Apple production in Chile is up, and so is consumer demand in the UK, especially for bi-colored apple varieties. The long-term effort by Chile’s apple exporters to meet the demanding standards of the UK’s apple deal has paid good dividends for all concerned, though increased competition may be squeezing margins for many Chilean companies.
“Meeting the demanding standards in the UK wasn’t easy,” says Luis Alberto Casse, trade director at C&D International, an important Santiago-based apple trader. “We have been at it for nine or ten years, and have finally achieved a very good level of comfort. We’ve found the right packaging, and know that we are meeting all the tough quality standards that the UK demands.”
While Casse notes that C&D’s exports to the UK have increased steadily in recent seasons, with his company’s apples received regularly by Tesco, Sainsbury’s, Safeway and Morrisons, he doubts C&D will continue growing in the UK market as rapidly as in past years.
“The competition is much stronger here in Chile with competing exporters that sell to South Africa and New Zealand increasingly present in the UK market, too, selling exactly the same apple varieties,” he says.
Casse points out that while exacting retail demands continue to grow - for better, safer, more edible fruit - prices are not rising. “So we have to make ourselves more and more efficient,” he says.
Casse’s cautionary words notwithstanding, C&D upped its apple exports to the UK from 185,000 cases in 2002/2003 to 235,000 cases in 2003/2004.
René Wunkhaus, trade director at Copefruit (Curico), one of Chile’s most important apple growing and exporting firms, shares Casse’s perceptions. “The UK apple job has been very good for us,” he says. “It is among the most demanding markets in the world, but willing to pay for the difference. Still, the UK apple job is good only if you have programs with the supermarkets chains, because the wholesale market really isn’t that favorable. Fortunately, we have a very good working arrangement with Asda.”
Copefrut first began supplying Asda seven years ago, with about 50,000 cases of apples. This season it is supplying 200,000 cases of apples to the UK’s second largest retailer.
What makes the UK market so important for Copefrut, says Wunkhaus, is that the supermarkets tend to be ahead of the curve, in terms of what international markets demand. This helps keep Copefrut in sync with whatever new demand consumers may throw at Chile’s growers.
“UK consumers want a good looking, good quality apple,” he says. “And they also want good agriculture practices employed in the country of origin. This is fine with us, so long as the consumers are willing to pay for it. Maybe in the future consumers will be demanding an emphasis on ‘ethical trading’. Again, we have no problem with that, so long as the consumer can pay the price that it takes to meet their demands.”
Patricio Wiesner (Wiesner SA, Santiago), a small but prosperous grower in Chile’s Central Valley, isn’t yet in the UK market, but he would like to be.
“The UK market pays good prices, but is very demanding,” he says. “Not just in fruit quality, but also packaging. Still, I can meet all of those demands. My problem is that I am not in a good position to compete because I produce only about 150,000 boxes of Royal Gala apples, not enough for the year-round volumes that supermarkets require. If I were to get together with some other exporters, perhaps it could work.”
As a result, Weisner sends his apples mostly to the Far East, US, Central America and the EU - but not to the UK.
Chilean apple exports to the EU market have grown steadily in recent seasons, from 13.1 million cases in 2002/03 to 16.4m in 2003/04, and the UK has played an important role in the process.
UK traders received 1.8m cases of Chilean apples in 2003/04, up a sharp 33 per cent from the 1.36m cases received in 2002/03.
“The best EU market is for Grannies, reds and Goldens,” says C&D’s Casse. “The end of this season was very, very good for red varieties and for Goldens, which Chile doesn’t export.”
“The UK is mainly a market for bicolored apples - Royal Gala, Braeburn, Pink Lady and Cripps Pink,” says Copefrut’s Wunkhaus. “In some years we have tried with red apples, but the UK seems to prefer the American Reds which have more colour. The demand for Pink Lady is especially strong.”
Indeed, Pink Lady production in Chile jumped radically from 730,000 cases in 02/03 to 1.2m cases in 03/04 - in part to serve growing demand in the UK. The increase in Pink Lady production is expected to continue into coming seasons.
Other steadily growing apple varieties shipped to the UK’s market include Granny Smith, 250,000 cases shipped in 03/04, compared to 178,000 in 02/03; Royal Gala, 720,000 cases shipped in 03/04, compared to 531,000 in 02/03; and Braeburn, 435,000 in 03/04, compared to 388,000 in 02/03.
Traditional red apples, meanwhile, appear to be dying off in the UK market. For example, Chile exported 23,000 cases of Richared apples in 03/04, compared to 29,000 cases in 02/03.
DEVELOPING A COMPETITIVE EDGE
Chile’s fresh apple industry successfully reinvented itself in the 1990s with major investment in intensely cultivated, bi-colored apple varieties and state-of-the-art packing and cooling facilities. The aim was to become less tied to traditional red apple varieties and to create an industry infrastructure second to none.
The success of the transition effort was confirmed by The World Apple Report’s finding in 2003 that Chile’s apple industry was the most competitive in the world.
Apple export volumes have been increasing steadily in recent seasons and are expected to top 36 million cases in the 2003/04 season. All indicators suggest that export volumes will continue to rise.
Leading the conversion to bi-colored varieties, Royal Gala production has grown steadily from 7.4m cases in 2000/01 to 12.6m cases in 2003/04. Fuji and Braeburn production is also up sharply, while Pink Lady (and Cripps Pink) production has sky-rocketed from 247,000 boxes in 2000/01 to more than 2m boxes in 2003/04.
Volumes of traditional red apples, by contrast, have steadily declined in recent seasons.
Chile’s bicolored apple varieties are absorbed mostly by the North American and European markets, where consumers appreciate Chile’s fresh, crispy, off-season apples. Total apple volumes to both markets have grown sharply in recent seasons: to North America from 3.5m cases in 2000/01 to 6.7m cases in 2003/04, and to Europe from 9.4m cases 16.3m cases in the same time span.
Traditional red varieties - on the order of 5 million cases each season - are shipped primarily to markets in Latin America. Total apple exports to this region over the past three seasons have remained steady at about 10m cases.
Green apple varieties are shipped to all markets and total about between 6m to 7m cases each season.
Granny Smiths were the most exported variety of Chilean apples to the EU market in the 2003/04 season with 4.3m cases shipped, followed by Royal Galas (3.7m cases), Richared Delicious (3m), Red Chief (1.2m), Braeburns (1.2m) and Pink Lady (1.1m).
In the 2003/04 season Chile exported 1.8m cases of apples to the UK market. In this market Chile’s Royal Gala were the most sought after Chilean apple variety during the 2003/04 season, with 721,000 cases shipped, followed by Braeburn (436,000 cases), Granny Smith (250,000 cases), Pink Lady (158,000 cases) and Cripps Pink (95,000 cases).
Chile’s Pink Lady exports nearly doubled in the 2003/04 season, while Royal Gala exports have been growing at more than a 10 per cent clip during the past three seasons, with Fuji’s experiencing almost the same growth rate. Granny Smiths have tended to rise a bit less dramatically, while Red Delicious and Red Chief exports have held steady in recent seasons.
(All statistics taken from Exportdata Yearbook 2004)
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