will struggle. But companies who, like us, trade fairly and pay promptly, will come through the other side fitter and stronger,” says one supplier.
“When you treat people well under adverse circumstances they, in turn, treat you well, which helps keep you at the top of the quality tree. I am not happy to have seen our margins slashed, but I am cautiously optimistic that those who remain will be in a better position.”
Others agree. “It is quiet on the market at the moment, but if you can keep your head above water, you are doing well,” says one insider. “Fortunately, we put the right things in place years ago and had some capital put away.”
However, on a more positive note, some exotics suppliers from overseas are seeing increased demand from the UK - for example, ginger suppliers from India.
The country’s department of horticulture has intensified its efforts to ensure consistent growth of high-quality ginger in the Davangere district of Karnataka. Thousands of acres of land in the district are to be brought under ginger cultivation this year to meet rising international demand.
UK consumers’ tastes are unlikely to change totally and they are not going to turn their backs on exotic fruit and vegetables entirely over the next few months, seems the general consensus - however, there will be some belt tightening, and traders well placed to withstand that will fare better over the next few quarters.
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