A “disaster” has unfolded for the berry market in recent weeks, with strawberry supply running tight following major disruption to Egyptian sendings as a result of political protests ahead of the late start to Spanish supply.
This comes against the background of a tricky period for the soft-fruit market, with supply and demand rated by many as “average” even before the real hurdles emerged.
Tesco has shifted to half price promotions and the other major retailers are expected to follow in what insiders are calling “about the worst week they could have done it”. A number of promotions are ongoing, with packs on the likes of a two-for-£3 offer across other retailers.
As FPJ went to press, Egyptian strawberries were making their way to the UK but a lack of clear information left importers nervous about how the next few weeks will play out. “Whether it’s getting back to normal, I have no idea,” says one importer. “Communication is on and off and it has been very hard to get any information. One of our suppliers has said that they should be able to resume with a reasonable programme next week.
“Fruit is now very, very short. We haven’t really seen a true level of sales because of the various issues. On top of this, we have been in small pack sizes, at 227g rather than the 400g we had last year because Egyptian growers and exporters were unhappy with their returns last year. That has had an effect this year as we have lost out on volume sales.”
A gap could open up if Egyptian supplies are disrupted further, given that volumes from Morocco are insufficient and Spanish volumes are running late following low night-time temperatures and poor light levels. Sendings from the main production area in Huelva are not likely to come on stream in volume until mid-February.
Any hopes for a Valentine’s Day boost with a flurry of heart-shaped packs and linked offers with chocolate and cream are being tempered with fears for a continued shortfall.
In fact, the last three months have played out unusually, with strawberry volumes fairly short in the lead up to Christmas before heavy snow held back arrivals and caused a stockpile of fruit. This sub-standard material was then put on the shelves over a period of about three weeks, which did nothing to help sales. Then, just as the category was getting back on track, the political protests started up in Egypt and brought sendings to an abrupt halt.
Israeli growers and exporters have stepped in to fill the gap to some extent, but volumes are failing to meet demand.
Oded Yacovson, general manager of Agrexco UK, claims that total exports are up by 60 per cent on last year, with 85 per cent going to the UK. “Prices have fluctuated through the season as a direct result of what has been happening in the local market, which was affected by differing weather conditions - sudden prolonged downpours and then turning very dry, which affected fruit production,” he says.
“The heavy showers periodically stopped supply and the following hot temperatures resulted in a glut of fruit, but overall prices are generally up by 14 per cent.
“Prices in the local market have been high and that in turn impinges on what is sent to the UK as our growers need to get the best returns possible, particularly in the current economic climate.”
Ian Waller from Total Berry admits that the shortfall has come at what is normally a promising time for the category and has “created a shortage of fruit going into a period of heavy demand” ahead of Valentine’s Day.
“There will be an inevitable rise in price,” he says. “Due to an interrupted supply, Egyptian producerswill not see a noticeable benefit and will suffer greatly in this period - unfortunately, this also follows a very lacklustre season for Egypt last year.
“As a company, we have invested heavily in varietal development to ensure the highest quality, best eating varieties are available for our customers and through December it was clear that some poorer eating varieties were finding outlets in the UK with the inevitable drop off in sales.
“Consumers have numerous choices when deciding on how to spend their weekly budget andas an industry, it falls to all suppliers to ensure we maintain quality standards to protect the growth and customer base we have worked hard to build over the last few years.”
ALL EYES ON BLUEBERRIES
Blueberries made the headlines last week with indications that they are set to overtake raspberries as the UK’s second most popular soft fruit. Stephen Taylor from Winterwood Farms tells FPJ what the industry can expect.
Blueberries are being talked about as the new raspberries and according to Kantar Worldpanel data for the year to 26 December 2010, shoppers bought 11.4 per cent more blueberries than in 2009, while volume sales of raspberries fell by 12.9 per cent. How can you explain this and what does it mean for the category?
These figures are for the whole 12 months so there are different factors at play throughout the year. The traditional production of Spanish Glen Lyon raspberries, for example, has suffered a major reduction as growers move some production to Morocco and shift a percentage of their home production to the autumn.
Raspberries are expensive to produce and the resulting price points often make them look like poor value to the consumer, especially when combined with a short shelf life. The volume of good quality raspberries on the shelves is increasing, but there are still too many average quality, average-tasting fruits on the shelves.
The raspberry market is fairly mature compared to the blueberry market and growers can grow raspberries as an annual crop, unlike blueberries, which take more than five years to come into full production. However, blueberries will continue to significantly increase in volume for the next five years, just with the current plantings.
Why have UK consumers taken to blueberries in this way?
The main increase we see each year now comes from increased market penetration and this will continue to be the major fact as penetration for blueberries has a long way to go yet. Although blueberry sales volumes are up by around 11 per cent, prices are down three per cent. This trend will continue as increased production comes on line, with particular times of year being affected more than others. There are already times when the current prices give a return to the grower that is near the cost of production.
What kind of promotions are retailers introducing on blueberries?
The most common promotions these days are two-for deals, with two for £3 being the most common at the moment and the weight varying between 200g and225g. To a certain extent, this does not help penetration, as on the face of it we are just selling twice as much to the same number of people. In reality, it’s this type of offer that the consumer responds to.
How are returns to growers?
This is very seasonal, but the UK grower is now seeing the reality of the fact that they must compete with imports if they want a future business but yields are also not reaching targets for most growers.
Unfortunately, the recent culture of price matching is not doing us any favours. As far as a statistic is concerned, all blueberries are equal and this is not the case at all. This means that we have a constant battle to price match with the discounters, which are generally selling poorer varieties with a lower quality specification. What we really need is the return of premium tier lines that the multiples have all but stopped during the recession.
How are UK blueberry growers innovating?
The main innovation was to plant English blueberries at all, but planting is now at a very low level after the initial rush. Most of the recent plantings have been aimed at the pre-Polish season, with growers then choosing to store fruit until September rather than compete with Polish prices. This is already having a negative reaction from some retailers, who expect to see UK product on the shelves for the whole summer.
The reality, however, is that consumers are not going to pay the same level of premium for home-grown blueberries as they do for UK strawberries, as blueberries are not a traditional UK-produced fruit.
I do not anticipate any new large plantings in the near future, with increased supply from existing plantations coming on stream being the main reason for an increase in supply.
How do you see the UK market for blueberries developing in the next three to five years?
We estimate that the UK market will increase by around 75 per cent over the next five years, but prices will continue to fall, albeit very slowly. We will also see penetration increasing as well as volume per purchase as there is a slow increase in pack weights.
What the figures hide is certain economies of scale. An increase in sales of this level with little price deflation, especially combined with slightly lower supply costs with increased pack weights, is something that most sectors would die for, but blueberry growers will no doubt be unimpressed - arguably having been spoilt in the past.
Many will come down to earth with a bump in the next five years as the market consolidates, but overall the future for blueberries is still looking great. The category is set to become the number-two selling soft fruit in the UK in 2011 and I believe can make real progress towards strawberries and other fruit in the years to come.
