The switch from the southern to the northern hemisphere will mark the annual shift in the citrus market, with higher volumes set to put pressure on prices, while supply finally meets demand after three months of frantic trading.
Tight supply characterised the southern hemisphere season from as far back as July, when record sales values were achieved after the early finish of northern hemisphere supply and slow starts from South Africa and Argentina.
But now, the balance is expected to be restored once sendings from the Mediterranean Basin kick in, though growers and suppliers fear prices will be driven right down as retail competition gets fiercer.
“There has been a lot of pressure from UK retailers, saying this is the price and we can take it or leave it - in this case, growers have no choice but to take it,” says one insider. “But we expect consumption to be strong, especially when clementines and satsumas come in, in November and December. We just have to work it on a day-to-day basis because we are in the hands of factors that we can’t control.
“It is generally better when market growth is driven by consumption rather than the high values that come with shortages, so we are hopeful for the next three months.”
The move into the Spanish season is expected to be fairly seamless, with the handover timed right at the end of the southern hemisphere season. The latest figures show that production in the Mediterranean Basin is forecast to rise two per cent this season. It is anticipated that the Spanish crop will jump 23 per cent to 6.5 million tonnes, while output in Italy, the region’s second-largest producer, is expected to fall by almost a quarter to 2.68mt.
Growers in Turkey are expecting a four per cent increase on 2007-08, as are producers in Israel, while Moroccan volumes are forecast to rise to 1.3mt, up 10 per cent. Production in Egypt is expected to decline by 10 per cent to 2.5mt, and volumes from Cyprus will also fall.
The US is expecting a decline in volumes from last season, with grapefruit volumes forecast to pack out below last season’s levels, by more than 12 per cent.
The citrus sub-categories can be broken down on an individual basis, to show how some are faring better than others.
Easy-peeler volumes make up half the demand in the citrus category. This season, production is likely to rise by just two per cent on last season in the Mediterranean Basin and the US, as gains in Spain, Morocco and Turkey are countered by a fall in Italy, Egypt, Cyprus and Israel.
Orange output is predicted to drop one per cent in the Mediterranean Basin. Spain is forecasting a 28 per cent recovery on last season to 3.45mt, but the shortfall of large-sized fruit is set to continue.
Grapefruit consumption has declined around 15 per cent this year, possibly after adverse publicity that the fruit could not be eaten with popular medication. Supplies are also expected to fall, with production in Turkey forecast to drop by 18 per cent to 200,000t and the Israeli crop set to sink by six per cent to 220,000t.
The lemon job, which has enjoyed high pricing over the past year, will be boosted by a 50 per cent increase in the Spanish crop, while supply in the US and Mediterranean Basin are likely to rise by 17 per cent.
Spain will be the one to watch over the next three months, as the heavyweight producer in Europe. Increases in production across all the main citrus-producing regions in the Mediterranean country mean the sector is expecting to harvest almost one million tonnes more fruit in 2008-09 than in 2007-08.
The Valencia region is the country’s main citrus production area and has forecast the fourth-largest crop in its history, reaching 3.953mt, in line with volumes achieved in 2004-05. Orange production is forecast by the regional authorities to rise by 29 per cent on last season, to 1.9mt, thanks to a recovery of 30.6 per cent for Navelina, 26 per cent for Navel Late and Lane Late, and a hike in Valencia Late volumes of nearly 43 per cent. Salustiana is also expected to show a rise in volume of 36 per cent on 2007-08.
Overall easy-peel production is expected to rise by 13 per cent to almost 1.8mt, but satsumas and late clementines are predicted to show the biggest gains on 2007-08, by 31 per cent and 34 per cent respectively.
But insiders are convinced the bumper crop will not spell disaster. There is no overproduction, they say, and so far the quality of the fruit has been high.
September and October rainfall has helped boost fruit size and also regulate the harvest, so that producers have not been tempted to pick fruit too early or come on stream with large volumes all at once.
The effects that the resurgence of economy lines will have on the category remain uncertain. The emphasis now put on value lines could prove useful to growers trying to sell large crops, though it is feared prices will be dropped across the board.
50 YEARS OF BRAND SUPPORT
With the Israeli season now in full swing, this is a very exciting time for the Jaffa brand. This year we are celebrating 50 years of Jaffa in the UK market, a market that remains our most important, says Marius du Plessis, general manager of Mehadrin Tnuport Marketing UK (MTEX).
We began the Israeli season with satsumas and grapefruit a few weeks ago. They have been well received in the UK, with a strong demand and sales ratio. White grapefruit demand continues to exceed supply but, contrary to popular belief, this is not due to short supply from Israel but lower volumes at the end of the southern hemisphere season, in particular in South Africa.
We have had Jaffa satsumas on shelf for longer during 2008 than in previous years, which is obviously good for our customers as this variety is so popular in the UK.
MTEX’s overall export volume will remain the same as last year, with an increase in clementine and late clementine varieties, such as Mor and Or, but reduced volumes of Minneola, which is mostly sold outside the UK. This year, we have stricter internal specifications on sugar and acidity levels and the ratio will ensure that product on shelf is always of the highest quality.
Our next fresh season variety will be Suntina, available throughout December and the Christmas period.
What has amazed many Israeli exporters is the huge growth in demand from EU and EEU markets. While it may seem tempting to cash in on this demand, the UK continues to be the main focus of supply for MTEX, in spite of currency pressures. Much of this new demand is being fulfilled by countries such as Spain and Turkey.
One of the most exciting developments for us this year has been the re-design of the Jaffa logo and the creation of a new strapline, which is designed to make the brand more accessible to younger consumers - something that our research identified as a key area for Jaffa. An exciting programme of marketing activity is just getting underway. Many of you will have already seen our unique sampling vehicle - Jaffa’s very own VW camper van, which has been branded in the new livery. It has already enjoyed an outing to last month’s snowboarding event, Freeze, in London, where visitors were given free fruit. The van has also stopped by the Manchester Final of Street Athletics, a sports charity set up by Darren Campbell and Linford Christie sports to encourage more young people to get into sport. Christie handed out Jaffa fruit to participants.
No-one would deny that trading conditions remain difficult, but it is at times like these that established brands and companies really show their worth. Countless studies over the years have shown that companies who continue to spend on marketing in a downturn come out stronger in the end, and we plan to support our brand and our customers. Consumers still need to be reassured about quality and consistency in a brand, and we believe that Jaffa delivers just that.
No comments yet