Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
EL MERCADO DE LOS CITRICOS EN CANADAI. Peru overview        1) Country and resourcesPeru is one of the largest countries i...
3) Economy50% of the population is under the official poverty line and around 10% are unemployed. Overone third of people ...
5) Relations with CanadaThe official relationship between Peru and Canada began in October 1944 with the naming of thefirs...
6) Peruvian exports of fruits to CanadaPeruvian Fruits represent 0.3% of the world export of fruits and 1.8% of the South ...
In addition, citrus exports are currently going exclusively to Quebec, British-Columbia, Albertaand Ontario. Since 1999, e...
II. Analysis of the export process from Peru to Canada         1) Product CategoryThe Citrus family contains many products...
2) Administrative procedure and requirementsThe following procedures and requirements are available on the Canada Border S...
Your carrier has to keep records at the place of business in Canada for three years after the year ittransported your good...
b) Shipment processCustoms processes most shipments at the border point (e.g., highway border, rail border,international a...
d) Carriers and brokersCarriers provide Customs with the appropriate documents to report the arrival of your shipments.The...
e) Examination of the shipmentThe importer may not experience this step in the import process. Customs do not examine alls...
The importer can use three invoicing options:    •   a Canada Customs Invoice (CCI), which either the importer or the vend...
Fruits may be subjected to CFIA inspection on arrival at the first port of entry in Canada todetermine whether the shipmen...
3) Packaging and Transport standardsThe following recommendations are provided by the Food Agriculture Organization and th...
Packaging items such as boxes, plastic trays, cases or containers have to be proper and clean. Asfor the labelling, this h...
III. Canada consumer market analysis and trends        1) Overall dataCitrus fruits are the most important fruit crop in t...
The four biggest exporters of mandarin-type citrus to Canada are Morocco, Spain, China and theUnited States; these countri...
2) Analysis of opportunities and threats on the Canadian market                     Opportunities                         ...
IV. Analysis of the Canadian distribution channelsThe Supply ChainThe information in this section was obtained through a s...
TransportationHowever, as there is only one Callao-Vancouver ship every 15 days, the great majority of theseshipments have...
Major Retailers and ImportersSobeys is the second largest grocery chain in Canada, and operates 1,326 stores across thecou...
Mr. Sbrocchi knows the Clemenvilla, recognising it as a hybrid of the Clementine and theSatsuma.1 When asked what he thoug...
On the question of which mandarin-type fruit Loblaws carries at different times of year, Mr.Borcsok provided the following...
Below is a summary chart that presents the cumulative mark-up factor for mandarin-type citrusfrom Callao (Peru) to Ottawa ...
The latest chart is obtained from our calculation of price escalation throughout the distributionchannel. However, we beli...
V. Competition        1) World environment for Fresh CitrusAccording to a market study done for 2002-2003 season in the No...
2) An overview over some competitors and their environmentIn this part, we chose to give an overview of three major compet...
c) United-StatesThe U.S. exporters are few miles away from the Canadian market. This gives them a significantcompetitive a...
The table below shows the share of clementines and mandarins export countries in the importstotal value to Canada. The glo...
4) Competitive Advantages of citrusPeruvian products have an advantage over their competitors, since they harvest their pr...
5) Competition of substitute productsWhile Peruvian fruit has this advantage, we need to remember that there are other sub...
Upcoming SlideShare
Loading in …5
×

Citricos canada

629 views

Published on

  • Be the first to comment

  • Be the first to like this

Citricos canada

  1. 1. EL MERCADO DE LOS CITRICOS EN CANADAI. Peru overview 1) Country and resourcesPeru is one of the largest countries in South America with an area of 1.28 million km2. It islocated on the Western Coast of the continent, bordering Bolivia, Brazil, Chile, Colombia andEcuador. The capital is Lima. The country is divided into three geographical regions: the coastalplain (Costa) bordering the South Pacific ocean, the Andean Mountains (Sierra) in the centre, andthe dense forest of the Amazon Basin (Montana) in the East. The natural resources are copper,silver, gold, petroleum, timber, fish, iron ore, coal, phosphate, potash, hydropower and naturalgas. 2) Population and societyThe population is of 28,409,897 inhabitants (July 2003 estimate), of whom 90% are RomanCatholic. The majority of Peruvians people speak Spanish (first official language), around 25%of Peruvians speak Quecha (second official language) and in the South of the Andes and in thearea of Lake Titicaca, people speak Aymara (unofficial language). The Ethnic groups areAmerindian 45%, mestizo (mix of Ameridian and white) 37%, white 15%, with the last 3% beinga mix of black, Japanese, Chinese and other backgrounds. Since the Constitution of 1993, Peru isa constitutional republic. The president of the republic and the 120 members of Congress areelected for 5 years. The current president is Alejandro TOLEDO. Peru is subdivided into 24departments and 1 constitutional province but the country is currently implementing adecentralizing program to change this into 25 regions.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 1
  2. 2. 3) Economy50% of the population is under the official poverty line and around 10% are unemployed. Overone third of people are farmers, many people have a small piece of land which provides themwith subsistence, while others work in small or large farming. The currency is the Nuevo Sol(PEN), which was worth approximately USD 0.29 and CAD 0.38 on 26 March 2004.The mining industry is very important for the economy, because Peru is one of the world’sbiggest producers of silver (2nd), lead (4rd), tin (5rd) and copper (8rd). Petroleum, natural gasand steel are also extracted in important quantities. The small farms located in the Sierra andMontana produce for the internal market, whereas the large farms located on the coast work forthe export sector. Peru’s main agricultural products are: coffee, sugar cane, rice, corn, coca,cotton, wheat, poultry, potatoes, wool, beef, dairy products, fish, and plantains. The fishingindustry is also an important part of the export industry. Other significant industries are: textiles,clothing, food processing, metal fabrication, auto assembly, shipbuilding and cement. The forestthat covers 54% of the country is not significantly exploited by industry. 4) Foreign trade and trade agreementsPeru has developed and maintains good relations with many partners across the world. The mostimportant export partners are the US, China, UK, Switzerland and Japan. The main exportedproducts are fish and fish products, gold, copper, zinc, crude petroleum and petroleum by-products, lead, coffee, sugar and cotton. As for imports, most important partners are the US,Chile, Spain, Colombia, Brazil, Venezuela and Argentina. The main imported products aremachinery, transportation equipment, foodstuffs, petroleum, iron and steel, chemicals, andpharmaceuticals.Peru is member of the Andean community. Foreign trade is regulated by GATT (WTO), theAsociación Latinoamericana de Integración (ALADI: Latin American Integration Association),and Peru has signed the Free Trade Agreement of the Americas (FTAA: Área de Libre Comerciode las Américas = ALCA) with Bolivia and preliminary discussions around the FTAA are inprogress with Canada.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 2
  3. 3. 5) Relations with CanadaThe official relationship between Peru and Canada began in October 1944 with the naming of thefirst Canadian ambassador to Peru, Jean-François Léon Henry Laureys. Canada is now the largestforeign investor in Peru’s mining sector and the third largest foreign investor overall. Currently,Peru ranks 6th among Canada’s South American commercial partners and 53rd in the world. Thevalue of recent trade between Canada and Peru is given below in Canadian dollars (CAD). 1999 2000 2001 2002 2003 Peruvian total 149,935,225 188,834,056 251,436,968 293,129,973 262,416,886 exports to Canada Peruvian total imports from 175,350,795 207,342,727 189,852,480 169,137,061 132,330,270 Canada Balance of -25,415,570 -18,508,671 61,584,488 123,992,912 130,086,616 paymentsChart 1: Balance of payments between Canada and Peru in CAD – Source: Strategis web site.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 3
  4. 4. 6) Peruvian exports of fruits to CanadaPeruvian Fruits represent 0.3% of the world export of fruits and 1.8% of the South Americaexport of fruits to Canada. Furthermore, Peruvian citrus represent 0.7% of the world exports ofcitrus and 12% of South American citrus exports to Canada. Overall, Peru is the 15th largestexporter of citrus to Canada (see appendix 1 for global imports and appendix 2 for imports fromSouth America). Currently, exports are exclusively comprised of mandarins and hybrids ofmandarins. Since 1999, citrus exports have increased every year, and actually doubled in 2003,which is particularly significant given that total world exports decreased by 8.87% in 2003. Global imports of citrus to Canada CAD Millions CAD Millions 4 400 3,5 350 World citrus imports Citrus imports from 3 300 2,5 250 Peru 2 200 1,5 150 1 100 0,5 50 0 0 1999 2000 2001 2002 2003 Years Peru : Mandarins-type citrus Peru : All citrus World : All citrusChart 2: Citrus imports from Peru versus world citrus imports to Canada in CAD – source: Strategis web siteMostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 4
  5. 5. In addition, citrus exports are currently going exclusively to Quebec, British-Columbia, Albertaand Ontario. Since 1999, exports have increased every year in each province, but in 2003 therewas a reduction in Ontario, no change in Quebec and an increase in British-Columbia (seeappendix 3 for citrus imports sorted by province and appendix 4 for mandarin-type imports sortedby province). That is significant because the South American exports have decreased by 14.87%. Global imports of Citrus to Canada CAD Millions CAD Millions 3 30 2,5 25 Citrus imports from Citrus imports from South America 2 20 Peru 1,5 15 1 10 0,5 5 0 0 1999 2000 2001 2002 2003 Year Quebec Ontario British Columbia South AmericaChart 3: Citrus imports from Peru versus citrus imports from South America to Canada in CAD – source: Strategisweb siteOverall, this information concerning Peruvian citrus exports to Canada is positive, as it suggeststhat Peruvian citrus is competitive on the Canadian market. However, the exceptional resultsobtained in 2003 may in part be due to production difficulties in competing countries, becausecitrus production decreased in the northern hemisphere - especially in Mexico, China, Japan,USA and the Mediterranean basin due to cold weather, frost and storms in early 2003.Furthermore, production also decreased in the southern hemisphere due to bad weather, plantdiseases on some plantations, currency appreciation in South Africa and drought in Australia.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 5
  6. 6. II. Analysis of the export process from Peru to Canada 1) Product CategoryThe Citrus family contains many products such as the Clementine, mandarin, and tangerine. Ourfocus in this project will be the Clemenvilla (a hybrid of the Clementine and the Satsuma) and theMinneola (a hybrid of the mandarin and the grapefruit), and the rules that would apply to theexport of these products to Canada. This category of products falls under the codex SH or theclassification number 080520. This is broken down into subcategories as shown in the tablebelow:Tariff SS Description of Goods Unit of MFN ApplicableItem Measure Tariff Preferential Tariffs0805.20.00 Mandarins (including tangerines and satsumas); clementines, wilkings and similar citrus hybrids 11 Tangerines KGM free UST, CCCT, LDCT, GPT, MT, CT, CRT: Free 19 Other KGM 20 Dried KGMChart 5: SH classification of mandarin-type citrus. Source: CUSTOMS TARIFF – SCHEDULE, Chapter 8: EDIBLEFRUIT AND NUTS; PEEL OF CITRUS FRUIT OR MELONS; Jan/1/04Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 6
  7. 7. 2) Administrative procedure and requirementsThe following procedures and requirements are available on the Canada Border Services Agencyweb-site. We extracted some relevant information from RC4041 Guide to importing commercialgoods, but further details can be found in this guide. a) Administrative documents requiredThe Canada Customs and Revenue Agency (CCRA) control Canadas entry points to protectCanadian people, businesses and society. Their responsibility is to provide fair, courteous, andefficient service. Their service will be provided in the official languages of Canada (English orFrench). The presence the CCRA at the border helps to control the illegal entry of goods intoCanada. They keep out goods that could threaten national health, environment, or agriculture.They also help keep Canadian businesses competitive by enforcing trade agreements andimport/export policies.An importer must keep books and records to substantiate what goods he has imported, thequantities, the prices paid, and the goods origin. He must keep records in Canada, in either paperor electronic format, for six years after the year that the goods were imported. If the importerplans to keep his records outside Canada, he must first obtain written approval from CustomsCanada. Even if a customs broker carries out customs activities on behalf of the importer, theimporter should also keep the records on his premises. The importer is responsible for all recordson reporting, releasing, accounting for, and paying for goods, as well as any later adjustments.The Certificate of Origin applies to goods covered by the General Preferential Tariff (GPT) or theLeast Developed Country Tariff (LDCT). It is issued by the exporter in the country where thegoods originated. It is relevant to point out that there is no quota on the Clementine, mandarin orTangerine as these are fresh products that are not harvested in Canada.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 7
  8. 8. Your carrier has to keep records at the place of business in Canada for three years after the year ittransported your goods to Canada. These records can include charts of accounts, trip logs,movement history reports, and bills of lading. They may include paper documents or those storedelectronically. Carriers can keep these records outside Canada if they receive written permissionfrom Customs Canada.Your carrier must either report all commercial goods you import into Canada on an approvedcargo control document (CCD), or, in the case of rail and marine shipments, electronicallytransmit the cargo information using electronic data interchange (EDI) before arriving at theCanadian border.At the CCRA, Customs Canada identifies each shipment with a unique 14-digit transactionnumber. They use this transaction number to identify your shipment at various times throughoutthe customs process. Under the cash option, they assign a transaction number to the documents inthe accounting package when you present them to obtain release of your goods.A final accounting package for shipments into Canada has to be submitted. In most cases, acomplete accounting package consists of: • two copies of the cargo control document (CCD); • two copies of the invoice; • two copies of a completed Form B3, Canada Customs Coding Form; • any import permits, health certificates, or forms that other federal government departments require; and • A Form A, Certificate of Origin (when necessary).You can present paper copies of these documents or, if Customs gives you the authorization, youcan transmit this information using EDI.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 8
  9. 9. b) Shipment processCustoms processes most shipments at the border point (e.g., highway border, rail border,international airport, seaport, or customs mail centre). Customs can process and releaseinternational mail only at the five customs mail centres across Canada. However, you can chooseto have Customs Canada release the goods at an inland office, which is a customs office notlocated at the border. For example, your shipment arrives at Fort Erie, Ontario, but you wantCustoms to release it in Toronto. In this case, after your carrier reports the goods at Fort Erie, itmust have posted security with the CBSA (Canada Border Service Agency) to carry them to oneof the approved inland Toronto sites. Only carriers who have posted security with Customs(bonded carriers) can transport non-duty-paid goods between points in Canada.There are 22 customs offices that offer commercial service 24 hours a day. Others providecommercial service from 8:00 a.m. to midnight, and others are only open to release commercialshipments during regular office hours (e.g., 8:00 a.m. to 5:00 p.m.).If you are importing goods that you need to use immediately in production or manufacturing, youmay benefit from releasing your shipment during off-peak times. During off-hours, trafficcongestion and waiting lines for counter service are reduced. Therefore, Customs should be ableto release your shipment more quickly at that time than during busier periods. c) Import permits and health certificatesSome goods are subject to the requirements of other federal government departments and mayneed permits, certificates, and examinations. CBSA administers the import portions of legislationon behalf of these departments. For example, the Canadian Food Inspection Agency examinesand gives permits for some meat products, and all restricted or controlled drugs require an importpermit from Health Canada. The CBSA verifies the permits or conducts inspections on behalf ofthe other federal departments and detains the goods if necessary.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 9
  10. 10. d) Carriers and brokersCarriers provide Customs with the appropriate documents to report the arrival of your shipments.The transportation mode determines what type of reporting document the carrier must use. As animporter, you also need to submit release or accounting documents, which you can either prepareyourself, or hire a customs broker to do on your behalf.Customs Canada licenses customs brokers to carry out customs-related responsibilities on behalfof their clients. A brokers services include: • Obtaining release of the imported goods; • Paying any duties that apply; • Obtaining, preparing, and presenting or transmitting the necessary documents or data; • Maintaining records; and • Responding to any CBSA concerns after payment.The importer will have to pay a fee for these services, which the brokerage firm establishes.Brokers do not work for the federal government and they are not federal public servants. Theimporter remains liable for all duties owing until either he or your broker pays them. This appliesregardless of whether or not the importer has paid the amount to the broker.Your counterpart in Canada needs to be registered with a Business Number. The business number(BN) has 15 digits: nine numbers to identify the business, plus two letters and four numbers toidentify the program and each account. The system includes major types of Canada RevenueAgency and Canada Border Services Agency programs that many businesses may be registeredfor: • GST; • payroll deductions; • corporate income tax; and • Import/export (identified by RM).For example, the import/export account will look like this: 123456789RM0002Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 10
  11. 11. e) Examination of the shipmentThe importer may not experience this step in the import process. Customs do not examine allshipments before releasing them. Under the Customs Act, Customs Canada has the authority torandomly select shipments for examination to verify compliance or to take samples in reasonableamounts. The frequency of examinations will depend on the importer’s compliance record andthat of other persons or organizations involved with the shipment as well as the type of goods youare importing.Custom Canada may choose to examine the shipment for several reasons: • to detect prohibited or restricted items (e.g., pornography, narcotics) or smuggled goods; • to fulfil other government departments legislative requirements (e.g., meat inspection, import permits); or • to ensure the goods comply with customs legislation (i.e., to verify their description, value, quantity, and marking against the invoice information).Because carriers are responsible for making shipments available to CBSA for examination, theremay be some examination costs associated with unloading and loading cargo. The importer mayalso have to pay special service charges for a customs officers time and travel costs when theofficer conducts examinations and releases goods at locations other than designated CBSAfacilities, or when the importer needs after-hours service.Peru is among the Most Favoured Nations (MFN) that benefit from free duty and taxes onimporting goods. These preferential measures, implemented by Canada to help some developingcountries, are intended to adjust their trade balance. Those products have to prove that they wereat least 60% manufactured in the country in question in order to benefit from MFN status.Furthermore, because the products cited above are considered basic groceries that are notharvested in Canada, they are subject to no quotas or to the Goods and Services Tax (GST).Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 11
  12. 12. The importer can use three invoicing options: • a Canada Customs Invoice (CCI), which either the importer or the vendor can complete, or a commercial invoice containing the same information as a CCI; or • a commercial invoice which indicates the buyer, seller, country of origin, price paid or payable, and a detailed description of the goods, including quantity, and a CCI that provides the remaining information.If the importer is using release on minimum documentation (RMD), the invoice must contain: • the importer’s name and the import/export account; • the exporters name; • the unit of measure and quantity of goods; • the estimated value of the goods in Canadian dollars; • a detailed description of the goods; • the goods country of origin; and • a bar-coded transaction number that you affix to the invoice f) Phytosanitary import requirementsCitrus and tropical fruits are exempted from further Canadian phytosanitary import requirements,as these fruits are not normally expected to harbour plant pests that could become established inCanada. Imported fresh fruits must comply with the health and safety requirements of the Foodand Drug regulations, e.g. for maximum chemical residue levels measured in active ingredient, asyou can see in appendix 6. Some of the fruits from peculiar countries are subjected to plantprotection requirements such as phytosanitary certificates or permits to import. In other cases,the product may be refused to enter in Canada until a pest risk assessment has been checked.Fruits and vegetables which enter Canada via a United-States port and then travel by road, arelikely to be fumigated by the U.S. authorities, because the U.S. Department of Agriculture(USDA) is concerned about tropical diseases and pests. To avoid a delay or refusal at the border,importers generally contact the CFIA prior to ordering the shipment. So, Incoming shipmentsmust be free of pests, soil, sand, leaves and plant debris. Besides, phytosanitary certificate andimport permit are not required.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 12
  13. 13. Fruits may be subjected to CFIA inspection on arrival at the first port of entry in Canada todetermine whether the shipment meets Canadian import and inspection requirements. The cost ofthe inspection is the responsibility of the importer.In case of non-compliance, shipments of citrus fruits may be refused entry, returned to origin ordisposed of if they are found to be contaminated with soil, sand, leaves, or plant debris, orinfested with any quarantine or regulated pest. The importer is responsible for any and all costsrelating to disposal, removal, rerouting or diversion to processing facilities or treatment,including costs incurred by the CFIA to monitor the action taken. The Plant Health andProduction Division of the CFIA will advise the National Plant Protection Organization of thecountry of origin of any quarantine pest interceptions or other non-compliance with importrequirements.Other Canadian import requirements, which are in addition to those stated above, include: • chemical residue standards as established under the Food and Drug Regulations; • licensing and inspection requirements as established under the Licensing and Arbitration Regulations under the Canada Agricultural Products Act; • regulatory inspection as established under the Fresh Fruit and Vegetable Regulations under the Canada Agricultural Products Act; and • packaging and labelling requirements as established under the Consumer Packaging and Labelling Act and Regulations.It is the importers responsibility to know and satisfy these requirements.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 13
  14. 14. 3) Packaging and Transport standardsThe following recommendations are provided by the Food Agriculture Organization and theWorld Health Organization.The code that regulates packaging recommends proper packaging and transport of fresh fruits andvegetables in order to maintain products quality during transportation and marketing. This willcover the following areas: - Destination; - Value of the produce; - Degree of produce perishability; - Amount of produce to be transported; - Recommended storage temperature and relative humidity; - Outside temperature conditions at origin and destination points; - Time in transit to reach destination by air, land, or ocean transport; - Freight rates negotiated with the carriers; - Quality of transportation service.Although most carriers check their transport equipment before presenting it to the shipper forloading, the shipper should still check the equipment to ensure it is in good working order andmeets the needs of the produce. Shippers should insist on clean equipment. A load of produce canbe ruined by: - Smell from previous deliveries or incompatible loads; - Toxic chemical residues; - Insects nesting in the equipment; - Decaying remains of agricultural produce; and - Debris blocking drain openings or air circulation channels along the floor.Packages coming into Canada have to be labelled in English and French. They have to specify theexporter’s name and address, the country of origin, lot number, the product name and type, thesize of the box and its weight. Shipping containers must be clearly marked on at least two sides.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 14
  15. 15. Packaging items such as boxes, plastic trays, cases or containers have to be proper and clean. Asfor the labelling, this has to be conformance with Canadian standards. Therefore, the exporter hasto double check with the buyer on the exactness of the label. The exporter can send a draft copyto make sure it conforms with Canadian standards. Notice that the province of Quebec mayimpose certain criteria as to the use of the French language. Any missing labelling regulationswill affect the sale of the goods. For more information on labelling, contact or visit the CFIA atwww.inspection.gc.ca . 4) Quality standardsCanada ranks among the countries with the highest imports per capita, and has one of the mostdeveloped food quality infrastructures in the world. Exporters must therefore offer a completelynew product to push suppliers with more attractive offer in term of quality. Canadian consumersdemand citrus fruits with an eye-pleasing, blemish-free appearance. They are prepared to payhigher prices for high quality. Produce should be sorted into standard categories according totheir size, weight, variety, ripeness, overall quality and case content. By enforcing high standardson a country’s produce, the resulting positive international reputation will lead to improvedcompetitiveness and export earnings as a result of a better national “brand image”.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 15
  16. 16. III. Canada consumer market analysis and trends 1) Overall dataCitrus fruits are the most important fruit crop in terms of value of international trade.Approximately 10% of citrus fruit production is exported. An interesting trend in citrus tradeduring the last two decades is the growth in trade of small fresh citrus fruits (tangerines,Clementines, mandarins…) at the expense of oranges. World production of tangerines isprojected to increase at an annual rate of 2.8% to 17,4 million tonnes in 2005. Globalconsumption of fresh tangerines is expected to rise at an annual average rate of 3.3%. However,much of the increase in consumption is expected to take place in China and in developingcountries.According to Statistics Canada in 1998, fruits and vegetables make up a large share ofCanadians’ food consumption. As a matter of fact, the average Canadian consumed 121 kg offruits in 1998, compared with 111 kg in 1990. The consumption of oranges and Clementine-typefruits is of 10 kg per year. According to Statistics Canada, Canadian people consumed 2.89 kg ofmandarins in 2002, which represents an increase of 34% in ten years. It is interesting to draw aparallel with the consumption of oranges, which decreased by 13% during the same ten years.Moreover, the price of fresh fruits increased by 13% between 1992 and 2002. In 2002, eachCanadian consumed 93 kg of fresh fruits, which corresponds to a 15% increase in ten years.According to the FAO (Food and Agricultural Organization of the United Nations), Canada is thesixth-largest importer of fresh citrus in terms of quantity. More specifically, Canada imported405 000 tonnes in 2002, which represents a 6% increase over 2001. However, Canadian importsof citrus were stable between 1997 and 2001. Moreover, Peruvian mandarin-type citrus importsinto Canada have increased significantly since 1999. According to Statistics Canada, theseimports were valued at CA$ 2,597,845 in 2003, which represents a rise of 579% since 1999. Still,the overall value of imports of mandarin-type citrus increased of only 2% since 1999.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 16
  17. 17. The four biggest exporters of mandarin-type citrus to Canada are Morocco, Spain, China and theUnited States; these countries accounted for 80% of the imports of these citrus fruits in 2003.Peruvian imports of mandarin-type citrus constituted only 2% of the total mandarin-type citrusimported in 2003. As Canada does not produce any mandarin-type citrus, the size of the marketcan be evaluated by the imports of mandarin-type citrus. This imports amounted to CAD$125,248,104 in 2003.We can identify a major trend in consumer preferences in terms of food. Canadians are payingmore and more attention to eating healthy and convenient food, and fruits and vegetables ingeneral are benefiting from this trend. Consequently, the consumption of mandarin-type citrus islikely to continue to rise, because mandarin-type citrus are both perceived as convenient andhealthy foods.Another interesting trend in the Canadian food market is the steadily growth of the organic foodmarket. In general, consumers prefer organic to conventional products, because organic food isperceived to be of better quality and healthier. The most important quality characteristics toconsumers are nutritional value, freshness, flavour or taste, and general appearance. Consumersof organic foods are influenced mostly by quality characteristics and not by the price premium.However, non-purchasers do not purchase organic products because of the price and availabilityof the product. There is also evidence that consumers are willing to pay a price premium ofapproximately 10% for organic attributes and characteristics. According to the main organicdistributors in Canada, sales of organic products are rising by 20% a year. Nevertheless, organicfood sales represent less than 2% of the total food sales in 2002. We can explain this dramaticgrowth by the increasingly wide availability of organic products in the major grocery storechains. As organic food is probably the fastest growing segment in the Canadian food market,this market segment consequently provides a great opportunity for newcomers or small exporterson the Canadian market.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 17
  18. 18. 2) Analysis of opportunities and threats on the Canadian market Opportunities Threats-a Canadian consumed 2,89 kg of mandarins in 2002 -Morocco, Spain, China and the-a Canadian consumes 10kg of oranges and mandarin- United States represent 80% oftype citrus per year the imports of mandarin-type-mandarin consumption in Canada increased by 34% fruits in Canadaover the past 10 years -imports of mandarin-type citrus-Canadian consumption of fresh fruits has increased by from Peru represented only 2% of15% over the past 10 years and amounted to 93 kg in the total imports of these fruits in2002 2002-Canada does not produce any citrus -only 15% of Canadian people are-Canada is the sixth largest importer of fresh citrus in familiar with Minneola-Tangelosthe world and less than 3% with Novas--mandarin-type fruits imported from Peru more than Clemenvillasfive-fold over the past 5 years -Canadian people are reluctant to-14% of Canadian people buy mandarins once a month buy unknown fruitsor more -the Canadian food market is very-Canadian people pay more and more attention to eating competitivehealthy and convenient food-sales of organic products are rising by 20% a year, andPeruvian fruits are often associated with natural fruitscultivated without chemicals and preservativesMostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 18
  19. 19. IV. Analysis of the Canadian distribution channelsThe Supply ChainThe information in this section was obtained through a series of face-to-face or telephoneinterviews, and some emailed responses. The questionnaires used for the interviews are providedin Annex 10. The first questionnaire was pre-tested with a fruit and vegetable store owner knownto one of the researchers, before subsequently being used on other interviewees. Thequestionnaires were modified slightly depending on the position of the interviewee in the supplychain.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 19
  20. 20. TransportationHowever, as there is only one Callao-Vancouver ship every 15 days, the great majority of theseshipments have been routed through East-coast ports, namely, New York, Philadelphia or NewJersey. From there, the fruit is trucked to Toronto or Quebec City. This East-coast route takesabout 14 days to reach Toronto or Quebec, and transportation costs add approximately US$2 tothe price of each carton, for a total of US$8.50 per 10 kg carton. At current USD-CAD exchangerates of approximately US$0.75 to the Canadian Dollar, that means a Canadian price of $11.35per carton, or $1.13/kg ($0.51/lb).If the fruit is destined for Western cities, it travels from Toronto or Quebec to Calgary andVancouver by rail. Sometimes the Calgary shipments go directly there and sometimes they arerouted through Vancouver first. The trip west adds an additional US$1.50 - $2.00 to the price ofa 10 kg carton, for a price of US$10.00 to $10.50, or CAD$13.35 - $14.00 per carton.Direct Callao-Vancouver sea traffic takes approximately one month, whereas Callao to Torontoor Quebec through an eastern US port takes about 14 days.Peruvian fruit tended to be small, and that consumer tastes in the East prefer larger fruit. As aresult, he viewed attempts to export to eastern Canada as more risky.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 20
  21. 21. Major Retailers and ImportersSobeys is the second largest grocery chain in Canada, and operates 1,326 stores across thecountry under various banners: Garden Market IGA, IGA, Food Town, Thrifty Foods, PriceChopper, Sobeys, Foodland, Knechtel, IGA Extra and Les Marchés Tradition. Its total sales in2002 were of $9.7 billion for all banners, giving it a market share of 17%.Given its size, Sobeys does not deal with Canadian distributors and deals directly with foreignexporters and agents. According to Mr. Sbrocchi, his main concern as Sobeys’ Director ofProduce is to assure continuity of supply, and the company therefore places a great deal ofemphasis on established, long-term relationships with suppliers.Mr Sbrocchi emphasised that Canada’s fruit market is very competitive, more so than the USmarket. He cites several reasons for this, such as competition between the major grocery chains,who operate their own “discount banners” – such as Price Chopper for Sobeys and No Frills forLoblaws - and a vibrant market of smaller retailers who might operate half a dozen large stores ina metropolitan area. The result is that the market is relatively saturated with product.When asked about the prospects for Minneolas, Mr. Sbrocchi replied that they comprised about15% of his mandarin sales, the other 85% being Clementines, most of his Minneolas being ofChilean origin. He remarked that some producers do not realise that Minneolas from differentcountries can have significantly different taste, due to the exact hybrid that grows best in eachregion, and that different consumers’ palettes will prefer Minneolas from different countries.When asked about the quantities of mandarin imports during the March-July period, Mr.Sbrocchi replied that the main demand during that period was for Navel Oranges. In the earlierpart of that period, Sobeys supplies come from California, and switch to primarily South Africansources and some South American (Chilean) suppliers in the later period.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 21
  22. 22. Mr. Sbrocchi knows the Clemenvilla, recognising it as a hybrid of the Clementine and theSatsuma.1 When asked what he thought of it, he replied that it was “alright”, one drawback beingthat it had too many pips. When asked why the Clemenvilla was not seen on the Canadianmarket, he said that it had never really been given the opportunity2. He suggested that theClemenvilla might actually represent an ideal compromise for Canadian tastes between theSatsuma (which is popular among Canadians of East Asian origin, but has not yet become verypopular among other Canadian consumers)3 and the Clementine.Loblaws is the largest grocery chain in Canada, operating 1,697 stores under different bannersacross the country: Atlantic SaveEasy, Atlantic Superstore, Dominion, Extra Foods, Fortinos,Loblaws, Lucky Dollar Foods, Maxi, No Frills, Provigo, The Real Canadian Superstore, the RealCanadian Wholesale Club, Shop Easy Foods, SuperValu, Valu-mart, Your Independent Grocer,Zehrs Markets, Cash & Carry and other banners. Its total sales in 2002 were of $23 billion, and itholds a market share of 40% of the Canadian Grocery Market and 43% of the Canadian fruit andvegetable market.4We obtained most of our information about Loblaws from a telephone interview with Mr.Michael Borcsok, and an emailed reply to our questionnaire. Mr Borcsok purchases citrus forLoblaw’s Eastern Canadian stores, which represents over 70% of the Canadian market. Loblawsdistribution system reaches practically the whole Canadian population, and therefore provides adistribution channel to over 30 million people.Although the sale of fruits and vegetables accounts for roughly 10% of Loblaws’ business, thatstill means sales of over $2 billion annually. Loblaws’ stores are large, varying in size from40,000 square feet to 165,000 square feet (3,700-15,350 m2), and the Loblaw group of companieshas some 135,000 employees.1 Note that the Satsuma is also marketed in Canada under the name “honey tangerine”.2 Apparently, some are available (probably in Toronto), under the Caputo brand.3 Note that the Asian market is growing in Canada, as the number of Canadians with East Asian origins grows.There are approximately 1.4 million Canadians of Chinese descent, most of whom live in the cities of Vancouver andToronto.4 Interview with Mr. Michael Borcsok.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 22
  23. 23. On the question of which mandarin-type fruit Loblaws carries at different times of year, Mr.Borcsok provided the following list. Although he did not specify volumes, he did note that allorders were of full containers. • In the Autumn and Winter, Loblaws carries Tangerines and Ortaniques (Florida), Clementines (Morocco and Spain), and Minneolas (California). • In the Spring and Summer, Loblaws carries Tangerines (Brazil and Argentina), Clementines (Chile and South Africa), as well as Mandarins and Ellendales (from various South American countries).Of the preceding types of citrus, the best-selling fruit (in decreasing order of importance) areClementines, Tangerines, and then Mandarins. Minneolas currently are small sellers, but MrBorcsok has noticed that the quantities increase every year. Another important observation of hisis that large Minneolas sell much better than small ones.Mr. Borcsok did not provide any information regarding the potential for the Clemenvilla and howhe would introduce new fruit. However, in his opinion, the two most important characteristics toconsumers are: 1) appearance, to incite consumers to try the fruit, and 2) taste, to make them buyit again.SummaryThe Canadian food industry is very competitive. According to Mr. Michael Borcsok, it is morecompetitive than the US industry, and he cites the existence of discount banners under each of themain chains. There is significant concentration amongst the big players, yet there exists a vibrantmarket for smaller retailers, who can operate several large stores in a metropolitan area.Furthermore, there are regional differences, namely, those between Québec and the rest of thecountry. In most of Canada, the major supermarket chains control about 65% of the market,whereas they only control about 30-35% of the Quebec market. This is attributable to culturaldifferences and a preference in Quebec for more frequent shopping trips to local stores.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 23
  24. 24. Below is a summary chart that presents the cumulative mark-up factor for mandarin-type citrusfrom Callao (Peru) to Ottawa (Canada). Price Price Price Price Description Profit Margin USD/10kg USD/kg CAD/Kg CAD/Lb Total price FOB Callao 6.50 0.65 0.87 0.39 Transportation TOR/MTL 2.00 0.20 0.27 0.12 Wholesaler 8.50 0.85 1.13 0.51 Wholesaler profit margin 20% 1.70 0.17 0.23 0.10 Retailer TOR/MTL 10.20 1.02 1.36 0.62 Retailer profit margin 40% 4.08 0.41 0.54 0.25 Consumer TOR/MTL 14.28 1.43 1.90 0.86 Retailer Ottawa TOR/MTL +10% 11.22 1.12 1.50 0.68 Retailer profit margin 40% 4.49 0.45 0.60 0.27 Consumer Ottawa 15.71 1.57 2.09 0.95Chart 6: Cumulative mark-up factor for mandarin-type citrus from Callao (Peru) to Ottawa (Canada)Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 24
  25. 25. The latest chart is obtained from our calculation of price escalation throughout the distributionchannel. However, we believe that it is worthwhile to compare these figures with the fluctuationsof Clementine from Chile and South Africa and tangelo mineola from Peru on the Canadianwholesale to retail market of Montreal and Toronto between Jun to September 2003. CAD 31 29 27 25 Price 23 21 19 17 15 7/6 5/7 2/8 9/8 6/9 /6 /6 /6 /7 /7 /7 /8 /8 /8 /9 /9 /9 0 4/1 14 21 28 12 19 26 16 23 30 13 20 27 31/5 Cl Minneola from Peru Clementines from South AfricaChart 7: Price fluctuations of selected mandarins between June and September 2003. Source: Canadian wholesale toretail market of Montreal and TorontoMostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 25
  26. 26. V. Competition 1) World environment for Fresh CitrusAccording to a market study done for 2002-2003 season in the Northern Hemisphere by theUnited Nations’ Food and Agriculture Organization (FAO), citrus production declined in 2002-03 from the previous season in most regions of the Northern Hemisphere including the UnitedStates, Mexico, China, Japan and the Mediterranean rim. In the latter region, output fell markedlyin Italy (due to frost and the eruption of the Etna volcano in Sicily), Turkey (due to cold weather)and Egypt. A storm in Spain at the beginning of 2003 slightly curtailed the citrus harvest (-2.6%). On the other hand, production rose in Morocco and Greece, which recovered from the frostof the previous season.Overall orange output contracted, as reduced harvests in the United States, Spain, Italy andMexico were not compensated by higher output in Morocco and Greece. Conversely, theNorthern Hemispheres tangerine crop was larger, with increases in Spain, Morocco and Greece.Exports of citrus from Spain reached a record high of 3.4 million tonnes in 2002-03 due in part toan excellent promotion campaign in Europe. Similarly, shipments of oranges rose in Morocco,Greece, Turkey and the United States (aided by the lower exchange rate of the US dollar).Exports of Clementines expanded in Spain and Morocco, but declined in Turkey.Concerning the southern hemisphere, the output of citrus was expected to decline in Brazil in2003 due to a reduced orange crop. Estimates of the harvest vary significantly across sources, butaccording to USDA (US Department of Agriculture), the total crop would be close to 387 million40.8 kg-boxes, down 14 percent from the previous year. The main reasons for this fall are adverseweather, the tree cycle and the reduced number of bearing trees due to diseases such as CVC andthe sudden death of citrus. Similarly, the Argentinean citrus harvest was expected to be down (-25 %) on the previous year due to poor weather. Australia forecast a smaller orange crop due todrought and strong winds, which would reduce exports.Citrus prices showed different trends across markets and products in 2002-03. Import prices forfresh oranges were lower than in the previous season in the European Union and the United-States. Grower prices for processing oranges rose in Brazil and the United States.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 26
  27. 27. 2) An overview over some competitors and their environmentIn this part, we chose to give an overview of three major competitors on the Canadian market:Morocco, Spain and the United-States. a) MoroccoThe history of citrus culture in Morocco dates back to Roman times, but today the industry is asmodern as any in the world. The total citrus acreage is 213,284 acres with 72% oranges (mainlynavels), 26% mandarins (Clementine and Satsumas), 1.1% lemons and limes, and 0.35%grapefruit and pummelos. While the Moroccan citrus industry produces only 0.89% of worldcitrus tonnage, it is the fourth largest fresh citrus-exporting country and the second largest freshmandarin exporting country in the world (USDA statistics, 2000). European Union (EU) marketsaccount for most of Morocco’s citrus exports. Morocco’s top-quality citrus are exported to theEU, and its second-quality fruits are exported to Eastern Europe and Russia. (P.L. Arribas, 2000.CLAM 99/2000: previsión de exportació). Citrus farms are relatively large in Morocco (largerthan those in Spain) with each unit averaging more than 200 acres (80 hectares). The cost oflabour in Morocco is very cheap compared to both Spain and the United-states. Inexpensivelabour is perhaps the biggest advantage the industry has over those in other countries. TheMoroccan products are available between November and March in Canada. b) SpainSpain is the world’s largest fresh citrus exporter, despite being fourth in total production behindBrazil, the U.S. and China. Almost 70% of their production is exported to Europe with mostgoing to Germany, France, the United Kingdom, and the Netherlands. In the 1999 - 2000 seasons,a severe oversupply of mandarins in export markets caused the price to fall below profitablethresholds for growers. Many blocks were not harvested due to low prices resulting fromoversupply. In 1999, approximately 284,000 ha (701,000 acres) of citrus were harvested. TheSpanish product comes a few days later than the Moroccan product and it stays on the market foralmost the same period.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 27
  28. 28. c) United-StatesThe U.S. exporters are few miles away from the Canadian market. This gives them a significantcompetitive advantage over the others citrus exporters. As one of the US competitors on theCanadian market, World fruits sales that combines California and Arizona product has a harvestperiod from December to April for Minneola Tangelo (Honeybell) and a harvest period fromOctober to December for Fairchild Tangerine. 3) Canadian MarketThere are about 31 million Canadians living in 10 provinces and three territories. The two officiallanguages are French and English. 90% of Canadians live within 200 km of the southern borderwith the USA. The five biggest agglomerations are Toronto, Montreal, Vancouver, Ottawa-Gatineau and Calgary.“Year-round consumption of citrus fruits is high in Canada, with imports valued at $332.7million in 2001, up to from $307 million in 1997. The US and Morocco were the top suppliers.Imports from Chile and Costa Rica rose, the former enhanced by the Canada-Chile Free TradeAgreement, while imports from Colombia and Ecuador fell over the five year period.’’ (TFOC,Fresh Fruit and vegetables/2002).According to Statistics Canada, there are 15 exporting countries for citrus products of themandarin and tangerine categories. Those countries are Argentina, Peru, Morocco, South Africa,Spain, China, Australia, Taiwan, USA, Uruguay, Mexico, Italy, Brazil, Chile and South Korea.The top three importers are Morocco, Spain and USA.All Canadian importers have their addresses on Canadian territories. They exist mostly in the bigagglomerations like Toronto, Montreal, Vancouver and Calgary, as you can see in annex 11.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 28
  29. 29. The table below shows the share of clementines and mandarins export countries in the importstotal value to Canada. The global total value in Canadian dollars for 2002 was $131 412 152. Exporter of Clementines and Mandarins Number of Canadians Importers Total Value (CAD) Morocco 3 42,200,000 Spain 6 22,000,000 USA 19 15,900,000 Peru 3 1,200,000 South Africa 7 2,600,000 Brazil 4 2,000,000 All the rest 45,500,000Chart 8: share of clementines and mandarins export countries in the imports total value to Canada. Source: StatisticsCanada, 2002This table shows the same data from another perspective. It demonstrates the amount of themarket controlled by the top numbers of importers: Numbers of importers Value of imports (CAD) Cumulative % of imports 3 39,862,200 30.33 6 61,710,368 46.96 10 83,158,867 63.28 16 104,492,542 79.52 All 131,412,152 100.00Chart 9: Amount of the market controlled by the top importers of clementines and mandarins to Canada in CAD.Source: Statistics Canada, 2002The table below lists the Canadian importers of mandarin-type citrus from Peru. The total valueof these imports was $1.2 million in 2002. Company name City Province DOMINION CITRUS LIMITED Toronto Ontario COURCHESNE, LAROSE LTEE Montréal Quebec KROWN PRODUCE INC Saskatoon SaskatchewanChart 10: Canadian importers of mandarin-type citrus from Peru.Mostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 29
  30. 30. 4) Competitive Advantages of citrusPeruvian products have an advantage over their competitors, since they harvest their products(tangerine and mandarins) when their main competitors (Morocco, Spain and the USA) areabsent from the Canadian market. In general, the products that come from Morocco and Spaininclude expensive transportation in their cost structure. As Peruvian products are availablebetween May and July, their main competitors are the other South American exporters, or SouthAfrican exporters. The table below indicates the citrus harvest periods for most competitors onthe Canadian market. Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec US Florida US Arizona US California Morocco South Africa España Peru Argentina Uruguay Nova Clemenvilla Tangelo Mineola All types of citrus Chart 11: Citrus harvest periods for most competitors on the Canadian marketMostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 30
  31. 31. 5) Competition of substitute productsWhile Peruvian fruit has this advantage, we need to remember that there are other substituteproducts that Canadian consumers can purchase during the northern summer. Among thosecompetitors’ products, there is the rest of the citrus family, as well as locally available fruit,including grapes, peaches, nectarines, various berries, etc... We must also consider that consumerbehaviour is different in the summer, as much of the fruit products consumed are in the form ofjuice.The following statement is particularly relevant: “According to the Canadian produce marketingassociation (CPMA), $3 out of $4 of the fresh produce sold in the Canadian market is imported.However, during the summer and autumn, Canadian producers supply 65%- 70% of the market.The Canadian harvest season generally runs from July to October, so the main import period isfrom November to June.”(TFOC, Fresh Fruit and vegetables/2002).Informe elaborado por:Estudiantes del MBA de la Universidad de Ottawa:Mostafa AmineSimon DesboisGeorges El MurrDominic RossiLaurent VerbruggenMostafa Amine, Simon Desbois, Georges El Murr, Dominic Rossi, Laurent Verbruggen 31

×