Global grape supply is short as we approach Christmas 2004, but the quality of product arriving in the UK market is outstanding for the time of year. And South Africa’s crop is proving to be no exception to the rule.
"The start of the season has been later than anticipated, which is very much a factor of us having a larger crop,” says Graham Retief of New Farmers Development Company. “The good news is that quality is excellent, and the only thing holding people back has been the sugar levels. Picking has been delayed by around 10 days in key areas and with early production lagging behind we will unfortunately see much lower sales than we would want in the pre-Christmas period and higher sales going into the New Year.”
Mike Grobbelaar at Colors says: “One thing that is positive about this season is that we are producing grapes that are better quality than we have seen for some time.” Colors has been able to bypass the early season problems with its fruit from the Transvaal, which has come through on time. Despite the Orange River being later, the quality of Prime and Flame from the Transvaal looks very promising and volumes should remain similar to last year, he says.
Neil Denny, grape procurement specialist at Richard Hochfeld, says: “Two vessels, the container Heemskerk and the reefer Snow Flower, left this week, to arrive in the UK on December 13 or 14. The next vessel will not get here until December 20 at the earliest so anyone who has not got their grapes on the water now has missed the pre-Christmas market.”
Capespan’s Martin Dunnett reports optimism amongst the growers he was visiting this week. “Obviously the fruit is very late in the north and in Namibia. We had estimates of picking starting in week 43 in Namibia, but temperatures have been in the 32-34°C range rather than the normal 40-42°C, so fruit was not picked until week 47.
“There is a shortage of Brazilian fruit for the UK too, but as the quality has generally been good, demand is strong. The 6,000 pallet Snow Flower - which is managed by Cape Reefers - was not quite full, but it will deliver around 3,000 pallets of mostly seedless varieties into a strong market. There is some early Prime Seedless, Sugraone, and Thompson from Namibia on there - and the fruit looked fantastic on the vines.”
Craig Schaefer at Colors UK says the season is highly unusual, with the Orange River so significantly late. “Three years ago for instance,” he says, “Prime Seedless was being harvested in volume by week 46, whereas this year it will be week 48 or 49, and Flame has dropped back from week 47 to 49. The implication for the grower is that there will be less fruit to sell in the pre-Christmas market, which will have a negative impact on returns.
“This is complicated further by the Little Elephant River Valley and the Berg River Valley being two to three weeks early. Therefore we are going to have some very late fruit from the early areas and early fruit from the mid-season areas, which should make for an interesting time in the marketplace. Anything we can do to keep additional volumes of fruit from other sources out of Europe would be helpful, as January is going to be very difficult for the grape market in general.”
The fact that the South Africans have not hurried fruit off the vines and into the market is a testament to their discipline, says Dunnett. “There is no rush to pick fruit before the sugar levels are right and of course it has to meet the specs in the international marketplace so it would be crazy not to adopt this approach.”
Hochfeld has been forced to shelve promotional plans for December because of the lack of volume, but, says Denny, January will feature widespread price promotion to push any additional volume through store. “There will be a lot of fruit around from December 21 onwards, but that is normal - we expect the peak in weeks one, two and three and have planned accordingly,” he says.
Promotions in December were also on the Capespan schedule, but Dunnett says it would not have been possible this season. “Prices will hold up through December and the volumes are definitely there for the promotions planned in January. The white crop is looking extremely promising and from week one through to 10, availability will be very good. Quality-wise, the white crop should run through to the middle of March. Chilean fruit tends to arrive around week nine or 10, at which time South Africa is under pressure to justify its quality. This year that is not going to cause us any problems,” he explains.
Denny adds: “There is nothing coming from anywhere else at the moment - early Chilean white seedless is all being airfreighted into a strong US market, the Peruvians are 50 per cent down and we won't see anything out of Argentina until January. So the early South African product is coming onto a strong market, which is unusual, as the South Africans traditionally come into a poor market and have to create their own momentum.”
Hochfeld, which exclusively supplies Tesco with grapes from its South African partner The Grape Company, begins its season with Prime and then moves straight into Sugraone until Thompson from Orange River takes a stronghold. The season then moves through Western Cape fruit until the time is deemed right for Chilean volume to kick in. “There is no natural cut-off point,” says Denny, “the decision has to be based on quality from each source nearer the time.”
As you would expect, perspectives differ on the volume availability of each variety as the season moves forward. “We are expecting slightly lower Thompson Seedless volumes from the Orange River,” says Retief, “but volumes of Prime Seedless and Sugraone should be at least the same and maybe higher than last season. Out of the Western Cape, where there is quite a severe drought, there will be similar volume to last year, although the Hex River area might see a decrease of around 10 per cent overall because of the weather conditions.” That drop would equate to around two million cartons, and Retief is quick to point out that there is no way as yet of being certain of the final outcome.
“It is not likely to help the situation overall, with any decline in volumes likely to show through in the late crop, in April and may when the prices tend to increase in Europe,” he adds.
Grobbelaar adds: “Volume of Thompson Seedless could be slightly higher from our point of view, but there are certain vines that don't have much fruit on them. We would expect good berry sizes though. Sugraone volumes could also be slightly tighter than last year, but Prime Seedless volumes will probably cover that and I don't think the difference will be that significant with either variety.”
Dirk Lategan at Fruits Unlimited, which supplies Grapes Direct and Redbridge in the UK, and Keelings in Ireland, landed his first fruit in the UK this week and expects a good start. “There will not be much volume for the first three or four weeks, but the quality of our fruit from South Africa and Namibia will ensure that prices will remain at good levels and we are extremely positive about the early part of the season,” he says. “We will finish picking Prime this week. Sugraone is starting and in the next two weeks we will have Black Gem from the Transvaal and begin picking Red Globe. The Sugraone and Prime in the Transvaal are running a bit late and Thompson in the Orange River, which is preferred in the UK, might run into both, but it shouldn't have too much effect. You can’t force the market - you have to do what the market wants.”
Katopé envisages exporting more than 1.5 million cartons of seedless grape from South Africa during the season, with early volumes from the increasingly important area of Mpumalanga, a region in which the company is very strong. But, it has encountered a late start in both the northern production areas. Managing director at Katopé Cape, Hubert LeClerq, says: “Actual harvest volumes are considerably light of original estimates, due to later than normal rains. However, the overall volumes as younger plantings come into full bearing are likely to be in line with those achieved in 2003.
Grape product manager Heinrich Siecker adds: “Mpumalanga growers are confident of a crop with good size and solids. Despite the late start they will have sufficient volumes of strong fruit starting with Prime Seedless to take us through the important Christmas and New Year period.
“Whilst this is a summer rainfall region - and this year has been no exception - and not usually conducive to good grape production, our growers have, through various techniques, managed to produce yet another stunning crop.”
From Mpumalanga, Katopé moves its production to Orange River, which “is also running a little late as sugar development has proved difficult to achieve with fully laden vines, however, a full crop can be expected over the coming weeks”, says Siecker.
Capespan has growers planting Crimson to fill “a hole” in the market in weeks five, six and seven, says Dunnett, and also expects another decent season of Flame.
He also holds out hope for the black seedless Sunworld variety Midnight Beauty, which will be available from mid to late February. “The variety is being grown in Orange River and further south,” he says. “The UK retailers have been looking for a good quality, true black seedless variety for some time and a number are looking closely at Midnight Beauty. It is difficult to gauge the true potential until a really good variety hits the market in good volumes. This variety has the potential to be the one.”
Katopé is experiencing the same delay with red as with white. Richard Collen, procurement director of Katopé Malet Azoulay says: “Like the white seedless, Flame has also been slow to start, with lower volumes than expected but we see normal supplies coming forward for shipping in week 49 and onwards.
“Crimson is now also well established within the portfolio with first exports as early as week 52 or week one. Here customers are voting with their feet. The positive effect on sales of red seedless grapes since the mainstream introduction of this variety with its superb characteristics has been as much as 50 per cent. With our late production and storage management, we will maintain a sales programme through to June.”
Denny agrees with the general consensus that red fruit is continuing to increase its presence, but points out that research shows that red sales tend to drop when there is only Sunred on the shelf. “We move through Flame and Crimson, dovetailing the South African and Chilean seasons, but will not take Sunred in big volumes - we don’t believe it is a standard variety.”
To alleviate some of the problems that can arise from an overcrowded market in years to come, South African Tablegrape Industry (SATI), a joint initiative involving all major players, has been established in an attempt to centralise and co-ordinate the information gathering, communication and promotional side of the grape job. One of its major strategic objectives will be to drive new market access and develop existing market access.
A meeting was held on Thursday (December 2) to discuss and formalise the key short-term strategic objectives of the programme, with the role of Europe - still the country’s major market for grape exports - playing a heavy part in the decision-making process.
“The UK remains our second largest market after continental Europe,” says Retief, one of two grower representatives on the SATI board, “and in terms of prices it is number one. As a general rule, we service it as our priority before we service the continent. However, it is vital that we develop other markets to take some of the pressure off the mid-season period, gaining access to markets and halting the slide in profitability at peak times of the season.
“South Africa’s exporters have doubled their volumes over the last seven years, but at the same time we have not significantly increased our market access. The Rand has also become very strong and is now back to the levels of five years ago, while increasing costs of production and a decline in price structures at the selling end - influenced by the weaker Rand in the 2001-2 season - have all served to reduce the potential returns to growers. We need to reduce the volumes being sent into our key markets to redress the situation.”
Grobbelaar agrees the Rand, which at the time of writing was sitting at below 11 to the pound sterling, compared with nearer 12:£1 at the same point of the 2003-4 season, is only likely to increase the pressure on growers. “With such a small percentage of fruit likely to reach the market before Christmas, it is going to be tough for growers to realise the returns they want,” he says.
Lategan says: “I don’t think that things will be that different post-Christmas. Prices may be 15 per cent down year-on-year, but that allows us to move more fruit through the market. We won’t be seeing fruit staying around for long, which is important with the volumes that could flow into the UK.”
Collen says: “From our growers’ point of view the exchange rate is still a major issue as it hovers around R11 to the pound and shows little sign of weakening.
“The name of the game for all growers with such uncontrollable external factors is that of greater harvest and packing efficiencies along with strong condition fruit going into every box, absolutely paramount to receiving the best return possible.”
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