The Australian fresh produce industry has faced up to a number of challenges, be it drought, strong competition from other southern hemisphere sources or the economic downturn. Two of the country’s most promising exports, blueberries and Pink Lady apples, have continued to show promise.
Blues town
Australian blueberry crops have been yielding top-quality fruit this year, in what could be one of their best seasons yet. The berries, plagued by drought, have exceeded all expectations in the 2009 season - holding firmness, colour and taste - which industry experts put down to limited rain, no hail and strong, healthy plants from the previous season.
Peter McPherson, general manager for Berry Exchange, explains that the lack of rain across Australia has benefited the blueberry crop this year, “allowing for a condensing of flavours and a firmness not seen in recent years”.
At the same time, volumes have surpassed all previous levels to date. “Many of the older, low-yielding plantings in Australia have been removed and the newer plants are now in top fruiting condition,” McPherson says.
Yields may be up, but the annual crop barely reaches 1,600 tonnes in Australia, priced at a market value of AU$24.5 million (£12.3m). Exports top 370t, but only 47t end up in the UK.
Compared to the US, where production is around 162,386t and predicted to increase to 254,011t by 2014, Australia is a small hill among some very large mountains. And with 90 per cent of global blueberries destined for the fresh market, the country has some extremely tough competition to tackle for market share.
Berry Exchange, Australia’s major blueberry grower and exporter, is holding its own by developing varieties that meet export specifications and hit the shelves before their southern hemisphere competitors. “The key to developing demand for Australian blueberries has been varietal genetics,” McPherson says. “We have invested heavily in the development of early-season varieties.”
Not prepared to pass up the opportunity of growing some of the world’s best blueberries, Berry Exchange travelled the globe in search of a variety that is well suited to Australian growing conditions, travels well - holding firmness, colour and taste - and is ready for the northern hemisphere market well before the competition.
“Market opportunities exist in Europe from September to March, and with Australia’s long growing season - September to December - we are well placed to meet this timing,” says McPherson. “Without this timing advantage, Australian product would become lost in the myriad of blueberry offerings already fighting for the European market shelf.”
However, wanting to hedge capital investments and watching US companies such as Hortifrut and Driscolls command significant market share, Berry Exchange has sought to replicate their global successes by reaching across the ocean to Morocco, where the season - February to April - fits nicely with the tail end of Australian production and fills the second half of the European market. “Hortifrut and Driscolls have developed in-country partnerships or ventures around the globe, which have enabled them to supply high-quality product at any given time,” McPherson explains.
Establishing a joint venture in-country partnership in Morocco has allowed Berry Exchange to remain focused on the UK market and extend its branding opportunities. With the first production under its belt, McPherson was very pleased with the quality and firmness of the Morocco-grown blueberries, which were well received in the UK. “We are aiming for exclusive buying arrangements with key high-end retailers for our Moroccan berries,” he says.
A total of 40 hectares are in production in Morocco and Berry Exchange is closely watching the advantages of berry production in the country, where the costs of production are one-fifth of that in Australia, while maintaining high quality and yield.
Back in Australia, the market continues to grow exponentially, with little advertising undertaken. The industry has captured the constant media coverage on the benefits of blueberries - from antioxidants to cancer prevention - and messages have sunk in well with Australian consumers. Initially purchased for their health benefits, regular consumers are now purchasing for the ‘snack-ability’ attributes of blueberries, for both adults and children alike.
The industry has undertaken significant pricing studies to maximise price trigger points. Based on this research, the sector commands high retail prices across the season in excess of AU$7 per punnet and this climbing market share has, for the first time, outsold strawberries.
But there has been little movement in the organic sector in Australia and McPherson believes this is related to the accelerator and choke price points. “Organic pricing is over the choke price and blueberry consumers are very satisfied with the production ideals of non-organic berries,” he says. And profitable yields are hard for organic producers to achieve. That said, McPherson believes “there is a big chance for organic production in Morocco”.
Lady killers
“The Australian Pink Lady remains a global market leader for quality,” says Jon Durham of Coregeo (UK) Ltd. And as the costs of production increase, this is good news for Australian growers as they weigh up the cost-price benefits of supplying the domestic sector versus exporting to a more risky external market.
“As a consequence, the risk-reward decision by growers falls strongly in favour of domestic sales and this is unlikely to change in the near future.”
Production of Cripps Pink apples in Australia now outgrows any other apple variety. This season, production reached 60,000t - surpassing even golden oldies including Granny Smith and Red Delicious, which have held market presence for more than 100 years.
Growers have been able to see the unprecedented appetite of consumers for Pink Lady and recent favourable growing conditions and subsequent retail prices have only encouraged the swing away from traditional varieties. “Australian consumers continue to devour Pink Lady apples with great enthusiasm, and prices achieved by domestic growers at the end of last season were exceptional,” says Durham.
Even with strong domestic sales, the UK market continues to hold allure for many growers and exports this year will reach around 5,000t. So far this year, sales of Australian Pink Lady have dipped slightly by eight per cent - the likely reason being the global financial crisis - and with Australian product destined for high-end retailers, many price-sensitive shoppers are likely to choose a cheaper apple option.
Australia competes with Chile, South Africa and New Zealand for market share and, with the highest costs of production, Australian growers must seek stronger prices to gain significant returns to make the export sale viable. They claim to produce a better-quality apple - in colour, firmness, blush and taste - but they know that competitors are catching up and unless Australia can offer something distinctive, they will be struggling for shelf space.
Pink Lady sales in the UK have shown annual growth of five per cent repeatedly and Europeans are expected to consume more than 100,000t this year - a conservative figure suggesting the economic downturn will make some seasonal impact.
The Pink Lady Europe alliance has a significant marketing budget behind the Pink Ladypromotional programme and is geared to making some contemporary changes to branding. The centre of the campaign will focus on the Pink Lady heart, using that symbol to evoke pleasure, love and vitality - ready for the new season campaign, starting in November.
Within the industry, the Pink Lady brand is one of the most recognisable and this success has drawn many of the new varieties to emulate the marketing process. This new threat to Pink Lady consumption by other registered apple varieties is possibly the biggest threat to the brand’s market share, albeit that the nearest competitor has sales nine times lower than that of Pink Lady.
In Australia, growers continue to plant Cripps Pink trees, with thoughts only of continuing to win over the hearts of Australian and global consumers in the fight for a large chunk of the fruit market.
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