The grape sector has become a victim of its own success this quarter and looks to overcome a tricky time in which prices have been noticeably low. Improvements in supply from North Africa in particular have ensured consistent supply, while the onset of the European grape season, which sees product emerging from a number of well-established grape-producing countries, has led to oversupply in a market already suffering.
Summer demand has long been a problem in the grape sector, lacking the boom that categories such as soft fruit, buoyed by the arrival of British product, or peaches and nectarines, regularly experience.
Currently, prices on UK wholesale markets are as low as 500p for 4.5kg of grapes as Greece, Italy and Spain dominate the sector, with Turkish and Israeli product also supplementing supply.
The market for white grapes, which has grown eight per cent in volume, has been stronger than that for red. But retailers are making more of US red grapes this year, as the exchange rate becomes less volatile - around $1.63 to the pound as opposed to approximately $1.50 last year.
One importer describes the market as “very, very soft”. He tells FPJ: “We were expecting a difficult European season and it has proved to be the case. A lot of fruit has already been sold to domestic markets, but prices are still low. We do think there will be a steady rise in the coming months though. Overall, the grape market has been fairly stable over the past three months; grapes are up on value, but static on volume so it is quite an average market.”
The continued growth on red fruit was checked slightly this quarter with a five per cent fall in volume, but many believe the sub-category’s growth will continue rapidly. One insider said: “Red’s growth is somewhat inevitable and I think it could represent as much as 50 per cent of the market in the next three years.
“At the moment, it is not a great time for red as it is not a big product for Greece and Spain, but its growth in South Africa and supply from the US over the next four months could stand it in good stead.”
Severe weather problems in Greece had caused early fears over grape production, but do not appear to pose a threat. In August, widespread forest fires outside the country’s capital, Athens, caused thousands to flee their homes and led to international aid being called for. The fires did not spread to grape-producing areas but the incident has provoked MEPs to demand more immediate cross-border European action in the fight against such disasters. Conversely, it was rain that seemed most likely to scupper the Greek and Turkish seasons, but reports on the ground suggest most of the fruit had been picked already and berry size continues to be excellent. Looking forward, there may well be some threat to Greece from the kind of dust storms that enveloped Sydney, Australia, recently. Dust blown from the Sahara is commonly found in Spain, Italy and Greece and there has been some suggestion this could become a larger problem in the future, potentially affecting fruit quality if it comes to pass.
The sector has been buoyed this year by the continued improvement in supply from North Africa and Egypt in particular. One insider tells FPJ: “Egypt has had a big influence in stabilising a potentially tricky market. South Africa and Chile had quality issues and India was tricky at times this year so the continued improvement in Egypt, especially on white grapes, has really helped. The country has been so much more reliable in the last few years as volumes and the quality of its logistics get better and better. There are encouraging signs for the future too - more packhouses are being built and they seem very focused on the European market, where Morocco perhaps does not have quite as close a focus on our market.”
In terms of international standing, it seems increasingly likely that the UK could lose out to Scandanavia and eastern Europe in the battle for product. The exchange rate remains a real problem for importers and the Russian market, which was thrown into crisis when widespread reports of non-payment emerged last year, appears to have recovered and good prices are being paid.
In Namibia, the government has continued to refuse to sign its Economic Partnership Agreement with the EU, leaving grape exporters facing a serious loss of trade preferences or a considerable increase in costs in the last month.
Looking ahead, it seems likely that less product will emerge from Brazil this year ahead of the main season starting later this month. South African supply could also be tricky, with the devaluation of the rand likely to cause some inflation, which could impact on grapes. But the country will doubtless benefit from the extension of the South African Beautiful Country, Beautiful Fruit campaign into grapes. Announced last month, the move will see a significant increase in PR activity for the sector ahead of the season in November. Products will be branded with the South Africa - Alive with Possibility logo, as growers look to harness the PR power of next summer’s football World Cup.
Despite an increased expenditure on fresh produce - now at around £340 million - static consumption will worry the industry. However, there are still signs that customers at all levels, including wholesalers, are prepared to pay a premium. This is borne out by the success of the Capespan Gold premium label, which could grow extensively in the next 12 months as the company looks to build its brand equity and fill in any gaps in supply.
Overall, while the market may remain steady in the near future, there are some positive signs to look for in an ever-challenging market.
GRAPE BREEDING - A DIFFERENT APPROACH
It Is a core requirement for the continuing development of a product that specialist breeders research and trial new combinations and varieties. It can take decades to bring a new variety to commercial release, with a number of factors influencing its viability and desirability to the market, says Dan Crooks, commercial director (grapes) for Mack Multiples.
Good breeding programmes are such a costly, long-term exercise that they are usually created in direct association with a marketing company, which contributes to the research investment. Its reward comes with the restriction of the new varieties to its own grower base and an effective monopoly on supply. One family business is now challenging convention in this field and has recently released its new varieties without marketing channel contract conditions.
The Giumarra family is at the heart of table grape growing in California with its famous GrapeKing brand. The company, Giumarra Vineyards Corporation, has invested more than 15 years in developing a range of exciting new opportunities across all colours of grapes, spanning early- to late-season varieties. California is a relatively expensive place to grow grapes, so the Giumarra family was primarily looking for low-intervention varieties with the flavour, colour, seedlessness and fruit size to rival industry staples such as Flame, Thompson and Crimson.
To help them in their search, they enlisted the help of respected grape specialist, Shachar Karniel. Shachar was the breeder of the renowned variety, Early Sweet. In conjunction with Salvador Giumarra (agricultural lead) and John Giumarra (commercial and consumer lead), he has travelled the world in search of parent material for the programme, aiming to improve the genetic repository of the plant material to bring a really comprehensive new range to market.
Mack Multiples has been working with the Giumarra family’s breeding programme for some time now and, a short while ago, we received the first shipment of a crop of ARRA15 - one of the first commercially available varieties from the programme. Our assessment is that this white grape is certainly a strong rival to Thompson in its flavour and appearance. We’re very much looking forward to talking through the potential of this and other varieties with our growers around the world.
With its programme having now yielded what it needed for its own purposes, the Giumarra family has opened the way for other growers to avail themselves of these new varieties. Grapa Company, the master licensee and worldwide distributor of the Giumarra varieties, is owned by the Karniel family. It is only through Grapa Company that these new innovations are offered for sale to the market. Rafi Karniel, attorney at law, will manage these agreements, with growers finding themselves offered clear, standard licensing agreements with Grapa Company rather than complex, market-committed agreements with importers and marketing companies. The merits of the new varieties aside, this is a very notable point of difference, which is quite a departure from the norm. Growers can plant these new options and remain free to find their own markets.
So if these aren’t exclusive to Mack, why are we pushing for growers to take interest? Well, Mack is all about linking the grower with the end market. We are looking for long-term development and offering our customers something new and different. We have already started talking to our growers and planting these varieties around the world, so thanks to our involvement so far, we have already got a great competitive advantage. The release of the ARRA varieties really is a groundbreaking move by the Giumarra family and we are sure that it is not overstating it to say that we are seeing the start of a new era.
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