Despite challenging supply conditions and a sluggish economic UK market, lemons have remained a staple in households and have even shown growth.
The amount spent on lemons stood at £57.5 million in the year ending
17 April 2011 [Kantar Worldpanel], up from £53.3m in the same period a year ago. Price per kilo has increased, while volumes reached 32,688 tonnes, as opposed to 31,471t in the year to 18 April 2010.
The figures show volume growth in the lemon market is behind its value performance. Kantar analyst Matthew Cross says that value growth has been driven through price increases at
3.8 per cent but the sector has benefited from stronger trip volumes this year, which has coincided with more promotional support for the sector.
Some may perceive normality as dull, but as the southern hemisphere lemon sector gets into full swing, Argentinean producers are breathing a sigh of relief as they return to form this season.
As Argentina rebounds from the last two years of drought, the country is forecasting a 33 per cent larger lemon crop this year, with sendings expected to rise 11 per cent, according to SHAFFE forecasts. Tucumán supplies 90 per cent of Argentina’s lemon crop and volumes are expected to reach 1.2m tonnes, compared to 950,000t in 2010. Some 35 per cent of volumes are exported and the European Union and Russia are key markets.
“Argentinean lemon volumes should be normal this season as long as there is no frost or any other adverse climatic conditions that would cause an estimate revision,” says Manuela Leyba, San Miguel’s regional export manager.
Argentina has a major presence in the UK during the southern hemisphere lemon season and Leyba points out that the main lemon exporters in Argentina have committed agreements in place with UK category managers. “Much of what is supplied to the UK market is pre-arranged and there aren’t many companies sending volumes on a speculative basis,” she adds. “The UK is a very organised and mature market.”
Whether Argentina can gain further market share very much depends on counter seasonal production and if northern hemisphere producers such as Turkey or Spain end their season early. Argentina is also able to extend its campaign with late season varieties.
Jose Carlos Bertolotti, commercial manager of Citromax, agrees that Argentinean producers will supply only what the market requires. “It isn’t worth loading without a good market because our costs are higher and there is a lot of competition among the fresh and processed sectors,” he explains. “If the fresh market isn’t so good, then maybe some producers will send fruit to the processed industries.”
The large volume of Spanish lemons in the market proved a challenge for southern hemisphere producers at the start of their season but Bertolotti says the weak market began improving in the first week of May.
The larger Argentinean crop is unlikely to affect prices, adds Martin Dunnett, Capespan’s trading director. “Lemons used to sell for 19p and when this price rose to 35p, consumption didn’t change and the converse is true - demand won’t shoot up because prices fall,” he predicts. “Retailers are very competitive on price but this isn’t driven by consumers.”
Dunnett agrees that the lemon market is stable but mature, and while consumption may be rising slowly in the wholesale and catering sectors, there isn’t a huge fluctuation in overall demand.
Supply issues in key growing countries such as Spain and Argentina have meant that South Africa has profited. In a normal year, South Africa supplies approximately 20 per cent of lemons from the southern hemisphere season and works at full capacity from mid-May.
The main producing area is the Eastern Cape, with more than 70 per cent of lemons. Though the region reported rains during late April to early May, good volumes are available. South Africa enjoyed a very good 2010 season and growers were able to take advantage of the smaller Spanish and Argentinean crops and pick up business.
Dunnett is optimistic about the new season. “The UK market always likes new season fruit and the start of the southern hemisphere lemon season stirs interest,” he explains.
Investing in operations is a priority for producers and in the last couple of years, Citromax has acquired new orchards. “We are constantly replacing old trees for new ones in order to maintain high quality and yields,” Bertolotti says. The producer is also investing in state-of-the-art technology to maintain quality control and offer the best quality fruit to consumers.
San Miguel reports it continuously invests in its farming processes, harvesting and packing operations and these efforts have led to an increase in productivity and lower cost production. The company is also working on its mandarin operations and the Nadorcott, Orr and Moria varieties are coming into full production. A key trend that San Miguel has identified is a growing importance of the maximum residue level and GlobalGAP accreditations. Leyba also says that some non-UK retailers are following the UK model and are more willing to approach the grower directly.
In terms of other initiatives, seedless lemons remain on the agenda but further trials and investigation are required. It’s challenging work and Dunnett acknowledges that there is a consistency issue. Some growers that have planted seedless lemon orchards haven’t been able to secure the yields required while others produce a wide range of sizes. There’s also the added complication that some growers can’t guarantee their lemons are seedless.
“Seedless lemons launched with a bang and though they haven’t set the market on fire, niche demand is there and there are opportunities,” Dunnett insists. “Growers have little option to make a lemon different in other ways so seedless is the way to go,” he adds.
Argentinean producers agree that seedless lemons will remain a niche product but it’s important to explore this avenue. “I don’t think seedless lemons will replace the conventional lemon, though it is something some high end supermarkets do value and appreciate,” Leyba says.
But Bertolotti argues that though trials of seedless lemons are ongoing, efforts should also be concentrated on improving the quality of existing product.
Meanwhile, unfavourable exchange rates remain a concern this season and sources say retailers are reluctant to pay the high prices demanded, caused by the weak sterling. “The strong rand makes the UK less competitive and any surplus stock is going to Asia,” Dunnett says. “A lot of money is spent on fresh produce in the region and you can compare the spending patterns there to those seen in Russia 10 years ago.”
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