What a difference a year makes. Only 12 months ago the exotics category was in sales freefall as shoppers shunned expensive tropical fruit in favour of traditional staples, but fast forward a year and a glut of supermarket promotions later and it’s a different story.
The £317 million category - which was in five per cent value decline in 2008-09, has grown by 0.7 per cent in the last year [Kantar Worldpanel, 52 w/e 13 June 2010]. More striking is that volumes are up 6.6 per cent.
On the face of it, then, it is a promising picture. But scratch below the surface and it becomes apparent producers have some serious concerns. The value growth is largely driven by pineapples (up 10 per cent), with only melons, mangoes and papaya also recording any growth and other lines in various states of decline.
The other problem is that in every area volume growth is massively outstripping value growth, and in many cases retailers are selling more fruit for less money than before.
The level of volume sold on deal has soared by 8.2 per cent in the last year as supermarkets struggled to maintain shopper interest in the category, and producers are concerned about the growing competition with other fruit over the summer months.
In particular the high level of promotions on core products such as apples and oranges has meant exotics prices have had to come down to remain competitive, according to Giles Shapley, marketing director at Dole Fresh UK. Similarly, the arrival of the summer soft-fruit season is putting further competitive pressure on.
A price war on pineapples - which saw Tesco selling the fruit for just 50p and all the other multiples running a variety of bogof and two-for promotions - has seen the average price plummet. “The question is whether this approach is sustainable and giving the wrong message to the consumer,” says Shapley. “Are we going to go down the same route as bananas [where suppliers are said to be reconsidering supplying the UK market]?”
Another source questions whether supermarkets have sacrificed margin for good. “Have the retailers shot themselves in the foot?” he asks. “There’s no value in the chain, and it’s the retailers that have probably taken the biggest hit. It is inevitable international suppliers are having discussions on whether to supply to the UK. If you can get a higher return in eastern Europe and have fewer hoops to jump through, what are you going to do?”
Tesco has been taking cost out of the chain by sourcing pineapples direct, but the source questions how much further this approach can go.
There’s an equally mixed picture on mangoes, where producers are questioning whether promotions will actually bring new consumers into the category at all. Currently there’s tight supply from West Africa, while exchange rates are hampering imports from Israel, meaning there is likely to be less discount activity over the coming months, according to Wealmoor senior national account manager, Danny Grover.
“Those people that want to buy mangoes will do so anyway, and those that don’t will not,” he adds.
There are some striking statistics on some of the smaller lines. Passionfruit prices have plummeted by 40 per cent over the past year [Kantar], leading to a 34 per cent volume sales increase but with values still 20 per cent down.
Confidence is fragile among exotics suppliers at the moment, and the big question over the coming months will be to what extent they are prepared to accept selling higher volumes at lower prices, or whether they will instead look to more profitable alternative markets.
THE ACCIDENTAL AVOCADO GROWER
The traditional avocado markets may find they’ve got some unexpected competition in the shape of newcomer Tanzania. Michael Barker reports.
When avocado producer Rob Clowes was turfed off his farm in Zimbabwe, he probably didn’t imagine his next move would be to change the lives of thousands of poor growers.
Yet as fate would have it Clowes found himself in Tanzania, an east African nation better known for its tea production, and discovered that the ground was particularly fertile for growing avocados.
Working with the help of NGOs, Clowes established The Rungwe Avocado Company last year and now has around 2,000 small-scale growers supplying him. Trial quantities of their crops will be hitting UK shelves next week, shipped in by Mack Multiples.
The key benefit for farmers in Tanzania, as Mack technologist Rob Hooper explains, is that avocados offer them an income double or triple that of producing tea. As they become available at the end of the Spanish season, they have the potential to command a higher price as they bridge supply. “They are coming in to the market at a time when supply is down and demand for avocados is growing,” says Hooper. “And they are just as good quality as those from anywhere else.” It is, therefore, a win-win for everybody involved.
Last year saw Tanzania’s first ever avocado export of five tonnes airfreighted to the UK, with a further 20 tonnes shipped in by sea this year. But that is just the tip of the iceberg. Hooper predicts that once trees have matured the Rungwe Avocado Company could be looking at about 3,000 to 4,000 tonnes within six years.
Although Hass is the principle variety being grown, a number of others are also being produced, including local variety Exikulu, which Mack is supplying exclusively to one customer. At the moment Exikulu - a green round avocado with a relatively small stone - is only produced by a few growers, but there are plans to plant several thousand more trees.
Two NGOs have played a key role in helping growers get up to standard to supply the demanding UK market. Last year the United States Agency for International Development (USAID) contributed $40,000 (£27,000) to help growers achieve Globalgap and other key certifications, while the Africa Enterprise Challenge Fund (AECF) has provided a $1m loan to help the company build a BRC standard packhouse that will be operational for next season.
So far there are no plans to take Tanzanian avocados down the Fairtrade route, although Hooper does not completely rule it out. He also says there could be the possibility of doing some marketing to promote the fact that buying the fruit means consumers are benefiting farmers in a poor country.
It is early days for Tanzania’s fledgling industry so far, but with grand plans and strong support in both the UK and Africa, the major avocado producing nations may just have to sit up and take notice of a new rival on the block.
No comments yet