There are few products in the industry that are seen as a luxury yet are as widely available as grapes. And it is this widespread availability that presents such a challenge for suppliers in the sector, with Chilean supply at this time causing major headaches in previous years.
In 2008, major weather disruption saw importers struggling to meet demand - something which happened at the same time the year before, following bad weather in South Africa.
But with such a carefully planned market for grapes, the industry has lost out as poor availability from South Africa and an emphasis on getting fruit from the vine quickly in Chile provided a peak in availability. This is in sharp contrast to 2008, where logistical problems dogged fruit coming from Chile. Moreover, Chilean cautions concerning oversupply caused further problems, with the sterling too weak to afford over-shipping.
This season has seen a huge spike in availability, with weeks five to eight in Sugraone and Thompson Seedless -naturally caused by ripening periods in South America - causing problems as it broke the usual availability pattern of fruit arriving late.
This is not uncommon, with Indian and South African supplies also suffering, although the latter negates this by using different growing regions to fight early-season competition from Brazil and Namibia. South Africa remains one of the longest seasons in the sector, with product entering the UK from late November to the end of April and seeded grapes supplied to the continent until mid-June.
One industry source tells FPJ: “The sheer amount of product from the San Felipe/Los Andes region and also the Central Valley in Chile has caused serious market pressure in the last two to three weeks with so much product. The problem is, with the economy as it is and so much pressure on reducing waste product and margins, the risk of oversupply is making everyone cautious.”
At such a crucial time of year, problems with the southern hemisphere seasons can make or break a year for grapes, with figures confirming that some 40 per cent of annual consumption is during the South African and Chilean seasons, from January to March.
Part of the problem in the sector has been the continuing undersupply of white seedless grapes since the Greek season last year, with problems peaking with a serious shortage in the South African season. Thompson, Superior and Prime were all short for import-export and suppliers have not enjoyed full supply for some time. Prior to this, questions over the fluctuating calcium levels in fruit due to over-production in the fledgling Brazilian seedless market put further stress on the supply chain.
“There has been big growth in Thompson in Brazil, but because of their economy, growers have been tempted to go for the maximum production per hectare and over-production can be dangerous,” says one insider. “It is doubtless something they will sort but at the moment, while the fruit looks beautiful, it can have some effect on the condition.”
White seedless grapes from Chile continue to be the main loser due to the wild variations in currency that have thrown various fruit sectors into disarray.
Latest figures show that the UK grape import market is down 21.6 per cent year on year, with 25.9 million kilos - with boxes varying from 4.5kg to 8.2kg - arriving on these shores.
In two to three weeks, it is estimated that UK receipt of grapes will be around 110m kg, 5m kg down on 2008. This year, loading from week nine onwards has seen a 33 per cent fall in the UK, southern Europe saw a 25 per cent fall, while shipments to northern Europe fell by 28 per cent. The eastern European market, which had been rising rapidly, has fallen away with a 30.5 per cent drop year on year, with loadings down by 28 per cent after week nine. The Russian market is largely to blame for the slide, with the rouble worth just 49p - almost a 30 per cent fall since last year - as the government continues to devalue the currency.
Back on home shores, the grape market continues to be in a constant state of flux. One supermarket supplier tells FPJ: “The UK market has been transformed in terms of presentation; around 40 per cent of sales in kilos are in fixed punnets now, as customers like the presentation.
“Historically, in this period - January to April - the vast majority was sold loose, but the attraction of promotions meant that conversion to punnets has driven up the price of loose grapes. It is something you just have to adapt to because it is more attractive. But with the weak sterling and the economics of funding this switch, supermarkets have had to put up the price and sales are down month on month.”
Another issue, as the UK waits to see what happens in the Mediterranean season, is the change of strategy in Chilean supply. With a primary early emphasis traditionally on the three-week Thompson season, which peaks in week six after Sugraone has come to the fore in weeks four and five, Chile has had to change tack due to the important US market.
“Growers have been desperate to get Thompson off the vines in case it rains as it did last year and to allow them to get started on Crimson,” one insider says.
With the Thompson harvest done, growers will now look to load as much Crimson as possible in weeks 11, 12 and 13 - the last loading weeks for arrival prior to the USDA/AMS Marketing Order for Table Grapes, something which has been brought forward this year.
With the Indian market coming to a successful end after rain cut short last year’s season in Hyderabad, the importance of Israeli product, which comes into play around week 21, could grow, with one exporter stating: “We are expecting to harvest 3,000 tonnes of Early Sweet and about 1,500t will be for export.”
The market demands that grape importers must be among the wisest and most versatile in the game and with the sector in such flux, careful procurement remains key.
DELASSUS CONFIDENT OF PROSPECTS
Morocco looks to be in for an excellent Early Sweet season, with promising weather set to eradicate the memories of the two bad seasons preceding it, writes Kacem Bennani-Smires, chief executive of producer and exporter Delassus Group.
Our country is still growing considerably in the grape market and we have found an excellent slot in the market, just after the end of the Chilean season, for the Early Sweet variety. This represents around 70 per cent of our production, with Sugraone making up the remainder. The main competition comes from Israel and Egypt, which we match pretty well, but one benefit we have that will never change is that we are closer to Europe and the UK, so we have a geographical advantage.
Last season, Morocco as a whole produced just over 10,000 tonnes of product, but in 2005-06 we totalled 11,591t and, if the weather holds to the standards we have had so far, we could reach 12,000t in 2009. Following the dominance of South Africa and Chile in the early part of the year, the Moroccan market comes to the fore between April to the end of May and until the beginning of June. It is a tight timeframe we have to work in, but it suits us well.
The biggest challenge for us at the moment, as for anyone involved in the import and export trade, is the currency issues in dealing with the UK. The dirham has dropped from 16 to 12 against sterling in the last year and, even if there is any inflation in consumer price - which there has not really been - it probably would not be enough to make a difference. But we will stay faithful to the UK market as it has served us so well in our citrus and cherry tomato business, as well as grape exports.
Dealing with the retailers can be difficult and they have attempted to push deals lower than we are prepared to go sometimes, but our relationships remain good despite the fierce competition we are observing in the UK marketplace.
We have always been very focused on the UK and work to UK specifications. While some people will complain about the various certifications and standards that must be met, we see it as a positive as it adds a professionalism to our growers and packhouses. While some growers initially complain about the certification, when they see the increase in demand and the impetus it gives our marketing, especially with unilateral worldwide standards, it simply makes sense to everyone. You cannot afford not to worry about issues such as pesticide management and traceability (although sometimes that is taken too far, with too much information thrown at the consumer) and you need those British Retail Consortium and GlobalGAP certifications.
In addition to this, we have implemented Fairtrade standards across our citrus farms and we are looking to extend this for grapes. We have provided schooling for the children of our employees for several years now, with more than 600 children learning through the scheme last year. It is part of a strong corporate social responsibility programme, which we established even before we became Fairtrade certified.
This stood us in good stead at Fruit Logistica in Berlin earlier this year. Although many said it was not as good in terms of passing trade and footfall as last year, for us it saves so much time and travel. We organised a lot of meetings and it proved very successful.
We have enjoyed an incredibly rainy season, with two to three seasons’ worth of rain in one season. The deltas are full and our growers, 60 per cent of whom are in Marrakech and the remainder in Agadir, are confident of a season to remember as Delassus enters its 60th year.
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