France is gearing up for an apple season that promises plenty in terms of crop quality and volume. However, product will be entering an immensely difficult marketplace, with exchange rates, a larger English apple crop and general economic woes impacting on sales to the UK.
According to figures released by the World Apple & Pear Association at Prognosfruit this month, France is due to produce 1.6 million tonnes of apples this season - five per cent up on the 1.53mt of 2008, but in line with the average production levels of 2006, 2007 and 2008.
French production this year is set to be in keeping with the Europe-wide trend for a five per cent increase in apple volumes - slightly behind the six per cent rise predicted for UK supplies and just ahead of the Dutch forecast for a four per cent crop increase.
Sylvain Brard, export manager at French shipper Blue Whale, is forecasting a 10 per cent larger crop than last year for his firm, withharvesting just a few days later than last season. Blue Whale is aiming to send 15 per cent more volume to the UK in 2009-10, depending on how the market pans out. “We have no crop damage to complain of this season,” says Brard. “The quality is excellent and cool nights at the moment are particularly helping our Royal Gala from the South West.”
Royal Gala is still by far the most popular bi-coloured variety out of France, says Bobby Barton, apple export manager for Loire Export. “It fits in well because it is a sweet eating apple that offers an abundance of small sizes to satisfy the pre-packing lines especially favoured by our UK customer base,” he says.
However, while demand for French Golden Delicious and Granny Smith is stable, demand is dipping for French Braeburn, reports Barton.“At Loire Export, this is the fifth consecutive year we have been disappointed in this variety,” he explains. “This is partly because our two main customer countries for this apple, Germany and the UK,have now started planting trees on their own soil. Braeburn is also a high-density apple and does not offer much abundance in small sizes for the polybag market, which generates a lot of our volume to the UK. To compensate for this dip in Braeburn and to keep our customer base on this variety, Loire Export is only marketing highly coloured clones such as Joburn and Marired.”
Barton predicts Royal Gala supplies from Provence to be“unusually big” this year, with sizing of 75-80mm. “I have seen growers having to use large fruit sizes of 73-78mm to fulfil French supermarket orders for 2kg polybags,” he says. “To make the weight using these larger-sized fruits, growers are using seven large apples compared with a typical 12 or 14. This is extremely rare and takes away from a lot of the attractiveness of the polybag pack. Large fruit is more suited to regular display trays, but this phenomenon is an indication of large crop sizing from the south of France. From Provence, there won’t be much potential for small Royal Gala.
“English supermarkets may have to hold on until next week to source large quantities of Royal Gala out of different regions like Moissac or Montabaun, which should be spitting volume next week fromthe South West. In the Angers area of the Loire Valley,we expect to be fully operational around September 14,” says Barton.
Loire Export has been sending its first Royal Gala to UK wholesale markets since the end of July. “Wholesalers are already actively buying two or three times a week, topping up their stocks when they see a surge in sales,” says Barton. “Visiting the orchards in theLoireValleyrecently, we can already report good colour condition. Our early varieties, like Royal Gala, are already of a dark, intense red due to early morning temperatures of 12-14°C throughout June and July. The fruit pressure tests recorded in our laboratory give us great confidence that the fruit will store well.There should be plenty of good fruit available for theUKfrom theLoireValley and there have been no adverse weather conditions.
“Visiting the orchards of Cavaillon and the Alps region, the Golden Delicious I saw was showing a nice dark shade of green with a good clean skin finish. Cosmetically, the fruit is free of russet and defects. This is not always the case, as the weather in the south of France is more suited to the firmer variety Granny Smith, so this is good news for the growers in this area.”
As always, there is an overhang from southern hemisphere supplies, but anecdotal evidence points to that overhang being less this season than in previous years. “This year, given the present economic context, some customers may stick longer with the southern hemisphere if prices are substantially lower,” says Barton. “Our UK customers report a slight overhang in Gala and Braeburn, but perhaps more so in Golden and Granny. This may create a sluggish start for sales for us in the beginning of September.”
John Hopkins, procurement manager for pomefruit at Capespan UK, says: “All signs point to a bigger apple crop from France and indications are for fruit sizing on average 5mm larger than last year, so there is potential for a shortage of smaller fruit.
“France has had adequate rainfall and there was hot weather a month ago and then cooler weather, which helped the colour to develop well. Coloration of early Royal Gala looks good at this stage.”
But Hopkins stresses that it is “very early days”. “Like most importers, we will still be majoring on southern hemisphere stocks for the next four to six weeks. France’s position this season will really be based on how competitive it can be against other countries of origin,” he says. “Spain and Portugal are forecasting bigger crops of some key varieties, such as Royal Gala. Italy might be down slightly on apple production [by two per cent, according to figures from Prognosfruit], but will still be a competitor. Eastern Europe is getting better-quality fruit too, although it is down in volume at the moment.”
Despite promises of a high-quality crop and decent volumes, French growers must face up to a number of pressing challenges this season, especially when supplying the UK - making the market a tricky one to navigate.
“A recession-hit Europe is the first major challenge,” says Hopkins. “Orders will be lower so volumes and values are more difficult to attain. Flexibility will be a key attribute of success, along with maintaining a sales rate.
“Another major challenge facing all of Europe is that there is a larger UK crop on the way, so that will be tough in October, November and December. Royal Gala and Braeburn will present a challenge as while there is UK crop of these varieties available, the UK market will be effectively closed. In the UK, there is an early market and a late market for French Royal Gala and Braeburn, but exporters will have to organise sales activities in other markets for two to three months while the UK crop is available.”
Brard says that while it is natural for English apples to take priority during their season,Blue Whale is looking for ways to deal with the rise in the English apple offer.
“We must adapt to the increase in the English apple offer and have to organise ourselves to find new markets to compensate for the fall in demand from the British market,” he explains. “We will not force our clients to buy French if they want to sell English apples - however, we always have to improve our offer in terms of varieties, clones and clearing surplus stock, to offer our British clients a better product than they can find locally at any given moment.”
The euro-sterling exchange rate this year is another overriding concern for French shippers, says Barton.“Like last year, this season the unfavourable exchange rate will be adding several pence per kilo to the retail cost of French apples, but this money won’t be going into the pockets of French growers,” he says. “At most, exporters will be struggling to try to absorb half this price differential. To give you an idea, we estimate that the exchange rate average return on the apple campaign of 2008-09 was a shocking 28 per cent lower than that of the previous year - at worst, it fell to 33 per cent lower. No exporter can seriously imagine for a second that they could increase their selling price to cover this pitfall.
“The exchange rate this year could be the rain or sunshine of this forthcoming apple campaign. A looming exit out of this recession could also give some light at the end of a tunnel and induce hope.”
Despite the difficult marketplace, club apples are performing well in France and Blue Whale is making good inroads in the UK market and elsewhere with such varieties. “Our Pink Lady offer is progressing extremely well, especially the Rosy Glow clone, which allows us to offer the English market a consistent product of good quality,” says Brard. “However, we have to remain vigilant to stay competitive, bearing in mind the exchange rate compared to our US competitors.”
Hopkins believes that the EU market needs to find a better balance in Pink Lady. “There is now a lot more opportunity for South Africa to extend its season and for the US to get in earlier,” he says. “If the European pricing structure remains at the high levels of the last few years, then sales will be lower. The challenge is to get the price right for each product and maintain the sales rate, especially on Pink Lady.”
New club apples such as Red Prince and Ariane are also proving strong contenders for French growers. Blue Whale has invested a lot of effort into improving its Ariane offer.
Brard explains: “Ariane’s presence on UK shelves is increasing and its good taste quality is going down well. Promotional programmes for Ariane are evolving and we think the 2009 crop will be excellent. We are predicting a 20 per cent increase in Ariane sales in the UK.”
With all eyes now on the weeks and months ahead, is the mood largely upbeat ahead of the French season? Exporters are pleased with the quality of the crop coming on stream, but are under no illusions as to the difficulties the next few months could throw in their path.
“As with every year, it is all fine and well to have crop date records and European harvest figures, but the crunch of this forthcoming apple campaign will come down to supply and demand at any given time and the basic capacity of any exporter to provide the given variety to its customers,” says Barton. “This is where service level comes in and regular exporters like Loire Export have a role to play. Strategic months are December and onwards, where packing time and variety management are of prime importance. With end-of-year festivities and holidays, customers need continued service. Varieties might not be short but growers have finished their stocks of regular atmosphere fruit, and open controlled atmosphere stores in a strategic fashion, depending on current grower returns by variety. We can’t afford to let customers down.
“After the end of regular atmosphere fruit, customers tend to give their large orders to companies who offer the full range. Having access to all varieties that are ready at different times in all areas inFrancebecause of climate differences means that we can afford to say yes to all orders and then work out the logistics afterwards. Customers don’t like to be let down over difficult times like Christmas, when traditionally lots of packers close down or when packing time becomes rare. This is where our service level comes in and we have a card to play - our job is to rough out and level off the peaks and troughs.
“No one could have foreseen the outside circumstances beyond our control last year - the sudden recession, the quick turnaround in exchange rates that proved to be longer than anyone expected and all the negative aspects that spoilt what initially looked like a good year at the beginning of last year’s apple crop in September,” adds Barton. “France will be hoping for some positive economic signs at the end of the year and a loosening up of unfavourable exchange rates. Our experience has told us that when stocks are low and certain sizes are much sought after, values can improve swiftly and dramatically. So let’s just see how the peaks and troughs come into play.”
Brard is optimistic overall, but insists that he is also a realist.“We know that competition will be tough, but we have to perform better and be more assertive than in previous years,” he says.
With the industry able to take fewer risks this year, according to Hopkins, being assertive and quick to adapt will be crucial for apple shippers - not just from France, but Europe-wide. “The focus this year, irrelevant of the country, has to be on being flexible and making sure you market as much of the crop as you can at a pace that suits your business,” he says. “Anecdotally, fruit quality is due to be good, but the market will be tougher this year than last, and those who are flexible and light on their feet will be better placed than those who are intransigent to change.”
SMASH-ING TIME FOR LOIRE EXPORT
Apple shipper Loire Export has built up a solid following in the UK market with its Smash-branded apples.
The company was founded in 1978 and today generates a turnover of €20 million (£17.2m).
“We are happy to have a following under our own market brand, Smash,” explains apple export manager Bobby Barton. “It guarantees a quality level and a sure bet to customers in an all-too-generic marketplace. Our wholesale market network of customers buy and sell over the phone and a recognised brand is seen as a guarantee of quality and consistency. It represents the joker in negotiations - a key card to play to secure the sale.”
Loire Export sources apples from around France to offer continuity, and offers 20,000 tonnes of Loire Valley apples, 8,000t of apples from Provence and 2,000t of imported fruit annually.
Around 11,000-12,000t are sent to the UK and Ireland every year,which represents 40 per cent of the firm’s total sales potential.
LE CRUNCH TIME FOR FRENCH
The annual Le Crunch campaign aims to boost sales of French apples in the UK market.
In 2008-09, the campaign organised marketing activities to stimulate sales and create visibility in stores across all the main British retailers. Activities took place in October 2008, then February and March 2009. On average, volumes increased by 27 per cent during the promotions, as opposed to before the promotions, and the campaign created approximately 32 million opportunities to see Le Crunch in store. “Investment from French producers in the UK is quite hefty and shows they are willing to support British retailers, even in these difficult times,” says a spokesman for Le Crunch.
As FPJ went to press, new activities for the 2009-10 campaign were being finalised.
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