Capepsan’s global procurement director Geoff Green has advised international fruit growers to rethink their sales strategies in the current economic climate.
Writing in the latest issue of the Re:fresh Importer of the Year’s in-house newspaper Capespan Courier, Green said growers must be canny in their choice of markets, avoid oversupply and use market data intelligently.
Due in the main to the market’s response to the credit crunch, he added, the last four months have been painful for many in the trade, as the key supply chain drivers shift their strategies to protect their own interests.
“The threats for growers,” he said, “lie in the rapidly changing purchasing patterns of consumers looking to make ends meet”, as UK and EU government economic policy squeezes their resources.
“We’ve enjoyed consistent growth in demand from retailers for 10 years,” Green said. “But suddenly the retail sector has dived into a violent decline with leading industry figures saying it’s the worst economic outlook during the last 30 years. Prospects are grim and it’s believed the correction period will be longer than anticipated.
“To get around the seismic shift in consumer habits, Capespan is considering strategies to tackle the challenge. With the downturn likely to last two to three years, any producer asking for higher prices is potentially committing business suicide.”
He said that Chilean and Indian growers are suffering the financial consequences of oversupplying Europe with grapes this year, illustrating that “some producers have created dangerous scenarios recently”. Anticipating that a strong euro would mean higher prices was a costly mistake, Green added.
Grapes are a being viewed as a “relative luxury” by consumers, and the category is experiencing a volume downturn. “Sales will no doubt continue to suffer for similar products while the economic situation worsens,” he predicted.
“The obvious solution is for producers to anticipate a drop in demand and supply less. Market and supply intelligence has never been more important. My advice to growers is: diversify into a wide range of markets. If the UK is critical for the product, plan your costs around the scenarios described.
“Consumers will have less money to spend on expensive fruit. And because supermarkets will be fighting to retain shoppers and fruit is a high-profile item, they’ll want to show that they’re offering the lowest possible prices,” Green said.
“To help maintain fruit volumes consumed and traded, we have to find alternatives to retail at the lowest cost, while still making the fruit look fresh and appealing. It’s the only solution that allows both sides to survive.
“Sooner or later, the crunch will end and we'll be back in a boom cycle again.”
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