When retailer Julian Graves collapsed in August, there were suggestions by some that the failure was down to the specialist products it sold: namely, dried fruit and nuts.

However, sales of dried fruit and nuts are doing rather well and the failure of Julian Graves actually came despite this. In the 52 w/e 28 October 2012, sales of nuts were up 12.9 per cent to £352.5 million while in the 52 w/e 11 October 2012 sales of dried fruit were up 7.7 per cent to £295m, according to Kantar Worldpanel data.

While, admittedly, this came with static volume sales growth in nuts and a small drop in volumes sales of 0.4 per cent in dried fruit, this is a far better performance than many food sectors during what are tough times. Clearly this is a sector that should be helping retailers flourish, not tipping them over the edge. Yet dried fruit and nuts is a complex category where a lot can go wrong.

Buying, for starters, is a complicated area. The UK produces very little of the product for this market – though it does process a lot of the raw materials, such as putting chocolate or yoghurt onto raisins – and so the vast majority of the produce is brought in from a myriad of global sources (there are 11 different countries of origin for just UK vine fruit). UK importers, then, are affected intimately by currency fluctuations and managing that can be key to success.

“Currency issues are a big challenge,” explains Mark Leather, managing director of Country Products. “There have been occasions that within just 24 hours the price has become very different.”

Mark Taylor, managing director of Filbert’s Fine Foods, adds that increased demand for products from the rising middle classes of BRIC countries is also putting pressure on supply and driving up prices.

“Compared to 18 months ago, we are paying an average of 60 per cent more,” he reveals. “At the top end, peanuts that were costing £800 per metric tonne are now £1,600 per metric tonne.”

However, while Peter Meadows, California Raisin Administrative Committee’s European representative, agrees that currency and demand issues are testing buyers, adding that an increase in adverse and erratic weather is also playing a role, he says the impact of these aspects should not be as acute as Taylor and Leather describe.

“This is a futures market and the people operating within it are very experienced at predicting and managing supply,” he explains.

“We are quite a close group of operators and there is a high level of understanding of the market and the forces that govern it and so despite the changeable economic situation and despite the increase in erratic and poor weather, the market has remained relatively stable as problems have been seen in advance and managed very effectively.”

There is a disagreement, then, on how complicated the economics actually are, and conflict arises again in response to whether the growing number of sources UK buyers can choose from for purchasing dried fruit and nuts is positive for the market or not.

The past few years have seen the likes of China, Afghanistan, Uzbekistan and Chile establishing themselves more concretely within the global supply chain, and this has given buyers more choice and, according

to Meadows, more room to make wrong decisions.

“While the new sources can be beneficial, there can be a downside,” says Meadows. “The product coming from some of these countries is sometimes very different to that coming from the established suppliers – the quality is lower. We need to educate buyers to that fact – they need to take into consideration the quality, the shelf life, the consistency of their supply.”

Leather sees it differently. He says the new supply sources are not only of a quality that is in some cases comparable to the established supply sources, but that the emergence of these new sources is great for the industry.

“The non-standard supplier countries are improving their product all the time. Afghan produce is far better than it was previously, Chinese sultanas are now very good quality and the dried fruit from Chile is excellent and a real challenge to established players. There is so much more variety now and so much scope for difference in look and taste. It is a positive development.”

Whatever the trials of buying into the UK, this is only half the battle. On the sales side, retailers and suppliers have had to adapt to a changed market whereby existing clients and new sales channels are all demanding lower price points and new types of packaging.

Of the new channels, Leather says he now sells to many fast food outlets wishing to offer a healthy alternative, while Jane Milton, owner of food consultancy Not Just Food, explains that school lunches and commuter breakfasts, alongside kiosks and supermarket whole foods sections are all growing markets.

Across the board, for old and new consumer alike, Leather says price is crucial and so pack sizes have had to reduce. “Compared to a chocolate bar, our product is more expensive, so the pack sizes have come down to compete, from 100g, to 70g and now to 50g,” he says. “We are packing smaller and smaller packs to hit the competitive price point.”

Milton says that packs also have to be more flexible – explaining that alongside smaller packs, consumers also want to dip in and out of larger packs for consumption on the move and so resealable packaging has become a must in some product areas within the category.

If that wasn’t enough, she adds that the consumer is now more knowledgeable about dried fruit and nuts than ever before, and demands innovation to hold their interest.

Meadows and Taylor stress that indulgence is a key part of meeting this demand – finding ways to make healthy snacks not just better for you, but a full and pleasurable food experience too (yoghurt and chocolate coatings are particularly effective, they say). Leather adds that new types of fruit and nut are also constantly asked for – a task difficult to fulfil with much of what is known already available. However, he points to recent fads of goji and acai berries as good examples where new varieties were brought in and demand proved extremely high.

The category’s ability to keep innovating in these ways, as well as with pack sizes and price points, is going to be key to its ongoing growth. Economic problems will persist, but there are signs that the sector is positive of continuing success, not least the fact that the original owners of Julian Graves, before it was sold to NBTY Europe and eventually closed, have opened a new nuts and dried fruit store, called Grape Tree, in Chester, with plans to open many more in the coming months. —