The market for grapes is in a “lull before the storm” as growers and suppliers feed the market with the kind of volumes that have seen retailers seize the opportunity to promote the category for the first time in months.
Prices have eased now that Chilean supplies are in full swing and promotional activity has taken off, with a flurry of £2.49 a kilo offers that have got white fruit moving after a period of tight supply that saw retails as high as £4.99 a kilo. The big March arrivals that normally span three to four weeks are only just getting underway after a slow start and this has reinvigorated supply and demand.
“A lot of the retailers are taking the opportunity to put on big promotions on white grapes as it’s the first chance they have had to do any promotions in the last five or six months,” says one supplier. “However, there is pressure on red fruit because arrivals are quite limited. South African Crimson has not delivered again. Chilean Flame is arriving and looks better, but there have still been some quality issues.
“For now, the emphasis is on what sells and understandably, that’s what retail buyers are focusing on.”
This follows a period of short supply that came to a head when a gap opened up in the crossover from the South African to the Chilean seasons. In fact, movement was so limited that UK supermarkets were forced to take action to make the most of the volumes available.
“Retailers had to slow down the rate of sale so they increased their prices, knowing that otherwise they would run out of fruit,” says an insider. “Prices were double what you would expect them to be for a time at the end of the South African season and the start of Chilean volumes. This is when you would normally have had good availability.
“But now, it feels like we are in the lull before the storm because it is going to be more difficult again in May.”
Kantar Worldpanel figures show that the grape market has grown by £31 million, with price rises fuelling this 5.8 per cent growth on last year but volumes falling by almost the same amount (five per cent) as hundreds of thousands of shoppers stopped buying into the category.
Only Marks & Spencer and Waitrose have pulled in more shoppers to the category, but they already overtrade in value share.
There are concerns that the end of the Chilean season looks set to be more difficult to navigate just as a number of other key sources that have faced challenging production conditions will be coming on line.
Suppliers are fearing for Indian supplies in particular, with the chlormequat issue still hanging over the sector and the realisation that yield on the vine is around 25 per cent lower than last year after production was hit by frost.
One supplier claims that this estimate is “extremely conservative”, given the combination of obstacles facing growers and suppliers. The export figures for last week show that so far just 349 grape containers have come from India, compared to 1,316 containers to the same week last year.
This could potentially combine with more problems foreseen for the results of residue testing, as harvest intervals have been affected by the cold snap.
Mexico is struggling after being hit by hail damage and Egypt follows India but it is not yet clear how sendings will shape up in the aftermath of political unrest.
South African grapes are still coming through from later areas in the Hex Valley, with four to five weeks still left to run following late rains in the Orange River Valley and challenging conditions from January, which affected the last 10-15 per cent of the season.
Suppliers are bracing themselves for how the market will play out in the coming months, especially given that trade is expected to shift as retailers increasingly take a direct approach to source grapes from growers, bypassing importers.
“It’s beneficial for growers because they are able to communicate more easily,” one supplier admits. “It had to happen because growers did not believe importers and retailers were becoming concerned about availability, so it was a very negative scenario.
“The message is now clear to buyers that growers are able to reposition their fruit if they don’t get the right price, which is forcing retail strategy to follow availability more than it has done for a long time.”
UNIVEG UK ON A FAIRTRADE MISSION
Univeg UK is working to bring Fairtrade Indian grapes to the UK by next year. Steven Maxwell reports.
Univeg UK has revealed more details of a project to import Fairtrade-certified table grapes from India, with the first volumes expected to reach the country by early 2012.
The supplier is confident that the line can gain the trust of consumers and retailers to secure sales in a market that has suffered in the economic recession, even in the face of misgivings from retailers following the recent maximum residue level (MRL) problems linked to the Indian grape sector.
Univeg UK has been working with a group of small growers in India to develop the initiative over the past three years and is keen to stress that all measures are being taken to ensure the quality and safety of the fruit.
According to Univeg UK’s Fairtrade commercial manager, Rosemary Lalley, the project has been slow to come to fruition because of the need to carry out audits and the drawn out nature of the Fairtrade accreditation process. However, she is also very aware of the need to reassure particularly retailers that the grapes are untainted by any connection with last year’s controversy over chlormequat chloride component (CCC) residues.
The detection of the chemical, used to regulate plant growth, in Indian grape supplies to Lidl in Sweden, plunged the 2010 Indian table grape campaign into turmoil. Although it had no European MRL in place and was judged by the European Food Safety Authority to pose no health risks at residues below 1.06ppm, the EU responded to the find by imposing a default MRL of 0.05ppm.
Despite the fact that many countries did take Indian grape shipments after the European Food Safety Authority’s pronouncement, the detection had a devastating effect on the season. It is a link that Univeg UK is keen to avoid.
“It’s something that we’ve discussed very openly with our suppliers in India,” says Lalley. “They fully understand the requirements they need to adhere to in order to meet all EU quality legislation. It has been a key factor in looking at the timetable of the project to make sure the farmers can deliver.”
Lalley says that although the project is likely to be small in volume terms initially, it could progress further over the coming seasons. “We are working with small growers that only have a small number of hectares, so that is a limiting factor, but volumes will potentially increase as more growers might come into the group,” she says.
The Indian project follows Univeg UK’s move to import its first-ever volumes of Chilean Fairtrade grapes into the UK in March last year, as well as established sources from South Africa and Egypt. The likely start of sourcing from India will mean that the company can move closer to offering Fairtrade grapes 52 weeks a year.
Of course, Lalley readily admits that given that the Fairtrade ethos is based on the concept of attaining a fair price for products grown by small-scale, often improverished growers, the current economic climate poses perhaps the greatest challenge for Indian grape exporters.
“It has been a difficult economic climate, but we have to look at how the products can fit within retail ranges,” she says. “A number of peripheral Fairtrade lines have been affected, but there are a number of core products whose sales we need to maximise and we need to widen their availability across UK store networks.
“It’s a niche market that’s going through a tough time, but we’re confident things will improve,” Lalley adds.
Although Fairtrade grapes appear certain to arrive on British supermarket shelves sometime in the near future, the project runs contrary to one of the prevailing trends in India’s conventional grape sector - that of selling increasing volumes within Asia.
Last season’s MRL-related problems and a less favourable rupee-euro exchange rate have led many Indian grape producers to look at nearby Asian markets, where consumption levels have been steadily growing.
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