Berries have come into their own this year and finally got the chance to sit pretty at the top of the fruit table in a result that confirms the category is one of the most dynamic on the supermarket shelves.
It was a first for the sector, with double digit sales growth leading berries to outperform all other grocery sectors with six consecutive months of value and volume growth in 2011.
The latest Kantar Worldpanel figures show value and volume have jumped by 14.5 per cent and 11.3 per cent respectively. The category is now valued at £772 million, still ahead of bananas at £611m but now falling short of top fruit at £935m.
Waitrose and Marks & Spencer are the winners this time around, showing the highest overtrade for berries out of all the retailers and revelling in their push to back British fruit. Sainsbury’s and Tesco are also trading soft fruit ahead of their grocery market share, while Asda and Morrisons are playing catch up.
As the runaway leader, all eyes have been on strawberries as the measure of the sector. The sub-category is static, but fruit flooded the market in August and saw a series of price cuts at the major retailers to shift as much of the volume as possible. The main offers were volume deals such as two for £3 before Tesco cut prices to as low as 50p for 200g for two weeks, and its rivals reacted by switching to cut-price deals.
One supplier claims that the moves were “brutal”, while others accept it was the only way to get fruit moving. “It was good timing because of the oversupply,” another player admits. “But the price cutting really was across the board and returns were below £3 a kilo, which is the break even point. Things got better from the first week of September, when demand dropped off a bit, but then so did production. It more or less matched up by the second week of September, then we had a spike in production after the heatwave. The season has been petering out since then.”
The British glasshouse crop is well underway and Dutch glasshouse supplies will run in line with home-grown fruit until mid-November, before importers switch to Egypt and Morocco, which are expected to come onto a clean market. The window won’t be clear cut, however, given that Egyptian production is expected to be around half what it was last year.
As one insider puts it, “prices haven’t really worked for them” after producers grew increasing volumes of strawberries over the last few years and “ruined the market”.
The raspberry category has been bolstered by improved varieties, but one insider admits that the last few weeks have been tricky after the September heatwave brought on production. “The retailers should have dropped the prices to shift the extra volumes but as it is, there haven’t been enough sales to soak up the volume,” he says. “Supermarkets haven’t wanted to drop down to a summer promotion price - sales would have been fantastic, but growers would be losing a fortune. Then again, the extra fruit is now being sold well below cost on the wholesale markets. The situation should turn within the next week and then we will be looking at a hole in supply.”
Raspberries are meeting their match in blueberries, with market penetration at nearly 30 per cent. As one supplier puts it, blueberries are “taking on raspberries year on year”. For now, prices for fresh fruit have been pushed up by rising prices for frozen product.
UK plantings remain static and volumes of home-grown fruit are in line with last year. “Returns have been up considerably and there has been good demand from supermarkets, especially Waitrose and Marks & Spencer, which really pushed British blueberries this summer,” he says. “Young consumers like blueberries so as they grow up they will continue to buy them. They will be huge in years to come.”
The fourth soft-fruit sub-category, blackberries, continues to grow after Tesco backed it and brought on what one insider calls a “much better year all round”.
As the major players look to autumn, berry supplies are expected to tighten up in the coming weeks so that upcoming sources such as Spain, Morocco and Egypt will come onto a cleaner market.
All in all, the soft-fruit category continues to stand out, with fruit quality improving and market share on the up.
“There are several breeding programmes in place to make the proposition even better in future,” says one supplier. “This can only be good for the category as a whole. Soft fruit is a high profile category and we deal with high value lines that sell well. And we are lucky that retailers give them the space they need.”
RASPBERRIES REINVIGORATED
Berry Gardens supplies more than half the raspberries on the UK market. Anna Sbuttoni talks to managing director Nicholas Marston about his plans for growth
Raspberries have had a standout year in the soft-fruit category, reclaiming their position in the berry line-up and generating sales growth that is the envy of the industry.
Kantar Worldpanel figures for the 25 weeks to 2 October show that raspberries are outperforming the rest of the berry category, with value up 26 per cent and volumes up 19.6 per cent on last year on the back of strong Spanish and UK seasons.
The number-two berry, behind only strawberries, is worth £153 million at retail level and has opened the gap on number-three berry blueberries, which is worth £137m in the same period.
This progress has been driven by the increased availability of high quality fruit, with improved shelf life, appearance and flavour, which have come together to boost year-round sales in a way that has never been achieved before.
Berry Gardens is leading the category, positioning itself at the top of the game by providing 65 per cent of home-grown raspberries [British Summer Fruits] and 53 per cent of the total raspberry market share [Kantar Worldpanel].
Its secret weapon is its range of Driscoll’s varieties, including flagship variety Maravilla, early primocane Cardinal, premium fruit Pacifica and niche yellow variety Estrella, alongside smaller volumes of Glen Ample and Octavia. Together, these lines are helping to build the category.
They will soon be joined by advanced selection Z121, which could fit alongside Maravilla, as well as Carmina, which is a potential replacement for Pacifica in the top-end market.
The Kent-based supplier will finish this season at 5,510 tonnes of UK raspberries, up from 4,427t in 2010 as a result of increased Driscoll’s plantings. The plan is to plant 15 per cent more next year, which the company aims to market through increased market share and growth.
Berry Gardens managing director Nicholas Marston claims that “if we stay on course”, the 80 per cent market share that Driscoll varieties have won in the US could be reflected in the UK.
“What drives the increases is that Driscoll’s raspberry varieties are much better than any other material in terms of shelf life, appearance and flavour but also in terms of grower economics, with high yields and low picking costs compared to many other varieties,” he says. “And prices this year - in spite of supply being up nearly 25 per cent - have been 2.6 per cent higher than last year on average, and therefore so have net returns to growers.”
Home-grown supplies are complemented with imports from Spain and South Africa, as well as top ups from North America and Mexico if necessary.
But in the UK this year, growers have been able to pick raspberries that they haven’t been able to before following the heatwave in September.
“That will be a help to growers,” says Marston. “And we have enjoyed very good support from retailers, who have acknowledged the superior quality that we can provide. The overall mix of pack sizes and promotions has been about right, while the use of sleeves or twin packs in several retailers have been a great way to sell more fruit when we have needed to.
“The key thing now will be to produce a planned amount of raspberries in the UK to match market growth and in the other periods, it is about producing more. In the depths of winter, for example, the raspberry market is about a fifth of what it is in the summer and for no other reason than the quality of the product.
“We will grow market share and make sure that we can push the category forward with the right varieties.”
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