If we are to believe Sir Isaac Newton’s Law of Motion that to every action there is always an equal and opposite reaction, then the grape market is due a big favour by fate in the near future.
This quarter, the European grape market was sent into chaos and some smaller Indian exporters reportedly attempted suicide after a laboratory technician set the wrong specifcation in testing for around 400 known susbtances and accidentally found chlormequat chloride had been applied by Indian growers despite the fact the active did not have a maximum residue limit.
Indian growers had been using it to replicate winter conditions so the grape trees hibernated, rather than protecting the grapes from disease. But the law remained the law and, in the absence of the application for an MRL, the EU set one at 0.05ppm, a level which meant the majority of Indian fruit was in breach of the regulation.
With the ever-increasing emphasis on traceability and a number of NGOs likely to put pressure on any retailer deciding to sell Indian grapes, a lot of fruit simply went to waste.
Supplies across Europe were short for 10-14 days as the EU encouraged member states to lift the ban simultaneously in order to prevent flooding of any one market. The UK allowed a temporary level for grapes that had arrived before 30 April creating a difficult situation. Chlormequat is a growth regulator and it has been said it would take huge levels of the substance to create even a stomach upset.
One insider remarked: “It is sprayed on the ground around the tree so the big fear is whether there may still be some residues left on the land next year, but I don’t think Indian growers are thinking about that yet. So many people were sat on fruit while they waited but then it really brought prices down when the ban was lifted. There was fruit that needed to be destroyed at a huge cost to the exporter, and that’s after they have paid for duty, packing and shipping costs.”
The glut of fruit then hitting the market unfortunately coincided with an early Egyptian season created by cold weather in December and further Israeli product, causing prices to bellyflop across the wholesale markets.
Indian exporters reportedly shipped 4,200 containers of table grapes to the EU this season, with around 1,000 sold up until the week of the chlormequat discovery. Egyptian growers were unhappy but accepted average prices in the fear that late-season oversupply could deliver an even smaller return, but lost out in lucrative airfreight deals as there was simply no need for the expensive option. Chilean fruit remained in the market long enough to cover some of the gaps in supply created by the EU ruling and growers in the country enjoyed a strong year, with Crimson proving particularly successful.
But the disruption merely distracted and intensified the truth in the market - UK shoppers are not buying as many grapes.
Many believe the 2.3 per cent year-on-year drop in penetration is merely a sign of things to come and the recent oversupply crisis saw large volumes of product hitting a very flat market.
In the summer, grapes often lose out to stonefruit and soft fruit but the problem remains more deep rooted, reflecting a torrid 18 months in the sector, poor exchange rates and strong local markets at source - Israeli and Brazilian growers have both enjoyed strong domestic markets.
One source said: “Consumers are keeping their hands in their pockets; we are not out of the woods at all. It is a very hard market to work in.”
In Spain, the season is shaping up moderately with some concerns over poor, rainy weather in Murcia. Some product hit the UK this week, but it is likely to be another two weeks until the sugars are completely right for white seedless. It has been a poor year for Spain across the fresh produce range but if grapes can claw back some market share from stonefruit during the Spanish season, it could go some way to injecting life into the sector.
At the retailers, there have been few promotions on grapes and insiders believe there are few options, with high prices the only way to guarantee fair margins to growers.
Looking ahead, the Spanish are set to dominate but there may be a conflict of interests later in the year as Brazilian growers have stated their intent to pick earlier to avoid the possibility of rain - which has blighted them the last three years - and face the possiblity of serious overlap with Greek exporters. A tough and ever-intriguing sector.
ISRAELI SPECIALITY TOMATOES GO ON TRIAL AT THE SUPERMARKETS
Capespan is one of the most established players in UK grape importing and works hard on a global scale to achieve constant supply. Grape procurement manager Steve Belsey gave an insight into a challenging sector.
The UK market for grapes has been quite lacklustre so far this year - do you see this picking up?
It is difficult to see the grape market picking up in the short term as traditionally, the summer shelf space is given up to berries and stonefruit. We are also suffering from the hangover of the Indian season in conjunction with an early Egyptian season. Grapes on the shelf at the end of the Indian season were generally poor quality and Egyptian pricing took retails from £1.99 per kg to £4.99 per kg; these two factors combined certainly had an impact on sales volumes.
How was 2009-10 for South Africa grape exporters?
In general, the season was a steady one for South African exporters - exports to the UK were up seven per cent year on year, with sales being good and at higher values than the previous season. However, the exchange rate was against the growers, so these higher values were needed to match previous returns.
Are there any new varieties becoming popular and why?
Sugrasixteen is a black seedless variety that is becoming increasingly popular. Volumes from South Africa are increasing, which means the fruit is now available through more outlets. This variety has a unique flavour; some say it tastes like lychee, with a superb texture and colour.
Can you give an insight into your work in Egypt and developments there?
Our hard work in Egypt is really beginning to show rewards. We have a grower base of 15 different producers, geographically spread to give us the best availability throughout the Egyptian season.
Our success is based on strong relationships with growers who are totally focused on their own production and who are very quality conscious.
Our technical expertise over the last eight years has been well received and has really led the way to building the relationships that we have. In 2010, Capespan will handle in excess of 600,000 cartons from Egypt.
Which sources do you see as the up and coming, dominant forces in world grape supply?
There has been greater demand for fruit from the US over the last few seasons due to both Spain and Brazil suffering with their Crimson volumes and I think this is a trend that will continue.
I don’t really see any new sources up and coming - indeed, the traditional sources have had a difficult 12 months and will do well to recover to their normal volumes in the forthcoming seasons. I see all the usual suspects dominating supply, such as South Africa, Chile and Brazil, etc.
How is your premium brand Capespan Gold developing and expanding? How important is branding in fresh produce?
Capespan Gold has developed really well, with growers now having the confidence that in packing their high quality fruit in our premium brand, they will receive a premium return. Volumes have increased over the last 12 months, particularly from Brazil and South Africa and we will be looking to pack the brand in Spain this coming season.
We have certainly seen that branding is still an important factor within fresh produce, but only within certain sectors. The main retailers all have their own packaging requirements which are, of course, free of any branding. The wholesale sector is still very brand-orientated, with customers showing a strong loyalty, particularly to the Cape brand.
Do you have any promotion or marketing plans for grapes?
The main plan for this year is to grow Capespan Gold availability, particularly from our sources in Europe.
We have commitment from our Spanish supply base and we will be looking to roll out the brand into the Greek season.
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