Media reports over the last quarter suggest there is plenty of cause for pessimism among traders of high-end goods. More discretionary purchases such as organics and exotics have come under the spotlight as the credit crunch deepens, with the industry wondering how sales will stand up in the next few months.
The good news is there have been no real supply issues on exotics over the last quarter. Figs are plentiful at a fair price, and there have been solid volumes of avocados and limes coming into the market, say insiders.
The Brazilian mango season has just kicked off and fruit is looking good. “There is a solid flow of mangoes coming through and quality is looking good,” one trader reports. “We are getting 330-450p for 8s-12s. The season has only been going for a few weeks but fruit is plentiful and prices are fair.”
The market for Mexican-type okra has also been very steady and prices have held firm. “This time last year there was too much product, but now the market is quite buoyant,” says one trader. “But we are still prisoners between supply and demand. Prices can be very high or they can be very low. For expensive airfreight exotics, the squeeze is on.”
Exotic and baby vegetables flown out of East Africa are struggling in both volume and price terms. “Supplies are very short due to heavy rain out there, which has damaged a lot of the crop,” says one importer. “The freight rates have gone up per kilo on flights as well. That has really pushed up the prices and that will make life difficult for exporters in the future.”
However, the real news this quarter is that sales of exotics have tailed off, with many regular wholesale customers looking to cut costs as much as possible and some even knocking whole products off their shopping lists.
There is less money around and for the high-end, high-value lines, fetching the premium prices is proving hard work - there has been retrenchment in that side of the exotics business.
“People are not spending like they used to and items such as guava and custard apples, etc, are just not being bought by former customers,” says one insider. “The independent retailers and even restaurants are now favouring cheap and cheerful produce such as apples and oranges - much more staple products.
“Last week we made up a fruit basket for a regular customer with physalis, guavas, passionfruit, etc - six months ago they would have paid £50 for that, now they have given me a bottom line of £30. It’s a clear example of cost-cutting.”
Even those customers still purchasing the same lines are demanding smaller quantities. “Some of our customers that used to take a full box of plantains or sweet potatoes are now just taking half a box, or not taking them at all. That means I am looking for two customers for a full box rather than just one. The same is happening with Medjoul dates, people are just asking for half a box,” says one trader.
There are also reports of exotic caterers and prepped companies falling out of the marketplace, and insiders are predicting a “bleak” pattern where this may continue for the foreseeable future.
Traders are expecting the tough conditions to continue for the foreseeable future, leading to some trying to focus on more wintry and seasonal lines in a bid to counteract tailing demand for exotics.
Meanwhile, there is similarly bleak news on the lychee front, prompting some suppliers to branch into new products. “The global market for lychee is expected to suffer greatly in 2009,” says one exporter from China. “Already last season, retail end-users in North America, Europe, the UK and Asia were starting to question food safety and residues on lychee fruits, such as usage of sulphur and other organic fungicides.
“Traditionally, lychee exports are dominated by countries such as Madagascar, China and South Africa, where sulphur and other fungicides are regularly used to maintain the fruit’s shelf life and its reddish colour. As there has been more media publication on food recalls and their negative health consequences, the general public is getting very sensitive on food safety.”
Lychee exporters are being forced to cut production costs to maintain margins or even just to survive. “Cost-cutting is not easy, as inflation is rising around the world,” says the exporter. “We expect many exporters will struggle, as they are now facing cost pressures and, on top of these, they also have to eliminate sulphur residue and keep MRLs in tact to convince their buyers that the lychee fruits they carry are safe.”
But could it be that the doom and gloom image portrayed in the media is having an unnecessarily negative influence on the nation’s buying habits? “I think people have still got the money but are cautious about how they spend it now,” says one trader. “They would rather have the money in their back pockets than pay for exotic products with it.”
Others insist there is still a place for added value in the category, and that could be the key to success in these financially conscious times.
“We have really tightened up on the specs and the quality of our products - if you can give added value, meaning the right size, the right colour, the right aroma and the correct ripeness, products will sell,” says one trader.
“For us, sales have been surprisingly resilient - it is not all doom and gloom. We are cautiously optimistic. But we have to find the right quality at the right price - which is not necessarily always the cheapest.”
Concentrating on bringing in what people want will be crucial over the next few months. “If volumes are reduced from somewhere we need to accept that - it is no good sticking to fixed volumes regardless,” says one trader. “If a customer buys a good-value product and it sells well and makes a profit, then that is good for the whole exotics business.”
CRISPIN EYES UP ISRAELI CAMPAIGN
The uk consumer’s interest in exotics appears to be ongoing, writes Ian Crispin, sales manager at Agrexco UK. However, while sales have risen steadily over the last few years, with today’s current climate and somewhat fragile marketplace we know we must more than ever produce excellent quality product with great taste and sugar levels, in order to retain and develop our market share in the UK - while also obtaining the best prices that we can for our growers.
The current season for Sharonfruit, pomegranates, figs and pitahaya will, we trust, be a good one - the quality of the products are excellent and none of them were affected by the frosts in Israel earlier this year.
We currently project overall supplies of Sharonfruit to be up by 100 per cent over last year. The season is just commencing, with first arrivals coming in this week, and the campaign will run through to April next year. We expect to see fruit of all sizes.
Supplies of early pomegranate varieties have been available over the last two months and we are now just starting to see the Wonderful variety come through, with arrivals in the UK commencing last week. While sales of standard size fruit are as we forecasted, the demand for giant lines through our UK office is already increasing to the level that we left off at last season. We are confident that the Wonderful variety will not only fulfil the demands made by our customers last season, but we will in fact be able to supply greater quantities year on year. Our main competition on the giant lines comes from Egypt’s Hicaz variety and the Pom Wonderful variety from the US, but with Wonderful’s great attributes - a large, dark red fruit, that has excellent eating qualities and a brix level of around 20 - we know we can compete effectively in all markets.
Fig suppliers from Turkey are now finished, with final exports arriving in the UK in week 42. Once the small remaining stocks have been cleared by the end of this week, we will be working with Israeli produce again until we commence with supplies from South America - Argentina and Peru - in December and January.
The Israeli pitahaya season has been running for a few months now and will continue to the end of the year. Sales have been surprisingly strong given the economic climate at present and demand is mostly edging supply. Both the white flesh variety and the red flesh Venus have performed well on supermarket shelves, while the yellow skin Apollo, which is available in smaller volumes, is doing well in the open market.
The Agrexco exotic portfolio also includes - although they are currently out of season - kumquats, limequats, carambola, lychees, passionfruit, pomelos, Jerusalem artichokes, red chillies, yellow courgettes, mangoes and sweet potato.
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