Guatemala Agritrade Presentation


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Keynote speaker of the conference Friday March 20th “European Market Trends & Opportunities for Guatemalan fresh produce”

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Guatemala Agritrade Presentation

  1. 1. European Market Trends & Opportunities for Guatemalan fresh produce Steve Homer © Bios Partners 2008
  2. 2. 30 second profile.... • $500M turnover from • Former Ethical Trading Initiative Board Member – 1.5M packs of vegetables per week • Former GlobalGap Board of Directors and – 1.5M bouquets of flowers per technical committee chair week DFID/Chatham House Procurement Forum • GlobalGap Africa Observer Project • The Group has been built on IIED/NRI Trends in private Agri-food standards – Foundation New Business Models IIED Gates Excellence in growing, marketing • NSF- CMI Agri-Certification Governing and supply chain management. Board Member Unilever standards benchmarking consultancy UNIDO–Trade Standards by leading standards • Board member NPTC vocational Supported Compliance Report qualifications for the UK land based sector of GAP, GMP, Environmental Institute Of Development Studies Trade Credit report protection and social and ethical WTO STDF welfare Private standards briefing © Bios Partners 2008
  3. 3. Content • A look at the EU27 Eu Consumption trends 2007/8 • Who are the healthy eaters • Who are the couch potatoes • What is driving public opinion Certification & market access • How that translates into market entry standards • What that looks like in reality • How does this affect consumer shopping patterns The global credit crunch • What are the retailers doing about it • A look at opportunities for Guatemala in a dynamic Summary & opportunities EU market during difficult times © Bios Partners 2008
  5. 5. EU-27 Gross per capita fruit consumption (in kg)/year - 2007 Source 2009 Freshfel Europe 5% Population in the EU-27, grew from 484.6 M in 2002 to 495.1 M in 2007 © Bios Partners 2008
  6. 6. EU-27 Gross per capita veg consumption (in kg)/year - 2007 Source 2009 Freshfel Europe 16.5% Population in the EU-27, grew from 484.6 M in 2002 to 495.1 M in 2007 © Bios Partners 2008
  7. 7. Total supply of fruit and vegetables (G/Capita/Day) Source 2009 Freshfel Europe WHO/FAO minimum intake recommendation © Bios Partners 2008
  8. 8. Fruit consumption increase (G/Capita/Day) • The eastern European countries that joined the EU in 2004 show the best per capita consumption growth in 2007 in fruit and vegetables 2007 Average Fruit Fruit imports % Rank Country Consumption (G/Capita/Day) increase 2007 EU membership 1 Hungary 301.15 35 2004 2 Poland 133.25 26 2004 3 Slovakia 126.22 20 2004 4 Lithuania 73.59 17 2004 5 Portugal 333.03 17 6 Greece 556.16 17 7 Bulgaria 149.11 14 2007 8 Spain 308.17 14 9 Netherlands 239.87 14 10 Slovenia 239 14 2004 11 Cyprus 524.33 12 2004 12 Latvia 166.87 12 2004 13 Ireland 114.06 10 Source Freshfel Europe © Bios Partners 2008
  9. 9. Vegetable consumption increase (G/Capita/Day) • The eastern European countries that joined the EU in 2004 show the best per capita consumption growth in 2007 in fruit and vegetables 2007 Average Vegetable Veg % imports Rank Country Consumption (G/Capita/Day) increase 2007 EU membership 1 Estonia 163.16 230 2004 2 Bulgaria 203.9 80 2007 3 Poland 316.22 55 2004 4 Spain 333.92 52 5 Cyprus 303.98 34 2004 6 Lithuania 141.62 28 2004 7 Malta 350.35 22 2004 8 Ireland 164.95 21 9 Netherlands 177.94 18 10 Slovakia 151.33 10 2004 11 Latvia 192.13 10 2004 Source 2009 Freshfel Europe © Bios Partners 2008
  10. 10. EU tries to boost consumption • Rising obesity and falling consumption • EU recommendations are being developed for fruit and vegetable producers by a EUR13.8m (US$17.8m) EU research project aiming to increase produce consumption in Europe • The ISAFRUIT scheme wants more Europeans to eat . their recommended minimum five portions of fresh fruits and vegetables. It cites data saying that consumers in Greece, Spain, Italy and the Netherlands, eat the most fruit in Europe (70 to 100 kg per person), followed by Germany, Poland and the UK at 40 to 60 kg, but that consumption generally is not rising. © Bios Partners 2008
  11. 11. STANDARDS & MARKET ACCESS TRENDS © Bios Partners 2008
  12. 12. Drivers - Campaigns & media • After testing 576 conventionally grown fruits and vegetables • Greenpeace Germany found that : • 84% of goods sold in the country’s leading supermarkets were contaminated with toxic pesticides. • In fact, 12% of the produce tested had residue levels actually at or exceeding legal pesticide limits. © Bios Partners 2008
  13. 13. Drivers - Campaigns & media • “Tesco can say all good things, but the truth is the people are not being treated well here.” • „Tesco is known to squeeze suppliers and these pressures are passed on in the form of low wages and precarious employment‟ Report exposes: low wages, exposure to pesticides, poor housing and discrimination • Action Aid report April 2005 © Bios Partners 2008
  14. 14. Drivers - Campaigns & media… • “To you it is a bag of salad, dropped into the supermarket trolley with the weekly groceries” • “The world is running out of water and British supermarket shoppers are contributing to global drought” • The Independent May 2006 © Bios Partners 2008
  15. 15. Lifecycle of compliance drivers… Drivers develop faster than most standards and decay over time Drivers PVS PVS PVS PVS PVS PVS PVS PVS Niche Response Multi stakeholder voluntary standards & consumer labels emerge Farmers and growers do not have enough time to finish one before the next one emerges ! Model developed with David Richardson NSF-CMi © Bios Partners 2008
  16. 16. Lifecycle of compliance drivers… Drivers develop faster than most standards and decay over time Drivers PVS PVS PVS PVS PVS PVS PVS PVS Niche Response Slow to respond creating ‘assurance lag’ Public Response Industry Response Expands behind drivers & specialist standards Model developed with David Richardson NSF-CMi © Bios Partners 2008
  17. 17. Lifecycle of compliance drivers… Drivers develop faster than most standards and decay over time Drivers PVS PVS PVS PVS PVS PVS PVS PVS Niche Response Slow to respond creating ‘assurance lag’ Public Response Industry Response Expands behind drivers & specialist standards Corporate Response Legal Compliance Market Compliance Industry Leader SPS Private Standard Niche Standard Model developed with David Richardson NSF-CMi © Bios Partners 2008
  18. 18. Ten years of standards... Integrity Provenance B2B B2C Good Social & Environmental Good Business Equity Agricultural Ethical Manufacturing Practice Practice Fair Trade Eurepgap ETI ISO 14001 BRC SA8000 Carbon ISO 22000 Water Energy 2003 2008 © Bios Partners 2008
  19. 19. The combination private standard – The future ? • Environmental and Pesticides – Our unique approach with 'Nurture' offers us the fantastic opportunity to pioneer standards around the use of pesticides, reducing energy usage and allows us to break new ground improving and enhancing the local environment. • Social and Ethical – Working in partnership with the ETI we ensure our suppliers are annually risk How does Nurture work? assessed on ethical standards and Each grower is audited on an annual basis to worker welfare to ensure that all ensure they meet the required high standard Tesco standards are achieved. Our dedicated has set. No matter where in the world we source technical team also visit suppliers to our fruit and vegetables from and who we work in ensure continuous conformance. This is partnership with we use one standard this is evaluated and monitored using SEDEX, Nurture. the Supplier Ethical Data Exchange. © Bios Partners 2008
  20. 20. M&S Plan ‘A’ • Field to fork • Climate Change • Waste • Sustainability • Fair Partner • Health • Partnership with Oxfam © Bios Partners 2008
  21. 21. EU: Food industry opposes quality label • 16 March 2009 | Source: Keith Nuthall • Strong opposition has been lodged to the idea of an EU-wide food quality label based on EU production standards. • CIAA said existing EU laws mandating food/feed safety, environment and animal welfare standards were sufficient. … too much information could distract…consumers from essential information on safety,quot; CIAA said. • COPA-COGECA opposed the idea of allowing non-EU food producers and manufacturers to use such a logo, this could confuse consumers about the origin of such foods, it warned. © Bios Partners 2008
  22. 22. THE CREDIT CRUNCH © Bios Partners 2008
  23. 23. Which? report angers industry • The research from consumer group Which?, entitled Hungry For Change?, reported that around 28 million UK adults say that price has become more important when choosing foods since the financial downturn. “Fresh produce is • Nearly three in five agreed that they would the main focus of buy more fruit and vegetables if they were promotions as cheaper. retailers battle it out to offer customers the best possible • Almost a quarter said that the economic crisis value.“ had made healthier eating less of a priority. BRC food policy director Andrew Opie FPJ – 16/03/09 © Bios Partners 2008
  24. 24. Tough times ahead .... • Sir Terry Leahy has told suppliers that they will have to bring down prices to help cash-strapped consumers. • Leahy has made it clear that he believes supplier prices would have to come down on the back of falling commodity prices. “These lower prices need to be fed into the supply chain and passed on to consumers who are under growing financial pressure,” • Waitrose has written to 1,000 of its suppliers to request a two per cent cut in its prices. • Mark Price, Waitrose's managing director, said that a fall in commodity prices meant that suppliers' raw material costs are cheaper and the supermarket saw this as an opportunity. – Fresh info news 12 Mar 09 © Bios Partners 2008
  25. 25. Shopper Anticipated Responses to Household Budget Squeeze Response Percent Increase spend on budget brands 33 Cut back on treats 26 Shop around for offers 25 Cut back on convenience food 22 Switch from brands to own labels 21 Change to discount retailer 13 Cut back on ethical buying 6 Spend same on food, cut back elsewhere 15 Source, IGD, UK, 2008 © Bios Partners 2008
  26. 26. IGD - Reasons for paying more for food and drink Thinking about food and drink that you are willing to pay more for, what are the most important reasons for doing so? 2% I Want To Impress My Friends 3% Religious Beliefs Eg Halal, Kosher 4% Endorsed By A Brand Or An Organisation I Like And Trust 6% Special Dietary Needs E.G Gluten Free 7% I Will Spend More On Food For My Children 9% They Are Better For The Environment 10% More Ethically Produced 14% Organic/ Natural Ingredients 21% I Know I Will Like Them 22% They Are For Special Occasions 25% I Can Afford Them 27% They Are A Treat 36% Healthier 41% They Are Better Quality Source, IGD, UK, 2007 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% © Bios Partners 2008
  27. 27. Drivers – credit crunch… • Further research from sector specialist IGD showed that organic sales have been the only ethical food sector to fall in 2008, according to their survey of 1,000 consumers the % buying organic has dropped from 24% to 19%. • At the beginning of October, it emerged that sales of Tesco's Finest and Organics ranges had stopped growing as shoppers rein in their spending. Chief executive Sir Terry Leahy said that while customers still wanted to buy the products, quot;they don't feel they can with the economic pressuresquot;. Source Retail Week, & IGD UK, 2008 © Bios Partners 2008
  28. 28. Drivers - campaigns & media… Steve Homer – Brighton Feb 09 © Bios Partners 2008
  29. 29. Own brands and budget lines • Supermarkets bring in simple budget lines. “WAITROSE is launching a budget range aimed at shoppers who are seeking cheaper alternatives in the recession. More than 1,400 items, including fruit and vegetables” - 9 Mar 2009 Daily Mail UK • Claims of same product – no reduction in quality • Deeper cut and more frequent promotions • Consumers are trading down to heavy discounter supermarkets, Lidl, Aldi, Netto. © Bios Partners 2008
  30. 30. Own brands and budget lines • Aldi, Lidl the discount supermarkets, are forecast to increase their share of Britain's grocery market by 60 per cent over the next four years as the middle classes trade down because of the credit crunch. • A new report claims that the discount chains will generate nearly £7.5billion of sales in 2012, compared with £4.5 billion last year • The IGD forecasts that Aldi will have at least 530 stores in the UK by 2012, compared with 373 today, while Lidl will have 610. © Bios Partners 2008
  31. 31. Eating out at home ... • Restaurant eating out has fallen. A survey of 500 families, by media agency MPG, found that 64% are dining out less frequently, while 46% have cut back on the amount they tip when eating out • Retailers creating combination meals for home consumption • MPG’s research also found that more than two-thirds (67%) of families are now spending more nights at home, with 63% saying they favour a night at home to spending on leisure activity, such as eating out or the cinema. • Opportunities for premium fruit and vegetables may increase or be protected from any downturn if this is true. Steve Homer – UNCTAD April 2008 © Bios Partners 2008
  32. 32. THE OPPORTUNITIES © Bios Partners 2008
  33. 33. Eastern Europe Vs Western Europe • Western Europe – Fruit and vegetable consumption is static or slightly declining – EU and trade organisations trying to improve consumption – Market access is highly regulated by PVS – Retailers have a strong market share – Prices are being forced down by the credit crunch • Eastern Europe – Consumption rising since EU accession – Aspirational consumers – many young people working in the west – Comparatively light market regulation – SPS / EU – Still wholesale based – but changing as retailers arrive – Fruits and roots are the big consumption items – can you change this – Finance and local transparency is a challenge © Bios Partners 2008
  34. 34. Celebrity Chefs • Latvia - Elmars Tannis • Latvia - Martin Blunos • Estonia - Imre Kose • Jamie Oliver has inspired a new campaign to promote the 2008 British Asparagus season among young men aged Who is this man ? Elmars Tannis between 25 and 40. • The British Asparagus Growers Association, are investing £35,000 to increase sales of the vegetable, which have been on an upward trend for the last three years. They have seen penetration rise from 2.7% to 14.3% during the British season while volume sales increased by 25% last year and double the number of households bought asparagus in 2007 versus 2004. Who is this man ? Jamie Oliver © Bios Partners 2008
  35. 35. Make a story – tick the boxes • Retailers need great stories – Why Guatemala ? – ECO ? – SOCIAL ? – SUSTAINABLE ? – You must tick the boxes and tell your story ...... © Bios Partners 2008
  36. 36. THANK YOU © Bios Partners 2008