Supplying one of the UK’s cheapest supermarket chains is always going to be a challenge, particularly when it comes to a global commodity like citrus.
“We’re responsible for citrus going into Asda 52 weeks of the year,” says Joep Maussen, citrus category manger with International Produce. “We ensure the availability, quality and, above all, price is right. Value for money is extremely important.”
He says it is a challenge: “It’s difficult on citrus because you’re talking about a commodity product where growers world-wide expect similar returns.”
It is something his company has to address by becoming as efficient as possible. “We’ve got to become more and more efficient to continue delivering that value for money to the consumers, while still allowing for sustainable returns back to the growers themselves.
“We’re now operating on a one per cent margin on our turnover and we’re constantly working to improve our efficiency.”
He says a key factor in maintaining viability in such an operation is through scale. Being the sole supplier to Asda on fruit gives IP that ability. “If we’re supplying more and more fruit to the same organisation, that brings economies of scale, so we’re in a good position.”
The constant drive to lower prices is not, he says, at the expense of quality. “I would say that Asda’s freshness and quality is comparable to everyone else on the high street,” Maussen says.
“Our challenge is not to sacrifice quality, variety and availability when it comes to price. If we’re as efficient as possible, we can get good value for money without lowering returns or quality.”
One element of improved efficiency is delivering into stores, Maussen says, and IP has been working on developing special display units which can be rolled straight out onto the shop floor.
“Having pallets we can roll straight out into the stores has a number of benefits, helping to increase availability in the store and avoid out of stocks. It also reduces the amount of handling needed for the produce, you’re moving less boxes and again that’s a saving in the supply chain.
“It’s something we’re looking into at the moment, but it’s not in the citrus category yet.”
He says there are still opportunities to grow the citrus sector. “Oranges are a fairly mature sector, and we’ve got 52 week supply, however, on soft citrus, particularly clementines, we’re not there yet.”
Maussen says there is still a gap in the supply of clementines, but everyone in the industry is working hard looking for the new varieties that will help close it.
“When it comes to northern-hemisphere supply, from mid-April to mid-May, demand for clems is higher than supply. If we can extend the seasons, then we can grow the category as a whole.”
He says it is getting closer to it all the time: “We’ve got the Afourer variety which is helping to close the gap, but the beginning of May is still a huge challenge.
“Afourer is a quite new late variety and, particularly in the northern hemisphere, it will help extend the season.”
Maussen says IP is also working on new innovative varieties and hoping to start stocking seedless lemons in Asda.
So far, the company has held off launching the product due to availability issues and to look at how best to sell it to consumers. “We need to translate it into an offer for consumers, the question is how we’re going to market it. There’s a demand for unwaxed lemons for cooking and drinks, so we’re thinking of introducing it as an unwaxed seedless lemon.
“Tesco had it last year, but it was a very limited offer, and we would want to get more of it onto the shelves.”
On the grapefruit front, he says the market is pretty static for IP’s customer. “The Asda consumers does not eat a great deal of grapefruit. Demand is quite slow, but the market is relatively stable.”
The price fluctation seen this year has also not helped: “With the tightening of supply following the hurricanes in Florida, retail prices moved up from 32p to 38p, and when that happened we did see demand drop off. You might think 6p is nothing, but it does translate into lower sales.”
When it comes to promotion, Maussen claims the simplest things usually work. “We find simply putting the fruit on the end of the aisles during certain times of the year, particularly during January and February, really does push sales.
“Offering things like a 2-kilo net for 98p on a gondola end performs exceptionally well.”
Overall, he still feels the citrus category has considerable room for growth, particularly on areas like soft citrus.
“Oranges is a very mature sector, although I think volumes are slightly up, by perhaps one per cent. But on soft citrus there is above average growth.
“People are always looking for ease of use and good tasting product and clementines really offer that.”
Maussen says IP has just launched a new kids offer on citrus into Asda, featuring a 500g net with smaller clementines and satsumas.
And when it comes to satsumas, he believes there will always be a market for the fruit in the UK. “Consumers are still looking for satsumas, when they’re on the shelves and are good quality, they really sell.”
However, he says falling demand globally has demanded a shift away from satsuma production in the northern hemisphere.
“There is still good demand in the UK, but supply is tightening, so we may see a price rise on satsumas. However, when it comes to the southern hemisphere, supply seems ok, there seems to be a different attitude there.
“I think satsumas will remain a viable product. You can argue about taste, but there is nothing that is easier to peel.”
At the end of the day, Maussen says the key to success in citrus is keeping Asda’s consumers happy.
“What they are looking for, as far as I’m concerned, is healthy and good tasting fruit which represents good value for money, and they want that year-round.”
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