GLOBALISATION
OF FRESH PRODUCE MARKETS
_____________________________________________________


CHANCE· NECESSITY· RISK
MIK...
CHANCE OPPORTUNITIES FOR GROWTH
NECESSITY THE NEED TO GROW
RISK OBSTACLES TO GROWTH
GLOBALISATION
• AFFECTING ALL AREAS OF THE FRESH PRODUCE SUPPLY CHAIN
 – International expansion of retailers
 – Consolida...
EUROPE THE ESTABLISHED MARKET
EUROPE THE ESTABLISHED MARKET
• COMPETITION MORE AND MORE INTENSE

• COSTS HIGH COMPARED WITH POTENTIAL RETURNS

• RETAILE...
HOW ATTRACTIVE IS THE EUROPEAN MARKET?
   How intense is competition in the European market?

   FIVE FORCES WHICH CAN DET...
HOW ATTRACTIVE IS THE EUROPEAN MARKET?
How intense is competition in the European market?

OTHER FORCES WHICH EXERT AN INF...
HOW ATTRACTIVE IS THE EUROPEAN MARKET?




                  =
    BARGAINING        Input provider switching cost relativ...
TECHNOLOGY

SUPPLY CHAIN BECOMING EASIER TO CONTROL AND TO MONITOR




Barcodes gradually being replaced by newer technolo...
HOW ATTRACTIVE IS THE EUROPEAN MARKET?




                =
INFLUENCE OF        Lines of credit restricted, unlikely to b...
HOW ATTRACTIVE IS THE EUROPEAN MARKET?




             =
BARGAINING         Buyer concentration to your concentration rat...
RETAILERS


THE EXPANSION CONTINUES DESPITE THE ECONOMIC DOWNTURN
RETAILERS


TOUGH ON SUPPLIERS, BUT INCREASINGLY SEEING VALUE OF FRESH PRODUCE

 MOVES TOWARDS        Rewe Group (Germany)...
GOING DIRECT


TRIMMING COSTS, BUT ALSO A NEED TO FIND THE RIGHT PRODUCTS




                     “   There is no point i...
TESCO’S DIRECT SOURCING STRATEGY

NINE TECHNICAL HUBS WORLDWIDE




                           Western         Eastern
   ...
MORE STREAMLINED


ECONOMIC NECESSITY, FOOD SAFETY, COMMITMENT TO QUALITY




                    “   A lot is said about ...
HOW ATTRACTIVE IS THE EUROPEAN MARKET?




              =
  THREAT OF       The existence of barriers to entry (patents, ...
HOW ATTRACTIVE IS THE EUROPEAN MARKET?




             =
 THREAT OF       Buyer propensity to substitute
SUBSTITUTE
 PROD...
HOW ATTRACTIVE IS THE EUROPEAN MARKET?




                =
   AMOUNT OF        Quality and number of competitors
 COMPET...
DESTINATION MARKETS – POLISH APPLES


2004/05                 2008/09




    36%

                             50%       ...
HOW ATTRACTIVE IS THE EUROPEAN MARKET?




               =
                   Environmental – eg Greenpeace, WWF, Rainfor...
WATER USAGE (LITRES)
                                                  190
200
                                      170
 ...
WATER USAGE (LITRES)

 2400
                             2400

  1800



  1200
             one hamburger
    600


     ...
HOW ATTRACTIVE IS THE EUROPEAN MARKET?




                =
 INFLUENCE OF       EU funding for Producer Organisations
GOV...
GOVERNMENTS


EU MARKETING STANDARDS – 1 JULY 2009

NO MORE SPECIFIC                            SPECIFIC MARKETING
MARKETI...
GOVERNMENTS


MANY FEEL STANDARDS REVISED IN RESPONSE TO PRESSURE FROM RETAILERS




                                  Pis...
HOW ATTRACTIVE IS THE EUROPEAN MARKET?




               =
                   Money concerns pushing prices down but incr...
FORECAST RETAIL GROWTH IN EUROPE, 2008-2012

                                                                             ...
IMPACT OF DISCOUNT TREND


SQUEEZING OUT VALUE!




                           Buy 1, Get 1
                           FRE...
IMPACT OF DISCOUNT TREND


FRESH PRODUCE STILL IN DEMAND, BUT IT’S AN EVEN TOUGHER MARKET




                     “   Man...
IMPACT OF DISCOUNT TREND


THOSE DOING WELL ARE THOSE PROVIDING VALUE




   Sales of €5.7bn in 2008, up from €5.4bn
   Sa...
IMPACT OF DISCOUNT TREND


OTHER RETAILERS FOLLOWING THE DISCOUNT TREND




Bis
Promotion offering 2 for 1
“Helping you ma...
IMPACT OF DISCOUNT TREND


PRICE WARS BREAKING OUT ACROSS EUROPE




     Madrid, November 2009
IMPACT OF DISCOUNT TREND


PRICE WARS BREAKING OUT ACROSS EUROPE
IMPACT OF DISCOUNT TREND


PRICE REMAINS MOST IMPORTANT; OFFERING VALUE IS ALL THE MORE CRUCIAL
IMPACT OF DISCOUNT TREND


PRICE REMAINS MOST IMPORTANT; OFFERING VALUE IS ALL THE MORE CRUCIAL
LOSS LEADERS


WHAT MATTERS MOST TO RETAILERS IS GETTING SHOPPERS TO COME BACK

                              ************...
PER-CAPITA FRESH PRODUCE CONSUMPTION – EU
                                                               300


           ...
HOW ATTRACTIVE IS THE EUROPEAN MARKET?
   How intense is competition in the European market?




             €

INPUTS   ...
ELSEWHERE THE NEW MARKET
DEMAND SET TO OUTSTRIP SUPPLY

         2050
WORLD POPULATION
SET TO RISE BY 40%
                        FOOD DEMAND
     ...
ECONOMIC GROWTH FORECASTS 2010

                      MIDDLE EAST & NORTH AFRICA       ASIA-PACIFIC (EXCL. JAPAN)
        ...
EMERGING MARKETS

 CHINA




                Massive market, high-value outlets in Beijing, Shanghai, Hong Kong
          ...
FRESH PRODUCE TRADE – EU AND CHINA

                                          800,000


                                  ...
EMERGING MARKETS

  INDIA




             Interest from big industry players – Total Produce, Capespan, Del Monte
       ...
EMERGING MARKETS

 INDONESIA




                                      Consumption growing, especially for fruit imports
 ...
EMERGING MARKETS

 PHILIPPINES
 VIETNAM
 MALAYSIA


                     Together with other ASEAN nations, market of almo...
EMERGING MARKETS


MAJOR SUPPLIERS TURNING ATTENTION TO OTHER PARTS OF THE WORLD




                    “   Our competiti...
ITALIAN KIWIFRUIT

2004/05                    2008/09




           61%                        71%


473,820 tonnes      ...
EMERGING MARKETS

  RUSSIA




           Huge focus on food retail, sales accounting for 40 per cent of consumer spending...
EMERGING MARKETS

  RUSSIA



                   OCTOBER 2008
                   Russia’s three largest fruit importers
  ...
EMERGING MARKETS

  RUSSIA



                   NOVEMBER 2008
                   Sorus files for bankruptcy, having defaul...
EMERGING MARKETS

  RUSSIA



                    JFC HOLDS STEADY
                    • Increased focus on strong categor...
EMERGING MARKETS

  BRAZIL
  MEXICO



                           Brazil – Major investment from big retail players includ...
EMERGING MARKETS

     EGYPT
     IRAN



                       Egypt – strong retail growth of 5-15 per cent per annum o...
EMERGING MARKETS

 TURKEY




                 Univeg acquisition of Alara Agri – development of import structures
       ...
EMERGING MARKETS

 SOUTH AFRICA




                                      World Cup 2010 set to give economy huge boost
  ...
EMERGING MARKETS


GENERALLY POSITIVE AND IMPROVING OUTLOOK




   “   Despite some retail markets weakening, the long-ter...
BUT DON’T FORGET… DEVELOPED ALTERNATIVES




           JAPAN         DUBAI

           HONG KONG     ABU DHABI

         ...
EMERGING MARKETS

COMPANIES EXPANDING BEYOND THEIR TRADITIONAL MARKETS
CASE STUDY - CAPESPAN

FIGHTING BACK WITH A NEW STRATEGY


      Fruit is a commodity, service is the differentiating fact...
CONSOLIDATION – GOOD OR BAD?

NEW ZEALAND KIWIFRUIT



             Present in 60 countries worldwide
     Global volumes ...
CONSOLIDATION – GOOD OR BAD?

NEW ZEALAND APPLES



       Industry deregulation has led to fragmentation
   Several small...
CONSOLIDATED MARKETING – CROSS-COUNTRY


BLUEBERRIES FROM THE SOUTH – CHILE, ARGENTINA & URUGUAY
CONSOLIDATED MARKETING – CROSS-CATEGORY


SOUTH AFRICA – MAJOR CAMPAIGN FOR STONEFRUIT, GRAPES & TOPFRUIT
WHAT TO EXPECT…
TOP FRESH PRODUCE TRENDS FOR 2010

• FURTHER CONSOLIDATION
 – All areas: retail, category management, logistics, transport...
TOP FRESH PRODUCE TRENDS FOR 2010

• HEALTH
 – Even more valuable to consumers in a downturn

• INNOVATION
 – New varietie...
P.O’s
P.O.S.
P
    PREPARED
    PROGRESSIVE
    PROMOTING



O
    ORGANISED
    ORIGINAL
    OVERSEAS
Eurofruit
in print· on screen· in person
Mike Knowles· Editor, Eurofruit Magazine· michael@fruitnet.com· +44 20 7501 3702
Upcoming SlideShare
Loading in...5
×

Globalisation of Fresh Produce Markets

2,743

Published on

Opportunities, imperatives and challenges for fresh produce suppliers in an increasingly international marketplace. Original presentation delivered at ICOP 2009 in Vienna, Austria.

© Mike Knowles / Market Intelligence Ltd

0 Comments
3 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
2,743
On Slideshare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
166
Comments
0
Likes
3
Embeds 0
No embeds

No notes for slide

Globalisation of Fresh Produce Markets

  1. 1. GLOBALISATION OF FRESH PRODUCE MARKETS _____________________________________________________ CHANCE· NECESSITY· RISK MIKE KNOWLES EUROFRUIT MAGAZINE
  2. 2. CHANCE OPPORTUNITIES FOR GROWTH
  3. 3. NECESSITY THE NEED TO GROW
  4. 4. RISK OBSTACLES TO GROWTH
  5. 5. GLOBALISATION • AFFECTING ALL AREAS OF THE FRESH PRODUCE SUPPLY CHAIN – International expansion of retailers – Consolidation of importers / category managers – Related service providers also consolidating eg seed companies, transport providers • CONSOLIDATION DRIVEN BY NEED TO… – Compete more effectively – Achieve economies of scale – Keep pace with consolidation among inputs and clients • NOT JUST MERGERS AND ACQUISITIONS – Strategic alliances – Marketing partnerships – Sharing of research CONSOLIDATING PRODUCTION WILL BE ESSENTIAL, BUT HOW THAT OCCURS REMAINS TO BE SEEN…
  6. 6. EUROPE THE ESTABLISHED MARKET
  7. 7. EUROPE THE ESTABLISHED MARKET • COMPETITION MORE AND MORE INTENSE • COSTS HIGH COMPARED WITH POTENTIAL RETURNS • RETAILERS AND OTHER BUYERS INCREASINGLY POWERFUL • DRIVE TOWARDS VERTICAL INTEGRATION • INCREASED USE OF TECHNOLOGY • PRICE AS THE LEADING CONSUMER TREND • STAGNANT CONSUMPTION LEVELS • GOVERNMENT NOT HELPING AS MUCH AS IT COULD • ENVIRONMENTAL AWARENESS AT ALL-TIME HIGH
  8. 8. HOW ATTRACTIVE IS THE EUROPEAN MARKET? How intense is competition in the European market? FIVE FORCES WHICH CAN DETERMINE ITS COMPETITIVE INTENSITY… BARGAINING BARGAINING THREAT OF THREAT OF AMOUNT OF POWER OF POWER OF NEW MARKET SUBSTITUTE COMPETITION INPUT PROVIDERS CUSTOMERS ENTRANTS PRODUCTS IN THE MARKET € Source: Five Forces Model – Michael Porter, Harvard Business School
  9. 9. HOW ATTRACTIVE IS THE EUROPEAN MARKET? How intense is competition in the European market? OTHER FORCES WHICH EXERT AN INFLUENCE… FINANCIAL NGOs GOVERNMENTS CONSUMERS INSTITUTIONS Source: Andrew Grove, Intel; Martyn Richard Jones, Groupe Bull
  10. 10. HOW ATTRACTIVE IS THE EUROPEAN MARKET? = BARGAINING Input provider switching cost relative to your switching cost POWER OF INPUT PROVIDERS Degree of differentiation of inputs Presence of substitute inputs Input provider concentration to your concentration ratio Employee solidarity (labour unions) Fuel – traditional sources becoming more expensive Transport – lot of consolidation, limited capacity growth Logistics – some consolidation, options limited Packaging – plenty of innovation, competition and crossover Pesticides – food safety crackdown limiting options Seeds – major groups consolidating, but some competition ATTRACTIVE UNATTRACTIVE
  11. 11. TECHNOLOGY SUPPLY CHAIN BECOMING EASIER TO CONTROL AND TO MONITOR Barcodes gradually being replaced by newer technologies like DataBar and RFID – greater amount of information can be stored – supply and demand more easily balanced NOT KEEPING UP WITH SUCH DEVELOPMENTS ELSEWHERE ALONG THE SUPPLY CHAIN CAN PUT THE SUPPLIER AT A DISADVANTAGE...
  12. 12. HOW ATTRACTIVE IS THE EUROPEAN MARKET? = INFLUENCE OF Lines of credit restricted, unlikely to be fully restored FINANCIAL INSTITUTIONS Tax-payers bailing out failed banks ATTRACTIVE UNATTRACTIVE
  13. 13. HOW ATTRACTIVE IS THE EUROPEAN MARKET? = BARGAINING Buyer concentration to your concentration ratio POWER OF CUSTOMER Your dependency on existing distribution channels Your ability to bargain on price (especially with high costs) The number of different buyers Buyer switching costs relative to your switching costs Buyer access to market information versus yours Vertical integration in supply chain Availability of existing substitute products Buyer price sensitivity € Differential advantage (uniqueness) of your products ATTRACTIVE UNATTRACTIVE
  14. 14. RETAILERS THE EXPANSION CONTINUES DESPITE THE ECONOMIC DOWNTURN
  15. 15. RETAILERS TOUGH ON SUPPLIERS, BUT INCREASINGLY SEEING VALUE OF FRESH PRODUCE MOVES TOWARDS Rewe Group (Germany) – Best Alliance contract farming projects SECURING SUPPLY Tesco (UK) – establishing direct sourcing initiative Asda (UK) – now owns International Produce Conad (Italy) – sourcing agreements with dedicated suppliers But in order to supply them, companies increasingly require... – CRITICAL MASS – INTEGRATED SUPPLY CHAINS – A RANGE OF PRODUCTS AND / OR SOURCES – ALTERNATIVE DESTINATION MARKETS eg. Univeg, Total Produce, The Greenery
  16. 16. GOING DIRECT TRIMMING COSTS, BUT ALSO A NEED TO FIND THE RIGHT PRODUCTS “ There is no point in having several teams buying for our individual country markets. We need experts in production who are close to our sources of supply, understand the difficulties associated with that production and know where to find the best products and suppliers. ” SANDY NORMAN – TECHNICAL MANAGER, TESCO
  17. 17. TESCO’S DIRECT SOURCING STRATEGY NINE TECHNICAL HUBS WORLDWIDE Western Eastern North America Europe Europe Asia-Pacific North Africa / Mid East Central America South America Africa Oceania
  18. 18. MORE STREAMLINED ECONOMIC NECESSITY, FOOD SAFETY, COMMITMENT TO QUALITY “ A lot is said about short supply chains and localised food markets, but the future of food retail and needs of consumers are completely different. We want to guaranteee long supply chains of quality, bringing the excellence of Puglia's production, for example, to Parma, and vice-versa. Consumers go to modern retailers; ” that is the reality rather than the nostalgia. FRANCESCO PUGLIESE – GENERAL DIRECTOR, CONAD
  19. 19. HOW ATTRACTIVE IS THE EUROPEAN MARKET? = THREAT OF The existence of barriers to entry (patents, rights, etc) NEW MARKET ENTRANTS Economies of product differences Brand equity Switching costs Capital requirements Access to distribution Customer loyalty to established brands Absolute cost advantages Learning curve advantages Expected retaliation by incumbents ATTRACTIVE UNATTRACTIVE
  20. 20. HOW ATTRACTIVE IS THE EUROPEAN MARKET? = THREAT OF Buyer propensity to substitute SUBSTITUTE PRODUCTS Relative price performance of substitutes Buyer switching costs Perceived level of product differentiation ATTRACTIVE UNATTRACTIVE
  21. 21. HOW ATTRACTIVE IS THE EUROPEAN MARKET? = AMOUNT OF Quality and number of competitors COMPETITION IN THE MARKET Sustainable competitive advantage through improvisation ATTRACTIVE UNATTRACTIVE
  22. 22. DESTINATION MARKETS – POLISH APPLES 2004/05 2008/09 36% 50% 50% 64% PROCESSING FRESH Source: WAPA / Prognosfruit
  23. 23. HOW ATTRACTIVE IS THE EUROPEAN MARKET? = Environmental – eg Greenpeace, WWF, Rainforest Alliance INFLUENCE OF NGOs Social – eg Oxfam, Fairtrade Food safety – eg Greenpeace, Friends of the Earth ATTRACTIVE UNATTRACTIVE
  24. 24. WATER USAGE (LITRES) 190 200 170 150 70 100 50 50 25 one glass apple juice one glass orange juice 13 one apple one orange 0 one potato one tomato Source: FAO
  25. 25. WATER USAGE (LITRES) 2400 2400 1800 1200 one hamburger 600 0 Source: FAO
  26. 26. HOW ATTRACTIVE IS THE EUROPEAN MARKET? = INFLUENCE OF EU funding for Producer Organisations GOVERNMENTS Individual EU members slow to act on healthy eating schemes Generally not as powerful as the retailers ATTRACTIVE UNATTRACTIVE
  27. 27. GOVERNMENTS EU MARKETING STANDARDS – 1 JULY 2009 NO MORE SPECIFIC SPECIFIC MARKETING MARKETING STANDARDS STANDARDS REMAIN apricots garlic apples artichokes hazelnuts in shell citrus asparagus headed cabbage kiwifruit aubergines leeks lettuce avocados melons peaches beans mushrooms nectarines Brussels sprouts onions pears carrots peas strawberries cauliflowers plums sweet peppers cherries ribbed celery table grapes chicory spinach tomatoes courgettes walnuts in shell BUT EXEMPTIONS CAN cucumbers watermelons BE SOLD IF LABELLED
  28. 28. GOVERNMENTS MANY FEEL STANDARDS REVISED IN RESPONSE TO PRESSURE FROM RETAILERS Pisa, May 2009
  29. 29. HOW ATTRACTIVE IS THE EUROPEAN MARKET? = Money concerns pushing prices down but increasing competition INFLUENCE OF CONSUMERS Food safety and CSR concerns increasing certification costs Health concerns favouring increased consumption Environmental concerns favouring local produce Consumption levels decreasing ATTRACTIVE UNATTRACTIVE
  30. 30. FORECAST RETAIL GROWTH IN EUROPE, 2008-2012 % 8 6 4 4.03 Forecourts 5.74 2 Hypermarkets 5.86 Supermarkets 6.38 Convenience 6.69 Cash & Carries 0 7.19 Discounters Source: Planet Retail
  31. 31. IMPACT OF DISCOUNT TREND SQUEEZING OUT VALUE! Buy 1, Get 1 FREE LATER
  32. 32. IMPACT OF DISCOUNT TREND FRESH PRODUCE STILL IN DEMAND, BUT IT’S AN EVEN TOUGHER MARKET “ Many Italian consumers want convenience, low prices and top-quality food. Whether rich or poor, they tend to save on non-food products such as detergents and then seem happy to spend what they have saved on high-quality food. ” VINCENZO TASSINARI – CHAIRMAN, COOP ITALIA
  33. 33. IMPACT OF DISCOUNT TREND THOSE DOING WELL ARE THOSE PROVIDING VALUE Sales of €5.7bn in 2008, up from €5.4bn Sales growth forecast at 8.1 per cent Food accounts for 78 per cent of sales Regular discount offers – 30, 40, 50 per cent
  34. 34. IMPACT OF DISCOUNT TREND OTHER RETAILERS FOLLOWING THE DISCOUNT TREND Bis Promotion offering 2 for 1 “Helping you make ends meet in a difficult period”
  35. 35. IMPACT OF DISCOUNT TREND PRICE WARS BREAKING OUT ACROSS EUROPE Madrid, November 2009
  36. 36. IMPACT OF DISCOUNT TREND PRICE WARS BREAKING OUT ACROSS EUROPE
  37. 37. IMPACT OF DISCOUNT TREND PRICE REMAINS MOST IMPORTANT; OFFERING VALUE IS ALL THE MORE CRUCIAL
  38. 38. IMPACT OF DISCOUNT TREND PRICE REMAINS MOST IMPORTANT; OFFERING VALUE IS ALL THE MORE CRUCIAL
  39. 39. LOSS LEADERS WHAT MATTERS MOST TO RETAILERS IS GETTING SHOPPERS TO COME BACK ***************************************************** Harry Potter and the Deathly Hallows ***************************************************** £ WHOLESALE PRICE: 9.89 Recommended retail price: 17.99 INDEPENDENT RETAILER: 10.99 ASDA: 8.87 LOSS: 1.02 *****************************************************
  40. 40. PER-CAPITA FRESH PRODUCE CONSUMPTION – EU 300 250 200 150 kg 100 50 2002 2003 2004 2005 2006 0 2007 Fruit Vegetables Source: Freshfel Europe / Eurostat
  41. 41. HOW ATTRACTIVE IS THE EUROPEAN MARKET? How intense is competition in the European market? € INPUTS CUSTOMERS NEW ENTRANTS & PRODUCTS COMPETITION NGOs GOVERNMENTS CONSUMERS BANKS ATTRACTIVE UNATTRACTIVE
  42. 42. ELSEWHERE THE NEW MARKET
  43. 43. DEMAND SET TO OUTSTRIP SUPPLY 2050 WORLD POPULATION SET TO RISE BY 40% FOOD DEMAND 2050 SET TO DOUBLE 9,100,000,000 +70-100% 2030 INCOME US$16,000+ FROM 352m IN 2000 FAO ARABLE LAND LEFT IN THE WORLD 2,100,000,000 12% MAINLY IN RUSSIA Source: Bidwells Agribusiness, FAO,
  44. 44. ECONOMIC GROWTH FORECASTS 2010 MIDDLE EAST & NORTH AFRICA ASIA-PACIFIC (EXCL. JAPAN) 4.4% 5.5% EUROPE NORTH AMERICA 0.6% 2.4% 2.4% LATIN AMERICA 3.1% SUB-SAHARAN AFRICA Source: Economist Intelligence Unit
  45. 45. EMERGING MARKETS CHINA Massive market, high-value outlets in Beijing, Shanghai, Hong Kong Retail sales and investment still growing, albeit more slowly Tesco, Wal-Mart, Carrefour attracting more customers from wet markets Government investing in infrastructure – Yn4 trillion stimulus package Fall in sales during 2008 and early 2009 Notable slowdown during the Olympics, followed by credit crunch Yuan holding strong, hurting exports, favouring imports » tougher market Grey trade slowly disappearing, increased shipments direct to north Increased quarantine hurdles and more formal duty structure
  46. 46. FRESH PRODUCE TRADE – EU AND CHINA 800,000 600,000 Tonnes 400,000 200,000 0 2003 2008 EU > CHINA CHINA > EU Source: CSO / Istat
  47. 47. EMERGING MARKETS INDIA Interest from big industry players – Total Produce, Capespan, Del Monte Bharti Wal-Mart, Reliance, Birla targeting back-end improvements Foreign direct investment up to 100 per cent allowed Growing preference for imported fruits, particularly among middle class Per-capita spending on fruit and vegetables up 8-9 per cent each year Supply chain and infrastructural deficiencies Domestic production continuing to expand and improve Retail development slowed by public suspicion of modern formats Organised retail still only accounts for less than 1 per cent of sales Investment tends to be more focused on front end, rather than supply chain
  48. 48. EMERGING MARKETS INDONESIA Consumption growing, especially for fruit imports Imports of citrus, apples, pears and tropicals all increased 2006-2008 466,000 tonnes imported last year, against 72,6000 tonnes in 1994 Average annual growth of 39 per cent in imported volumes Modern retail sales due to rise 15 per cent in second half of 2009 Double-digit growth in retail sector sales since 2003 Major competition on import trade from China (65 per cent share) Quality of local production increasing, providing tougher competition Domestic crop doubled from 7.2m tonnes in 1998 to 16.6m tonnes in 2007 Tighter rules on imported produce, stricter MRLs coming into play
  49. 49. EMERGING MARKETS PHILIPPINES VIETNAM MALAYSIA Together with other ASEAN nations, market of almost 600m people Philippines – Zespri spending 20 per cent of SE Asia marketing budget here Philippines – Turkish citrus imports growing, Aksun 200+ containers Vietnam – major growth in tourist numbers, foodservice Vietnam – grocery sales reported up in first half of 2009 Malaysia – expansion of modern retail sector, foreign investment Malaysia – target market for Dutch onions, European kiwifruit, Washington apples FTA between Australia, NZ and ASEAN increasing competition in SE Asia Philippines – tight controls on shipments following recent illegal imports Vietnam – inflation in second half of 2008 dampened demand Malaysia – Tesco and Carrefour competing aggressively on price Strong competition from local and Chinese produce
  50. 50. EMERGING MARKETS MAJOR SUPPLIERS TURNING ATTENTION TO OTHER PARTS OF THE WORLD “ Our competition has already realised that Asia is the growth market of the future. Leave behind the staid and traditional old UK, move on from the frustrating EU and forget about the self- sufficient US. Asia is hungry, ready to buy and eat, and rocketing forward in wealth. It is the fastest-growing market in the world. There is risk but there is also money to be made. ” ANDREW FENTON – PRESIDENT, HORTICULTURE NZ
  51. 51. ITALIAN KIWIFRUIT 2004/05 2008/09 61% 71% 473,820 tonnes PRODUCTION 474,232 tonnes 286,260 tonnes EXPORTS 335,440 tonnes Source: CSO / Istat
  52. 52. EMERGING MARKETS RUSSIA Huge focus on food retail, sales accounting for 40 per cent of consumer spending Consumer confidence and retail sales expected to recover in 2010 In major urban areas, 67 per cent of consumers buy groceries at supermarkets Rising foreign retail investment – Metro, Auchan, Rewe (Billa, Selgros), Globus, Lotte Kesko due to introduce grocery format in 2010 Possible entry for Schwarz (Lidl), Coop Norden, Wal-Mart? Import sector shaken up by economic downturn, loss of key players eg. Sorus, Sunway Very hard to know who to deal with and who to trust Retail sector still dominated by a small number of local players As economy develops, consumers could spend more on luxury items, less on food Long-term approach to development is required Modern retail beyond major cities still in its infancy
  53. 53. EMERGING MARKETS RUSSIA OCTOBER 2008 Russia’s three largest fruit importers estimated to account for as much as 85 per cent of the Russian market Sunway 15% JFC 35% 20% Sorus Other 30% Source: Samokhval / Sales Business Journal
  54. 54. EMERGING MARKETS RUSSIA NOVEMBER 2008 Sorus files for bankruptcy, having defaulted on two loan payments MAY 2009 Sunway suffers a similar fate, partly due to a rapid fall in demand for exotic fruit
  55. 55. EMERGING MARKETS RUSSIA JFC HOLDS STEADY • Increased focus on strong categories like bananas, mangoes, pineapples • Fewer financial risks – bank support to help fund coldstorage development 50 37.5 % share 25 12.5 0 End 2007 End 2008 Q1 2009 Q2 2009 Future...? Source: Uralsib
  56. 56. EMERGING MARKETS BRAZIL MEXICO Brazil – Major investment from big retail players including Wal-Mart Brazil – growth in demand as currency strengthens, more demand for imported fruit Brazil – exporters with experience of supplying now turning their expertise to imports Brazil – expected to be world’s fifth-largest economy by 2014, boosted by new oil revenue Mexico – with 110m people, a significant market despite broad range of domestic produce Mexico – 44 per cent of population under 20, bodes well for modern retail development Mexico – positive attitude towards eating fresh fruit and veg, buoyed by healthy eating schemes Brazil – New oil revenues likely to make imports cheaper but exports more difficult Brazil – domestic producers and supplier looking to grow their sales at home Brazil – unemployment high at around 7.6 per cent Mexico – fairly fragmented retail sector, top five account for just 30 per cent Mexico – modern retail investment fell by more than half in 2010 to US$1.3bn
  57. 57. EMERGING MARKETS EGYPT IRAN Egypt – strong retail growth of 5-15 per cent per annum over past decade Egypt – consumers “beginning to expect cleanliness, quality and a wider variety of products” Iran – one of world’s top 10 fruit consumers, but still a net importer Iran – long-standing tradition of fruit consumption, frowned upon not to offer guests fruit Both markets set to become more used to modern retail outlets (especially hypermarkets) Improving economies, inflation coming under control, consumer spending set to increase Middle Eastern markets generally receiving more attention from major suppliers Potential for political upheaval means foreign retail investment could be hampered, especially Iran Iran – Carrefour due to enter in 2009, but pulled out in September Tough phytosanitary protocols for imported produce Strong local production, with potential for future development Both major producers themselves, Egyptian suppliers able to compete and meet high standards
  58. 58. EMERGING MARKETS TURKEY Univeg acquisition of Alara Agri – development of import structures Some slow but positive steps towards European Union membership World’s 15th largest per-capita GDP (PPP), generally good growth Retail sales grew by 11 per cent to €118bn in 2008 Good levels of investment over past 15 years following EU trade agreement Young and urban population (66.5% aged 15-64; 70.5% living in cities) Some doubts remain over possible EU accession Retail sector remains relatively under-developed Majority of food sales remain through independent retailers Strong domestic production, which could certainly expand
  59. 59. EMERGING MARKETS SOUTH AFRICA World Cup 2010 set to give economy huge boost Well-developed infrastructure supporting efficient distribution of goods Affirmative action and empowerment schemes helping raise productivity and earnings Big opportunities for Southern European and North African grapes and stonefruit Increasing volumes of imported berries and cherries appearing Imported kiwifruit from Italy and New Zealand gaining in popularity November to early February – imported avocados and citrus Around a quarter of the population unemployed Development is localised and leaves large swathes of country untouched Volatile and unpredictable currency – strengthening post-World Cup Rush to supply country during June-September has led to quality concerns
  60. 60. EMERGING MARKETS GENERALLY POSITIVE AND IMPROVING OUTLOOK “ Despite some retail markets weakening, the long-term outlook remains positive for investors in the world's key emerging markets. Growth is expected to gather momentum again in 2010, providing both retailers and suppliers with attractive long-term investment opportunities. ” EMERGING MARKETS 2009, PLANET RETAIL
  61. 61. BUT DON’T FORGET… DEVELOPED ALTERNATIVES JAPAN DUBAI HONG KONG ABU DHABI SINGAPORE US SOUTH KOREA CANADA
  62. 62. EMERGING MARKETS COMPANIES EXPANDING BEYOND THEIR TRADITIONAL MARKETS
  63. 63. CASE STUDY - CAPESPAN FIGHTING BACK WITH A NEW STRATEGY Fruit is a commodity, service is the differentiating factor “Suppliers must evolve to provide world-class products & service” South African sourcing no longer enough – must be global, 365-day Developing strong partnerships crucial to retaining advantage Global customers demand: • Global sourcing • Superior supply • Financial competitiveness • Innovation & sophisticated systems Source: Louis Kriel presentation – Eurofruit Congress Southern Hemisphere 2009
  64. 64. CONSOLIDATION – GOOD OR BAD? NEW ZEALAND KIWIFRUIT Present in 60 countries worldwide Global volumes down just 0.1 per cent to week 41 Overall returns forecast up NZ$0.47 per tray Forecast returns for Green down NZ$0.07 per tray Forecast returns for Gold up NZ$1.97 per tray Strong, sustained marketing campaign Drive towards more efficient, streamlined business Source: Zespri Kiwiflier – October 2009
  65. 65. CONSOLIDATION – GOOD OR BAD? NEW ZEALAND APPLES Industry deregulation has led to fragmentation Several smaller growers and exporters out of business 44 individual exporters supplying fruit to Europe Heavily reliant on one market – the UK Now investigating possibility of national branding as well as ways to consolidate arrivals and streamline operations Source: Pipfruit NZ – August 2009
  66. 66. CONSOLIDATED MARKETING – CROSS-COUNTRY BLUEBERRIES FROM THE SOUTH – CHILE, ARGENTINA & URUGUAY
  67. 67. CONSOLIDATED MARKETING – CROSS-CATEGORY SOUTH AFRICA – MAJOR CAMPAIGN FOR STONEFRUIT, GRAPES & TOPFRUIT
  68. 68. WHAT TO EXPECT…
  69. 69. TOP FRESH PRODUCE TRENDS FOR 2010 • FURTHER CONSOLIDATION – All areas: retail, category management, logistics, transport, R&D Don’t let the crisis pass you by! • RETAIL – Discount trend slowing down, but still advancing – Renewed focus on direct sourcing and shorter supply chains – Doubts over practicalities of direct sourcing in short term, but some will be tempted – Retail consolidation advancing as drive to open new markets and cut costs continues • MARKETING – Major shift towards country- and region-based marketing, as well as cross-category – Time for geographical indications / denominations of origin to come to the fore? – Support of governments essential, but investment in agriculture more likely • EMERGING MARKETS – Some have slowed, but their emergence will continue – Need to spread the risk now even more urgent – Reduce reliance on traditional markets and investigate, trial, conquer new ones
  70. 70. TOP FRESH PRODUCE TRENDS FOR 2010 • HEALTH – Even more valuable to consumers in a downturn • INNOVATION – New varieties, products, services to escape the commodity trap • INPUTS – More cost increases especially for fuel, but input and service providers under pressure to trim costs – Technology and packaging companies compelled to innovate and help reduce costs / boost efficiency • ENVIRONMENT – Continued need to respect and act upon environmental issues – Some will coincide with economic necessity, others will require investment – Big emphasis on sustainability from retailers and leading suppliers • FINANCE – Gradual restoration of confidence and credit lines – Agriculture seen increasingly as a good investment
  71. 71. P.O’s P.O.S.
  72. 72. P PREPARED PROGRESSIVE PROMOTING O ORGANISED ORIGINAL OVERSEAS
  73. 73. Eurofruit in print· on screen· in person Mike Knowles· Editor, Eurofruit Magazine· michael@fruitnet.com· +44 20 7501 3702
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×