With the trend for healthy snacking continuing to rise in the UK – western Europe’s largest market for savoury snacks, according to Euromonitor – combined demand for dried fruit and nuts has never been so strong.
An explosion in the number of SKUs at an expanding range of retailers has been both a driver and a result of this rising demand, particularly in nuts, sales of which have risen 61.4 per cent over the past four years, according to Kantar.
“I’ve been involved in this industry for 30 years now and the discussions, requests and suggestions for NPD have never been more positive,” says Mark Setterfield, managing director of importer and supplier RM Curtis. “If you go into all sorts of different retailers now there will likely be some sort of food-to-go offering by the till or in store that wouldn’t have been there before – from hardware stores to DIY stores to discount stores to chemists. It’s incredible how the retail landscape has embraced the idea.”
The main drivers of this booming demand, according to the Californian Walnuts trade body, are not only the rise in health consciousness – with walnuts in particular chosen for their cardiovascular benefits and omega-3 fatty acids – but also the growing trend for healthy snacking among time-poor consumers. According to a study by UK market researcher The NPD Group, replacing meals with snacks will increase by 12 per cent by 2024, and because of this trend, UK consumers are buying far more shelled nuts than in-shell product, with shelled sales increasing 133 per cent over in-shell product, according to recent Kantar data.
Innovative new product development has been another key source of sales, says Setterfield, with RM Curtis adding 50g shot packs to its Snacking Essentials brand range earlier this year to allow customers more variety and portion control. The supplier has also tried to tap into the growing trend for planned snacking with its Duo Pots, which contain two snack pots per pack and include value-added creations such as yoghurt peanuts and dark chocolate cranberries.
Within this overall picture of increased consumption and demand, there have been nuances however. While nuts continue to show strong sales growth, dried fruit sales have fallen by 0.4 per cent in the past year and by 3.3 per cent since September 2015, according to Kantar. The main reason for this slight decline, says Setterfield, has been the “demonisation” of sugar. “Generic sugar, whether natural or added, has all been lumped into the same category,” he says. “The press has misrepresented the facts in the sugar debate and it’s almost been demonised to the point that people don’t know what the truth is any longer.”
One dried fruit affected by this change in public perception is raisins. The UK imported four per cent less volume in Californian raisins in the 12 months to 31 May 2017 than it did the year before and this can be compared to a 13 per cent increase in exports to the EU as a whole.
Responding to the threat this poses to sales, the National Dried Fruit Trade Association sponsored a study last year that suggests eating a handful of dried fruit a day – particularly sultanas, raisins or currants – can actually reduce blood sugar levels. The research is soon to be published, and the California Raisins trade body plans to take its findings to lobbying groups such as the British Dental Association to help stem the tide of negative coverage.
It should be remembered that the UK remains the largest dried vine fruit market in the world per capita, but if sales were to drop significantly, Turkey would be one of the main countries affected since it is a major supplier of hazelnuts, sultanas, raisins and apricots to Britain.
In a bid to push up the price of sultanas and raisins, the Turkish government this year tried to protect growers by buying up a portion of the crop to take supply out of the market. “At the moment we’re seeing this playing out on sultanas, raisins and hazelnuts,” Setterfield says. “But how much they’re prepared to buy and how long they’re prepared to hold it for is unclear.”
Leaving Turkey to one side, the main factors driving up prices in dried fruit and nuts are post-Brexit currency volatility, and the growth of the Indian and Chinese markets – both countries have a rapidly expanding middle class of roughly 250 million people, according to recent estimates.
“China for pecan nuts and India for almonds are two massive new destinations for products that have transformed the overall landscape of demand,” Setterfield says. “Economic growth has suddenly transformed the amount of product that goes into these so-called emerging markets, and what happens over in the Far East clearly has an impact on what we pay here. The growth of India and China has completely transformed the historical data of supply and demand.”
Unfortunately, this year there have been some major supply difficulties, limiting the industry’s ability to fulfil all their orders. Brazil nuts have been particularly problematic, according to RM Curtis, following a major crop shortage from Bolivia, where the nuts are grown wild in the Amazon rainforest. Tonnage is thought to have decreased from an annual average of 20,000 tonnes to no more than half that following a severe lack of rain towards the end of 2016.
This huge reduction in what is already a small crop saw prices “go ballistic” and increase by around 250 per cent, Setterfield says. As a result of this a lot of buyers, packers, processors and manufacturers opted to take Brazil nuts out of their mixes – a tricky option since it involves changing the wording on an item’s packaging, but an easier solution than asking a retailer to increase the product’s price.
Aside from Brazil nuts, Greek currants suffered a significant crop reduction this year – down from an average of 20,000-25,000t to just 17,000t, following hailstorms this summer; while the American pecan crop was hit by Hurricane Irma in the state of Georgia. In California, meanwhile, climatic extremes of prolonged high temperatures and heavy winter rains could dent yields, however an increase in planted area to 315,000 acres may limit any crop reduction, says Peter Meadows of California Walnuts’ marketing agency The Garden.
As climate change intensifies, and the Chinese and Indian markets continue to grow, weather conditions like these could make supply more and more tricky for the likes of RM Curtis. But for the time being, the backdrop of rising demand is outweighing these threats.
“I don’t remember a time when dried fruit, and nuts have had more focus and more interest,” Setterfield says.
