Melons come into their own as a refreshing treat when the sun shines as one of the most popular choices in the exotics category but, behind the scenes, the sector is battling a series of knocks that have hit trade and seen big names pull out of production.
This year has been hard for a category that has faced a number of challenges in production and seen some significant shifts in supply and demand that are shaping the melon market into an increasingly competitive business.
But how has the offer been affected by the rollercoaster of the last few months? And is the category fulfilling its potential?
The UK is a unique market for melons in that almost all types are consumed, with Honeydew as the top line, ahead of Galia and Cantaloupe, as well as Piel de Sapo and watermelons. However, at this time of year, melons face competition from a vivid array of fruit coming onto the market, from the likes of home-grown soft fruit to stonefruit and grapes.
Kantar Worldpanel figures show that the UK melon market is now worth just over £100 million, having suffered a decline of one per cent year-on-year caused by a slip in penetration. This could be attributed to the fact that melon prices have edged up by 1.2 per cent year on year, with increases in Galia and Cantaloupe in particular. In fact, watermelons are the only line to have enjoyed an increase in shopper numbers and it is the only one to have seen lower prices this year.
Terry Watts, managing director at importer Vidafresh, warns that the melon market is underperforming because “growers and importers are working on margins below where they realistically need to be to invest in this category”.
He lists other challenges as the “major problem” of the exchange rate increasing costs for Central and South America, coupled with higher freight rates and increased spend on cartons, bags and fertiliser.
“Overall, prices for Brazilian melons are expected to be 20-25 per cent higher compared to last season, which will increase retail prices to alevel never seen before,” says Watts. “It will be difficult to drive sales with such high retails, which will obviously impact on volumes required from growers.
“This summer has been difficult for some UK retailers as Spain has had problems with size availability on some varieties. There is also the ongoing question of the quality expectations in the UK and some growers have been afraid of costly rejections due to unrealistic expectations of the UK customer, when they know they can get the same or even better prices on the continent without the issues they sometimes encounter here. Some of these growers are fighting to survive, so it’s difficult to disagree with their decisions.”
The hurdles that the melon category has faced this year can be traced back to the start of the Spanish season, which was hit by bouts of heavy rain that caused production to run short.
Gonzalo Rodríguez from Spanish firm Procomel admits that it has not been easy this year, especially in the context of a more “aggressive” market. “We had lots of melons in two weeks and then almost nothing, which is bad for both growers and their customers,” he explains. “The market is much more aggressive than it was some years ago. But those who focus on quality at the right price are growing in terms of melon sales, more than those who only look for the best price. The key is to give consumers what they are looking for, which is good taste without a luxury price.”
Brazil will dominate the UK market from now until Christmas before Honduras, Costa Rica and Panama come on stream. The South American heavyweight had around 12,000 hectares of melon production last year but this is expected to slip to some 10,000ha this year, after Del Monte temporarily pulled out of the country and a number of smaller firms quit the business. This means that volumes will be cut by around 20-30 per cent or more, depending on pest and disease pressure.
Brazilian firm Agricola Famosa claims to be the largest melon producer in the world, with 20,000ha spread over Ceará and Rio Grande do Norte and half the production earmarked for the UK market. The company is enjoying a “record” early start to exports to the UK this year, having sent its first containers of yellow melons and watermelons to the UK last week.
This season, the firm is launching a new brand for its best melons, named Famosa, which is soon to hit wholesale markets in the UK and the continent.
“It’s a record for Brazil,” says Carlo Porro, co-founder and commercial director of Agricola Famosa. “We have never started so early and it has because of the problems in Spain, where they are having more and more challenges in production with the climate and costs.
“Prices are going up because of the exchange rate and the cost of seafreight is rising. In fact, melon prices are expected to go up by 20-30 per cent this year.
“The problem for a lot of melon businesses is viability. Prices in Europe have been low over the last few years and there have been a lot of technical issues. It has been a difficult year for Spain and I fear it will carry on this way for Brazil.”
But this season’s challenges aside, the sector as a whole needs to continue to develop its offer. One way to look at how the category will develop in the long term is to consider new varieties and what seed breeders are aiming for.
Daniel Kretzschmar, produce chain manager at seed breeder Nunhems France, claims that the market for melons is changing and UK consumers have higher expectations than ever. “Demand for orange flesh is increasing, supported by the increasing melon medley offer in fresh cut,” he explains. “On the other hand, demand for tastier melons is also increasing, not only in premium ranges, but for all categories. Consumers are getting used to melons with higher brix levels and more flavour.”
But finding winning varieties is a marathon task and Kretzschmar claims that the biggest hurdles facing breeders are “flavour and shelf life”, which usually contradict each other. “We foresee a large development of varieties combining convenience (right size, shelf life, no waste), together with excellent flavour,” he says. “These varieties will be for the fresh market, but there will also be big sizes for the fresh-cut industry.”
In fact, some melon players are still innovating, in the hope of building the category and growing sales.
Agricola Famosa is set to continue with exclusive watermelon variety Leopard Seedless, now in its second season. At the same time, the firm will this year trial an as yet unnamed yellow melon with UK retailers. On top of this, the team is working on several new European types of Cantaloupes, following investment over the last five years.
“We trial 600 different varieties each year and we are looking into protected production, to protect against rain and the onset of pests and disease. With this, we hope we can be more stable on quality and more effective on costs.
“But I believe that we still need to find a super sweet yellow melon because that is a popular variety, there is still room for improvement in terms of quality and brix levels. And I see a big opportunity in the European types of Cantaloupes.”
Spanish firm Hortifrutícola Costa de Almeria is aiming to increase consumer awareness as the key to expanding the market. “Melons should be presented to the consumer as a fruit for daily consumption for the summer,” says Noelia Medialdea Pérez. “We need to develop recipes that integrate seamlessly into the diet of UK consumers, as well as look for ever-smaller varieties for families made up of two or three people.”
But the majority of melon growers and exporters are struggling to take the sector forward at a time when returns will barely cover costs, let alone investment.
“Unless the retailers get behind the category, give it more shelf space, add a bit of in-store theatre and invest in tastings and promotions, nothing will change - just like nothing has changed in the last five years,” says Watts. “Without doubt, the biggest single problem is the fact that melons have been devalued to a point where some producers are looking to grow other crops.
“Take Brazil as an example, where in the last two years alone we have seen the demise of Nolem - arguably the single biggest melon producer in the country and who had Fyffes as a partner - and just recently, Del Monte has announced that they are ceasing melon production in Brazil. If companies like this cannot survive, what chance do smaller growers have?
“The only way to improve the consumption of melons is simply to give the consumer value for money. But how does the consumer perceive what value for money is? Is it a low-priced melon that looks good, but has a low brix level or one that is slightly more expensive, but delivers on taste every time? I know what I would sooner buy, but we are all under too much price pressure to find the MD2 of melons.”
However this year pans out, it is clear that the melon sector needs a cash injection to secure its long-term prosperity. If margins are not rectified, even the major players could face an uphill battle to grow the market and make sure the exotic line remains popular in the UK.
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