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Juices, Canned Foods and Tomatoes 2014

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Welcome to a difficult world

© FOODNEWS 2014. All rights reserved. No part of this publi cation may be reproduced or transmitted in any form or by any means without the written permission of the publisher.

ISSN 0951-130X. Registered Trade Mark: FOODNEWS®. Informa Plc.

Ad vertising in FOODNEWS and its supplements is accepted on condition that the advertiser will indemnify the company from any claims or actions arising from the appearance of an advertisement.

FOODNEWS is published by Informa Agra, IBI, Christchurch Court, 10-15 Newgate Street, London EC1A 7AZ, UK.Phone: +44 (0) 20 7017 7500 Fax: 0044 20 7017 6985 Email: [email protected] www.foodnews.co.uk Managing Editor: Neil Murray Deputy Editor: Julian Gale Managing Director: Philip Smith Specialist reporters: Amy Booth, Davide Ghilotti Design & Production: Steve Aylett, Jane CrispinAdvertising Manager: Sunny Patel Tel: +44 (0) 20 7017 4153 Fax +44 (0) 20 7017 7594 Email: [email protected] Enquiries: Email: [email protected] Tel: +44 (0)20 7017 5540 or (US) Toll Free: +1 800 997 3892Online Access: Email: [email protected] Tel: +44 (0)20 7017 4161

It’s a tough time to be in the juice industry.

From being the darling of the ‘healthy’ food lobby, fruit juice has become one of the villains because of its sugar content, and never mind its vitamin and mineral count.

And pure juice consumption is dropping inexorably in Europe, and positively plunging in the US. At the recent Juice Latin America conference, we had the first hard evidence that calorie intake from soft drinks is dropping in the developed market. True, this relates mostly to carbonated soft drinks, but the message is clear: we are supplying a shrinking market. Some are pinning their hopes on new markets in Africa and Asia, but the volumes involved are often so small that a double-digit growth rate, when translated into millions of litres, is not impressive.

FOODNEWS has long been doubtful of the merits of slapping a brand name associated with a premium product on an inferior one. Tropicana is, in Europe at least, associated with quality NFC pure juices. I remain to be convinced that putting the same brand name on the Trop 50 product, which is only 50% juice, is a good idea, but then I doubt whether many consumers are aware that half of what they’re drinking is water.

And David Berryman of the

eponymous juice blending company made a good point at our conference in Cape Town recently. Blending juices with water, if well done and (above all) correctly marketed, offers a lifeline. And carbonating them changes them even more – it changes the taste. The trouble with “half juices” is that you need to sell double the quantities simply in order to stand still. But perhaps a marketing man is already working on that one.

Plenty of canners are ill at ease this year, too. Tuna pricing has experienced a precipitous decline over the past year, after consumers were put off by mounting high prices up to April 2013. This does seem to be slowing, but it would be premature to speak of a turnaround.

The pineapple and peach markets are the polar opposite: prices are sky-high and buyers have been left short. Canned fruit is a convenient option, but it is not a must-have item.

If we reach the stage where canned fruit is more expensive than fresh, the whole situation could spiral down alarmingly quickly – but prices along the supply chain must remain viable, and supermarkets keep an eagle eye on margins, too.

The age-old rules of price, supply and demand still apply, but it is a particularly tricky

game at the moment.Meanwhile, the processing

tomato market is looking, for the first time in several years, on the up. Prices have increased and, with the short production of the last couple of years, most origins will be trying to grow more and make the most of the favourable tide. Turkey is gearing up for a strong crop, but the duties in place in the EU still make the bloc a no-go area for the country.

On another note, how do you differentiate your brand from all the others? Many believe pursuing added-value and product innovation is the answer. In this issue, we also take a look at the state of the African tomato paste market, to assess what countries and regions may harbour opportunities for tomato exporters.

CONTENTSChinese Road Map 4

Peach drought 8

Demographic challenges 10

Mango Central 12

Europe leads 14

Splintered market 16

Orange in bloom 19

The devil is in the detail 22

Fruit for thought 24

Pineapple problems 26

Hook, line and sinker 28

From farm to shelf 30

The beast from the East 32

Destination Africa 34

Apeeling bananas 37

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It has been a protracted agony, and one which FOODNEWS did not think could possibly be spun out so long, but it does now seem as if we are entering the final phase of the collapse of the ‘old’ Chinese AJC industry.

For several years now, the Chinese industry has been operat-ing at somewhere between one-third and one-half capacity. There is no way that an industry designed to run flat out, process-ing very high volumes (up to about 10 million tonnes of fruit, to produce a maximum of 1.5 million tonnes of AJC) in a short space of time (between August and the start of December) is going to be profitable when oper-ating in fits and starts, on small volumes of raw material deliv-ered erratically, and producing perhaps 550,000 tonnes of fin-ished product.

China has lost the European market. Chinese imports into the EU peaked in 2007 at 258,000

tonnes, the same year as EU imports from all extra-EU origins peaked at over 411,000 tonnes. Since then, the decline in Chinese sales to the EU has been remorse-less, barring a slight uplift in 2011. In 2013, China sold about 33,000 tonnes of AJC to Europe.

So who has benefited? Who has taken the business? It is not quite as simple as that, because it is a matter not just of declining exports from extra-EU origins, but declining demand as well. However, for the record, in 2013, the biggest supplier to the EU was Ukraine, at some 60,000 tonnes. Moldova came next, with 38,345 tonnes and then Turkey (37,777 tonnes), and in fourth place was China with 31,900 tonnes. Chile and Serbia were in fifth and sixth place, but their volumes were about a quarter of what China supplied.

So that leaves China, still the world’s biggest AJC manufactur-er, even if its industry is running at a fraction of maximum capaci-ty, as a supplier whose impor-tance is about the same as Turkey and Moldova.

Incidentally, when these figures were presented at a recent FOODNEWS conference, there was some doubt about the actual size of Ukraine’s export volume.

These are indeed the correct fig-ures, but almost every single tonne goes to Poland. It is believed that a major Ukrainian supplier is simply shipping unfin-ished product from its plant(s) in Ukraine to its plants in Poland, and that this unfinished product is not subject to duty. FOODNEWS would welcome clarification.

What appears to be happening is a shift in AJC as an actual commodity. When it was really cheap, perhaps a decade ago, it found its way into everything. It was used as a natural sweetener. It was the base of choice for every single cheap juice blend. But global prices have risen sharply. Chinese prices have risen incredibly sharply: today’s price of around USD1,300-1,350 per tonne is double what it was a decade ago. That equates to a CAGR of 7% over 10 years. And this at a time when Chinese apple harvests have grown bigger and bigger: since 2000, Chinese apple production has risen by some 14-15 million tonnes.

There are two dominant factors governing the supply of Chinese AJC and its price into Europe. The overriding one is the Chinese fresh fruit market. This exploded in the second half of the last decade, and is still growing. The

BY NEIL MURRAY

Chinese Road Map

“What appears to be happening is a shift in AJC as an actual commodity. When it was really cheap, perhaps a decade ago, it found its way into every-thing. It was used as a natural sweetener. It was the base of choice for every single cheap juice blend. But global prices have risen sharply.”

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CHINESE AJC PRICE (USD/TONNE, fOB)

SOURCE: FOODNEWS

Logistics improvements may mean that Chinese AJC processors will have access to even less raw material.

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Chinese domestic market for fresh apples is what utterly dic-tates the supply for processing, and this market will continue growing, probably at a rate at least equal to the increase in fruit production.

The reason for this is simple. Only a few years ago, fresh apples were primarily sold in the major cities: the tier one cities such as Beijing and Shanghai. As the transport infrastructure improved, it became viable to transport fresh apples to the tier two cities, and then the tier three.

LogisticsNow China’s road network is growing at an astonishing rate. According to the Beijing Review, China overtook the US in terms of motorway (freeway) size in 2011, which it added 11,000 kilo-metres of freeway to its road net-work. China built over 83,000 km of freeways in just 11 years, and is still building. At the end of 2013, the network covered 104,500 km (source: Xinhuanet).

The effect on the market of the apple farmers’ and traders’ invest-ments in cold store facilities was immediate and dramatic: supplies were withheld from processing (and from the fresh markets, come to that) until the price of fruit had reached the levels that the farmers wanted. And then they sold. They could hold onto their stock until the time was right.

Now we have additional invest-ment in temperature-controlled storage in China. But this time, it is not the farmers and apple bro-

kers who are building coldstores. It is the supermarket chains (some of them western-owned). It is the big transport and logistics companies (again, some western-owned). Coldstore construction doubled in China between 2008 and 2012, and specific products, such as fruits, account for 27% of the market share (China’s Food Production and Cold Chain Logistics, by W. Wang, F. Jaeger, X. Li, X.H. Wang and J.M. Zhang, published 2012).

China produces about 230-240 mln tonnes of fresh fruits of all types annually, and about 700 mln tonnes of fresh vegetables. Meat and dairy production is growing fast. This new generation of cold-stores will serve two purposes: it will allow the supermarket chains to move their produce around the country swiftly, while keeping it in good condition, and it will dramat-ically improve fresh food hygiene standards, which is a national pri-ority for China (and perhaps deservedly so).

This logistics investment is nat-urally backed by a similarly impressive investment in IT: you cannot have the one without the other, these days.

So what does this mean for fresh apple consumption? It means it is going to continue ris-ing, as the fruit reaches consum-ers in more and more regions of the country which were hitherto considered too remote. Even if per capita consumption falls, the number of new consumers com-ing onto the market will more than make up for this.

There will be no increase in supplies of fresh fruit for pro-cessing. Possibly, the raw materi-al supply will be even lower. Already, Haisheng is known to be planting apple orchards to pro-vide raw material for its plants, but this is a long-term project: it can take five or six years before the fruit yield is sufficient.

DutyThe second issue involving Chinese sales into Europe is the duty. This was, until recently, 25.5%, and when its AJC was a cheap commodity, China could easily manage to sell into Europe even with this penalty. But China has to pay world prices for its energy and steel, and Chinese labour rates have increased as well. In recent years, this duty has been a burden.

Now, however, China has dropped out of the EU’s Generalised System of Preferences (GSP). This rate which, it turns out, was considered a preferential rate, has been withdrawn and Chinese AJC is subject to 30%

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SOURCE: National Bureau of Statistics

CHINESE fREEWAY NETWORK (KILOMETRES)



duty into the EU. With an fob price of USD1,300/tonne, plus perhaps USD80/tonne for freight, plus duty, Chinese AJC works out at around USD1,850/tonne ex-dock Rotterdam. European (or Turkish, or Ukrainian) sweet AJC is priced around EUR1.00/kg ex-works right now which, at present exchange rates, is USD1,370/tonne. Even more acidic AJC, at EUR1.15/kg, works out at around USD1,500/tonne. China simply cannot compete.

Even if the duty were lifted alto-

gether, China would find it tough going, given the present lowish price of European AJC. To an extent, this is a legacy of two suc-cessive years of large Polish apple harvests, and we cannot expect a third year of the same. The trees need to rest. But there has been another fundamental change in the apple juice market, and this is sim-ply a reduction in demand. Cheap AJC means higher sales. Costlier AJC means lower sales. At the same time, the European market for pure juices is stagnant at best.

Fruit juice is becoming an ingredi-ent in soft drinks, some with high juice content but, overall, the mar-ket has shrunk.

So where can China sell its AJC? Russia is a major customer, but the biggest market now is the US, where China prices its offering higher than it does in Europe. Chinese prices are presently around USD8.00 per gallon ex dock Newark, or about USD1,600/tonne. There is no US domestic AJC production worth mentioning, and its major competition comes from Chile and Argentina, plus (to a lesser extent) Brazil. There sim-ply is not the wide choice of ori-gins open to US buyers. However, this year Chile is returning to the US market because even Chile is having trouble competing in Europe, and Chile can comfortably underprice China in the US. A few years ago, the thought of a few tens of thousands of tonnes of AJC coming from Latin America would not have been a worry, but now

even 50,000 tonnes or so of Latin American AJC is enough to hurt China.

The Chinese juice industry is diversifying. It is starting to look at other fruits, other juices, and how to sell its products at higher value. For now, though, it is still holding a bunch of factories equipped with fabulous production facilities that it simply cannot use for lack of raw material. As one Chinese juice processor said to FOODNEWS: “What will we do with all this stainless steel?”

“So where can China sell its AJC? Russia is a major customer, but the biggest

market now is the US. However, this year Chile is returning to the US market and Chile can comfortably

underprice China in the US.”

Partner Country

Quantity

2008 2009 2010 2011 2012 2013

World 684628 795717 784144 608497 587332 597838

US 329652 369834 387578 266385 293210 318549

Japan 71776 53803 52101 55033 62896 68236

Russia 43387 60652 76441 63011 54702 49080

S Africa 15063 32899 30149 28841 19809 33625

Canada 29579 42977 40632 22239 50438 32750

Australia 30512 34496 33266 29832 26170 26625

Germany 42581 79787 40039 34549 19649 8878

N’lands 52625 57616 58977 57117 7529 7736

India 900 3472 3602 3244 5717 5020

Israel 3846 4689 4959 3968 2746 4382

S Arabia 3926 3350 4541 5535 3207 4139

Thailand 1419 1267 2314 2562 3146 3339

Taiwan 1935 3369 3643 3032 2542 3302

S Korea 1941 2046 2908 2953 3622 3199

K’stan 1331 1867 1457 1303 1511 3082

Turkey 1557 3093 5755 110 7023 2530

Pakistan 137 814 1593 1936 2408 2496

NZ 5597 3589 3218 2786 2549 2002

Belgium 2507 156 3054 2744 2912 1852

Malaysia 1231 1420 1755 1313 1455 1386

Norway 282 977 340 848 953 1169

UK 5777 5035 5089 3590 923 1130

Singapore 1149 1268 1106 813 916 1103

Indonesia 371 861 606 651 924 1096

Cyprus 495 806 846 506 1298 1073

Nigeria 1137 317 562 1015 1090 1003

Egypt 614 766 1735 1142 560 865

Vietnam 168 225 391 361 514 812

Jamaica 4109 527 196 132 132 662

Ukraine 6726 7832 2926 4210 953 638

Ph’ppines 296 560 359 177 540 632

Mongolia 139 364 455 696 1049 609

Spain 2415 3329 626 521 825 561

Denmark 317 595 176 154 88 549

SOURCE: GTIS/China Customs

MAIN CHINESE AJC EXPORTS ANNUAL 2008-13 (TONNES)

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This year is likely to be one of the most challenging on record for supplies of peach purée. Not since a severe cold snap demolished Greece’s peach supplies in 2003 has there been such a shortage (and that applies to canned fruit, as well).

When the prolonged and severe frost hit Latin America in September 2013, Greece still had some supplies available (the Greeks always seem to keep some stocks back, just in case) and, predictably, capitalised on the Latin American shortfall, but Greece is effectively completely sold out of peach purée, accord-ing to Alexander Christodoulou of CHB, a major Greek peach processor, speaking at the FOODNEWS Juice Latin America conference in Mendoza,

Argentina.“We have nothing: not a drop.

And we will have nothing until July,” he told delegates.

The effect on price has been dramatic. Chilean peach produc-tion for 2014 is estimated at just 156,000 tonnes, compared with 278,000 tonnes last year, from the same growing area (9,300 hectares). Latin American prices for 30/32 brix puree, which fluc-tuated between around USD1,300-1,400 per tonne fob during 2012 and 2013, have now shot up to USD2,200/tonne, and Chilean production this year is estimated to be no more than 29,000 tonnes, or 20,000 tonnes down on the previous year. Roberto Murphy of Aconcagua, one of the major Chilean produc-ers, estimates that the country’s exports will be roughly halved,

to 20,000 tonnes.Already, blenders are reported

to be switching to peach/apricot blends or even to pure apricot itself. Apricot dices and purees are already appearing in baby food, dairy products and bakery items. Apricot is not a direct replacement for peach – it tends to be slightly more acid, but in countries where peach is a popu-lar juice flavour (eastern Europe, Russia, the Middle East), the only way bottlers and processors can cope is to change their recipes to admit more apricot.

Russian juice companies have already changed their recipes, while, in Africa, peach is appar-ently being blended with guava in juice drinks. It needs to be recalled that in Russia, nectars are popular, and so there is no 100% juice requirement to be consid-ered and, in Africa, the main mar-ket in pre-packed beverages is for juice drinks of no more than 20% juice content, so in both markets, to a degree, flavourings can be used to good effect.

However, nearly 90% of Chile’s peach purée exports are destined for other Latin American countries, and FOODNEWS has already heard reports that these other countries are enquiring about placing orders with Greek manufacturers, to make up the shortfall.

This year’s crop looks good so far, he said. The winter has not been particularly cold (although snow fell in Greece recently, as a reminder that spring is not yet established), but the trees have received enough chilling hours.

The trees themselves are now in bloom, and Greece is fielding enquiries for purée from all over the world.

GreeceThe big question, though, con-cerns Greece’s announcement at

Peach droughtThe world is facing a serious shortage of peach purée this year, and Greece will benefit.

“Apricot is not a direct replacement for peach – it tends to be slightly more acid, but in countries where peach is a popular juice flavour, the only way bottlers and processors can cope is to admit more apricot.”

BY NEIL MURRAY

Juices, Canned foods and Tomatoes 2014

the recent CANCON conference that it is investing heavily in new peach orchards, to increase peach production. Greece may be on the verge of a boom in peach production that could see crops reach 600,000 tonnes in 2016/17, an increase of over 35% from the present average annual production of about 440,000 tonnes.

It would represent a signifi-cant increase in market supply, since Greece accounts for about 40% of global canned peach exports.

According to Costas Apostolou of the Greek Canners’ Association (and many canneries

now have purée production lines installed), farmers are planting new acreage following a depressed slump. “From 2007-2011, farmers were not satisfied with the prices they were receiv-ing and were leaving farms,” he said. “We had reduced quantities, reduced areas cultivated. The first recovery was in 2012, when some farmers were satisfied with prices received and returned to orchards.

“Particularly this year, accord-ing to knowledge that we have, a lot of farmers are planting new farms. I do not know if this was due to the high prices that result-ed from frost and hailstorms, but

according to these figures, I believe that in two to three years, there will be a new boom of production.

“If all goes well, I expect that in the years 2016-17, production will be over half a million tonnes. I’m expecting about 600,000 tonnes. There is a big question about how we are going to handle this. There will be big production in every direction: canned, frozen and purée. It seems we are going to have much higher production in the next years.”

Unsurprisingly, this news has alarmed Greece’s competitors around the world, who think that

such a move would push the industry into over-supply of canned peach, and probably purée as well.

But apparently the planting programme is already under way, and Greece definitely has the processing capacity to handle such a massive increase.

So where will Greece price its purée this season? Bearing in mind that one is dealing with some of the canniest processors in a country not under-estimated for its bargaining skills, this is a difficult question. FOODNEWS would be surprised if Greece asks less than EUR1,650/tonne this year.

“Unsurprisingly, this news has alarmed Greece’s

competitors around the world, who think that such

a move would push the industry into over-supply of

canned peach, and probably purée as well. But

apparently the planting programme is already

under way, and Greece definitely has the

processing capacity to handle such a massive

increase.”

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CHILEAN PEACH PULP PRODUCTION (TONNES)

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Tetra Pak is one of the largest suppliers of packaging systems in the world, operating across the dairy, juice and food indus-tries in over 41 markets. Since our business was founded in 1951, the food and packaging industries have undergone dra-matic changes, from the intro-duction of food-labelling to test-tube burgers.

Today, the biggest innovations are being driven by the rapidly changing demographics of both developed, and developing, mar-kets around the world. The face of the average FMCG consumer has changed more in recent years than ever before, and in the com-ing years this change will accel-

erate. It is expected that by 2025-30, there will be 1.3 billion more consumers on the planet. Five billion people will be living in urban areas and there will be almost triple today’s number of people over 60 years of age. These shifting demographics are opening up huge opportunities for the food and drinks industry – and, at the same time, throwing up new challenges that need to be tackled quickly and innovatively.

The developing worldEconomic growth, urbanisation and the rising purchasing power of a new global middle class are driving demand for packaged food and beverages, particularly in the developing world. Asian markets have driven the largest share of Tetra Pak’s growth in recent years, with the burgeoning middle class demand for FMCG products accounting for a 50% increase in packaging material over the past six years (80% if you include the Middle East).

We have seen a big rise in demand for products unique to these areas and ethnicities, but also a surge in demand for prod-ucts traditionally consumed as staples in the UK, such as dairy products. For example, according to Tetra Pak’s annual Dairy Index report, which tracks world-wide facts, figures and trends in the global dairy industry, con-sumption of dairy products by low-income consumers in devel-oping markets is forecast to increase from about 70 bln litres in 2011 to almost 80 bln litres in 2014. In the coming years, many of these consumers are expected to switch from drinking ‘loose’ milk to packaged milk. Therefore, the onus on the packaging indus-try has been to move towards affordable, smaller package sizes and portion packs to provide con-

venient products for these new consumers.

While this booming new con-sumer base offers great growth opportunities for brands, growing consumption levels can also lead to significant environmental issues. Brands have an important role to play in providing products that minimise environmental impact, while engaging consum-ers with important issues like recycling and food waste. The packaging industry continues to invest in minimising the impact of existing packaging materials and developing innovative alter-natives. For example, at Tetra Pak we have developed a range of bio-based caps, made from plant-based polymers – a renewable material. Cartons are also recyclable.

Developed world trendsIn developing markets the expanding consumer base pres-ents the biggest opportunity for food and drink brands, but in developed markets, it is the changing lifestyle of existing consumers that is driving inno-vation in the industry.

In Europe and the US, shifts like a rapidly ageing population, changing consumption and eat-ing habits and the push towards healthier eating to counteract rising obesity levels are having a big impact on product development.

We are seeing changing con-sumer demographics, and the rise of personalised consump-tion patterns leading to demand for more specialised products and packaging that meets spe-cific needs. There is growing demand for convenient, on-the-go packaging, often with re-sealable caps, as people contin-ue to consume products throughout the day or on the

Demographic challengesMike Jarvis, portfolio manager at Tetra Pak, gives a global view of the changing trends expected to drive innovation in the food sector over the coming year and beyond.

“Brands have an important role to play in providing products that minimise environmental impact, while engaging consumers with important issues like recycling and food waste.”

BY MIKE JARVIS

© Informa UK Ltd 2014 - fOODNEWS® April 2014 11www.agra-net.com


move rather than at set mealtimes. Similarly, the rising purchasing power of an ageing popu-

lation is steering product and packaging development towards the needs of older consumers. Packagers are balanc-ing the need to make packaging easier to open and use, while continuing to protect the product inside. For example, at Tetra Pak, designing packaging that is easy to hold and open is a core part of our development process. We have worked closely with the Swedish Rheumatism Association (SRA) to make sure our cartons are easy to open for those with reduced hand strength (including children, the elderly, and those suffering from rheumatics or injury), and several of our packs have been accredited by them.

From a product development perspective, we see trends that are popular in the US catch on here in the UK, and nowhere is this more evident in recent years than in the health food category. More health-conscious consumers, alongside continuing bad press for ‘unhealthy’ foods, has led to a rise in health-boosting, reduced-fat and fortified prod-ucts on the market, on both sides of the Atlantic.

Health-enhancing drinks, such as coconut water, vitamin-enriched waters and juice, have experienced huge growth area over the past few years, with sales of coconut water, particularly certain recognisable brands such as Vita Coco, booming all over the world. Globally, the number of prod-uct introductions in the coconut water category has more than quintupled (+540%) in the past five years, while here in the UK, Chi coconut water, one of our customers, recently announced a 500% increase in growth since last year.

The responsible consumerGlobally, we expect that, through education campaigns and growing media attention, we’ll see increasing consumer demand for products that are sourced ethically, are easier to recycle and that minimise waste wherever possible.

Here in the UK, there is evidence to suggest that consum-ers are placing more importance on the environmental impact of the products they choose.

We found in some of our recent research, conducted in both mature (France, Germany, Japan, UK and the US) and developing (Brazil, China, India, Russia, South Africa and Turkey) markets, that a number of consumers are willing to pay more for packaging that lives up to their environmental expectations. For example, over half (54%) of UK consum-ers are willing to pay up to 20% more for milk in environ-mentally sound packaging.

Even more encouragingly, the data also found that half (57%) of consumers in developing markets said they would buy environmentally friendly products to help reduce the impact of their purchases. While the number of those sorting their packages for recycling was lower than in mature mar-kets, the data gives us cause for optimism, with these con-sumers demonstrating high levels of engagement with envi-ronmental issues.

As the global market opens up even further, brands face a dual challenge of providing relevant products that meet the needs of a diversifying consumer base, while minimising the environmental impact of growing consumption and engaging new consumer audiences with environmental issues like recycling and food waste. In this time of huge opportunity and change, our focus needs to be on educating all consum-ers on the need to reduce, reuse and recycle, while providing the right products that allow them to do so.

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India’s packaged juice market has charted a high growth trajectory, thanks to its easy availability, anytime-anywhere consumption and convenience, according to IndiaRetailing.com.

Within the beverages market, the fruit-based beverages category is one of the fastest growing categories, and has grown at a CAGR of over 30% over the past decade. As of March 2013, the Indian packaged juices market was valued at INR11.0 billion (USD183 million) and projected to grow at a CAGR of some 15% over the next three years.

In volume terms, the juices and soft drinks market was last estimated at about 1.2 bln litres, and the fruit beverage sector is growing at about 25% annually. Per capita consumption of pre-packed juices and juice drinks remains very low, however, at

about 0.6 litres per year (compared with 10.6 litres/year for China, and an astonishing 48.1 litres/year for the Netherlands). And mango is far and away the most popular flavour.

The packaged fruit juices market can be divided into three sub-categories: fruit drinks, juices and nectar drinks. Fruit drinks, which have a maximum of 30% fruit content, are the highest-selling category, with a 60% share of the market. Frooti, Jumpin, Maaza, etc. are the most popular products in this category. One hundred per cent fruit juices, on the other hand, hold a 30% market share at present. In contrast, nectar drinks with a 25-90% fruit content account for only about 10% of the market.

The rising number of health-conscious consumers is giving a boost to fruit juices; it has been observed that consumers are

shifting from fruit-based drinks to fruit juices as they consider the latter a healthier breakfast/snack option.

Dabur is the Indian packaged juices market leader with its Real and Real Activ brands. Other players include Parle, Fresh Gold, and Godrej.

Other brands of fruit juices and drinks include Frooti, Appy, Mazza, Minute Maid, Slice, Fresh Gold and Del Monte. Considering the attractiveness of the segment, diversified consumer food companies such as ITC are working towards making a foray into packaged juices.

The global majors, Coca-Cola and PepsiCo are also present in the Indian market, with brands familiar elsewhere but tailored to the Indian market. PepsiCo’s Tropicana, for example, is better known in India as a juice drink rather than as a pure NFC juice (as it is, for example, in Europe).

According to local market studies, the most preferred pack size is the individual (small) pack which is convenient, and easy to carry and consume. These are in great demand as out-of-home consumption is on the rise. TetraPaks are most popular among manufacturers as well as consumers. Some companies are also offering their products in tins (eg Del Monte) and PET bottles (eg Mazza); however, they are more expensive than TetraPaks, which adds to production costs, and, as a result, affects the market price.

Fruit juices have created a space for themselves in regular household menus, as a part of a family’s breakfast, social gatherings, and evening snacks. As a result, consumers are picking up multiple family packs at one go, which is an emerging

BY NEIL MURRAY

Mango Central

“The rising number of health-conscious consumers is giving a boost to fruit juices; it has been observed that consumers are shifting from fruit-based drinks to fruit juices as they consider the latter a healthier breakfast/snack option.”

Not only does India produce more mango than any other country in the world, but the flavour is to be found in every soft drinks sector.



consumption trend.There are several reasons

behind the growth of the Indian packaged juices category: changing consumer lifestyles, increased health awareness, hygiene concerns, the growing category of informed buyers, rising disposable incomes, booming modern retail, habitual purchase, and introduction to new flavours.

Juice powdersIndia is still one of the strongholds of the powdered juice market (Latin America is one, the Philippines is another). Juice powders are extremely cheap, and can be reconstituted anywhere there is fresh water, but the margins on such products are not high and the consumer is easily swayed or deterred by a price change of just a few couple of rupees. Rasna is the brand leader here, but Rasna decided to go upmarket a couple of years ago with ready-to-drink (RTD) beverages, and launched its Ju-C brand in 2013, with apple, orange, guava, pineapple and mixed fruit varieties.

Even the international majors sell powdered juices in India: Cadbury India sells the long-established Tang brand (and added a mango variant in 2012) and Coca-Cola has established a

separate business unit for its powdered drinks, fruit juices, still drinks, energy drinks, mixers and ice teas, in order to separate them from its carbonated soft drinks.

Among all the challenges, it is difficult to control the cost of production at the price points of juices, primarily because of rising food inflation. The continuous, year-long supply of raw materials, and the non-stop production of juices for the full season, is another production-linked issue which needs to be managed carefully. Also of vital importance is controlling transport and logistics costs.

Packaged juices are gradually cementing their place in the urban household in the metros and Tier I cities; however, replicating the same success in Tier II and III cities is still a struggle as residents in these regions still prefer fresh juices over packaged ones because they are comparatively cheaper, and also in sync with the traditional belief that juices are best consumed freshly pressed.

It is appropriate to say that the packaged juices market in

India is still evolving. As there

are many national and international brands on the verge of succeeding and expanding further into the field, new entrants can also cash in on this opportunity by positioning/promoting packaged and bottled fruit juices as part of the consumers’ daily diet. Simultaneously, it is critical to ensure affordability for consumers, while maintaining hygienic quality throughout the year.

“Packaged juices are gradually cementing their

place in the urban household in the metros

and Tier I cities; however, replicating the same

success in Tier II and III cities is still

a struggle.”

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Innovation in global fruit juices and smoothies is swinging back to Europe, according to a new report from Datamonitor. Europe has overtaken Asia-Pacific, says report author Melanie Felgate.

In 2012, 53% of juice and smoothie product innovation came from Europe, compared with 19% in Asia-Pacific. “There has been a shift in innovation in

the last five years, with Europe accounting for a larger proportion of innovations, and Asia-Pacific showing some decline,” says the report.

Juices and smoothies innovation is “notably limited” in North America, accounting for just 13% of new launches in 2012; only slightly above South and Central America (11%). Fruit drinks and 100% fruit juice

products account for the majority of new innovation globally, with 76% of juice and smoothies innovation coming from these two sub-categories. Globally, though, the fastest-growing and largest category is that of juice drinks, with a 0-29% fruit juice content. These drinks have a 30.9% share of the global juices and nectars market, compared with 26.7% for pure fruit juices.

New techniquesWhile pure fruit juices are generally seen as healthy products, there are concerns about their sugar content, and they face growing competition from functional drinks.

“These products have greater flexibility in relation to formation,” points out the report, adding that this presents an opportunity for fruit juice manufacturers to develop juices with added health-enhancing ingredients. The report also notes that pasteurisation by high pressure processing (HPP) preserves juice while retaining nutrients and a fresher taste to create a healthier, more premium offering.

BY NEIL MURRAY

Europe leadsIn juice innovation and research and development, at least. Innovation appears limited in the US.

“Pasteurisation by high pressure processing preserves juice while retaining nutrients and a fresher taste to create a healthier, more premium offering. However, Datamonitor also warns against expecting too much from HPP as regards on-pack claims.”

Germany, 9.2

Japan, 8.2

Spain, 5.1UK, 4.8

France, 4.2

Mexico, 3.5

Russia, 3.4Poland, 2.6

TOP 10 JUICES, SMOOTHIES & NECTARS MARKETS BY VALUE (USD BILLION 2012)

SOURCE: Datamonitor

30.9%

26.7%

15.4%

15.3%

9.1%

2.3%

0.2%

Fruit drinks (0-29% juice)

100% juice from concentrate

100% NFC juice

Nectars (30-99% juice)

Vegetable juice

Fruit-based smoothies

Dairy-based smoothies

GLOBAL JUICES, SMOOTHIES & NECTARS MARKET SHARE BY CATEGORY 2012

SOURCE: Datamonitor



However, Datamonitor also warns against expecting too much from HPP as regards on-pack claims. “It is open to debate whether products using HPP can truly claim to be ‘unpasteurised’ or ‘raw’, however, as a class action suit has recently been filed against Hain Celestial Group’s BluePrint brand for making such claims,” says the report. “It is argued that the process involved in HPP denatures the fruit and vegetable ingredients in such a way that they can no longer be considered raw in the true sense of the term.”

Some manufacturers are claiming “high vitamins” for their products, and this claim appears on a “significant proportion” (18.1%) of new product launches in 2011/12, beaten only by the “no preservatives” claim, which appeared on 18.2% of new launches.

Juice products recently launched that offer functional benefits include Oxitien Inulin Plus, from Germany. This fruit juice contains 50% apple, 40% orange, 7% banana, and 3% inulin, a soluble fiber which is said to aid digestion.

In the US, there is Juve Maqui juice, a blend of maqui, açaí, blueberry, pomegranate and raspberry that is high in antioxidants and promoted to

have anti-ageing benefits, support the immune system and support healthy heart, skin, hair, and nails.

Labelling issuesDatamonitor also highlights the labelling problems that have afflicted certain premium NFC juices, such as PepsiCo’s Naked Juice (FOODNEWS September 3 2013). “By failing to ensure that the product formulation aligned with the healthy, natural image the Naked brand was portraying, PepsiCo faces potentially damaging consequences as health-conscious consumers lose trust in the brand,” says Datamonitor. “It remains to be seen how much impact the removal of “all natural” from Naked will have on sales, but it is likely to be damaging since the brand is no longer aligned with the increasingly important ‘fresh and natural’ trend.”

Following a dip in 2010, organic juice sales have recovered. In 2008, 9% of new launches were organic, compared with 12% in 2013. The problem here is that organic products are perceived as expensive, and manufacturers face the challenge of convincing consumers that they are worth the extra. This could be possible.

“Amid ongoing debate over whether fruit and vegetables grown organically are in reality any healthier than conventional produce, consumers continue to

attach a healthy ‘halo’ to them, meaning organic juices and smoothies are viewed more favourably by many,” points out Datamonitor.

There is better news on cost, in view of the fact that raw material price increases are having an effect on retail prices. Consumers now regard juices as everyday staples and thus are less prone to cutting back on them when money is short.

However, the report notes that cheaper private label products are having an effect on branded sales, especially as private label suppliers have “significantly improved the range, quality, and packaging of their offerings”.

Products are branching out to address issues of personalisation (e.g: for kids), health (e.g: cholesterol lowering), visual appeal (e.g: glitter) and flavour innovation (e.g: purple carrots).

Switzerland, 124.3 Finland,

117.7

Norway, 117.1

Germany, 112.1

Spain, 109.8

Australia, 109.2

UAE, 103.5

US, 103.2

Sweden, 97.1

Netherlands, 87.1

TOP 10 JUICES, SMOOTHIES & NECTARS MARKETS BY PER CAPITA EXPENDITURE (USD) 2012

SOURCE: Datamonitor

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The Middle East is regarded as a potential gold mine by many in the fruit juice and soft drinks sector. It is perceived as affluent (oil-rich, even) and consumption of alcoholic drinks is either banned entirely, or frowned upon.

However, the picture is not as rosy as it may seem. For one thing, the largest countries in the Middle East (Egypt is a prime example) do not have the disposable income for pre-packed pure fruit juices, and of the countries that are affluent, many (such as the Gulf states), have extremely small populations, so however attractive the per capita consumption may appear, in real terms it is not a vast volume.

Saudi Arabia, however, ticks

all the right boxes. It is fabulously wealthy, it has a population of over 29 million, and that population is young: nearly half are aged 24 and under. This generation is being called Generation Alpha, and are a prime target for juice and soft

drinks makers. It is more environmentally aware, and communicates using social media. Many consumer goods companies now have their own presence on social media, allowing the young to identify with them and their products.

BY NEIL MURRAY

Splintered marketSaudi Arabia is one of the largest countries in the Middle East and has a booming juices, nectars and soft drinks market.

“Saudi Arabia ticks all the right boxes. It is fabulously wealthy, it has a population of over 29 million, and that population is young: nearly half are aged 24 and under.”

172 184 201 204 218 231 245 255 273 290259 246 273 281 309 331 354 382 413 442

485548

629 654 688 715772

842909

972

0

200

400

600

800

1000

1200

1400

1600

1800

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Still drinks Nectars Pure juices

SAUDI ARABIAN JNSD GROWTH 2008-17 (MILLION LITRES)

SOURCE: Al-Rabie


The country’s retail market is ranked 16th globally, with the highest consumer confidence in the MENA region. Its population are amongst the most eager consumers globally, and the retail market is growing by an astonishing 13% annually. In addition, it should never be forgotten that the country receives 13 million pilgrims annually.

Shopping has become a recreation and much money has been invested in shopping malls. A higher disposable income has boosted grocery sales, especially of convenience and quality products.

Saudis also have a sweet tooth. Juices, nectars and still drinks have all been growing well, with a CAGR of 5% for nectars and 6% for pure juices. Still drinks, however, are showing the strongest CAGR of all: 9%. Volume sales in 2012 for pure juices, nectars and still drinks were 309 mln litres, 218 mln litres and 688 mln litres respectively.

The total JSND market is currently worth SAR7.1 billion (USD1.9 bln), broken down as follows: juices SAR1.5bln; nectars SAR1.7bln; soft drinks SAR3.2 bln, plus SAR0.7 bln for drinks sold through the foodservice sector.

Self-service and small corner shops hold 39% of sales. Wholesale stores are next with

32%. Hypermarkets have 21%, and HoReCa (foodservice sector) accounts for 8%.

The wholesale market sector is peculiar to the region. It is very traditional, with some 1,250 such stores across the country, and deals only in long-life products. The stores stock either high volume products with low margins or highly popular brands. As their name suggests, some have their own distribution to smaller grocery stores supplying a wide range of products.

They demand continuous trade promotion, they have no loyalty to any brand and are “notorious in brand substitution as long as it’s to their benefit”, according to a major juice and soft drinks manufacturer in the country. Most of the top organised chain stores have their origins as wholesalers or are still active in this segment.

However, as elsewhere, the Mom & Pop stores are under threat from the big organised retailers.

However, in the next few years to 2017, growth in nectars is expected to outstrip the other two categories with a CAGR of 8%, compared with 6% for pure juices and 7% for still drinks (single-serve packs are driving growth here). The total market is forecast to grow from 1.28 bln litres to 1.70 bln litres in the 2013-17 period.

Saudi Arabia is notable for the

fact that its top dairies are all in the soft drinks market as well, but they tend to concentrate on pasteurised juices and nectars rather than carbonated soft drinks and other shelf-stable beverages, because their cold chain infrastructure is ideal for distribution. Still drinks, for example, are almost all (97%) long-life products. Long-life nectars are also extremely popular.

In packaging terms, plastic cups are declining in popularity for single-serve (up to 600ml) packaging. Such packs tend to be used for very cheap items, because the packs are cheap themselves, and the Saudi market has moved beyond the entry-level type of product. Cartons, cans and glass bottles are growing strongly, and it is forecast that this sector will grow from its present volume of 926 mln litres to 977 mln litres by 2017.

For family packs (600ml – 2.0 litres), over the same time frame, glass bottles will hold onto their present volume of 19 mln litres,

while cartons and HDPE bottles will grow slightly, but the star performer will be the popular PET packs, which already hold most of the market with 248 mln litres. This will grow to 266 mln litres in 2017.

Distribution is difficult in the country, due to its size and far-flung population centres. A number of major brands remain regional for this very reason.

With 31 manufacturers and 61 brands in the market, consolidation is inevitable. The development of private label products by the retail chains is also likely.

Long life volumes

Long life market share

Short life volumes

Short life market share

Total 2013

JUICES 54 6% 177 50% 231

NECTARS 166 18% 165 47% 331

STILL DRINKS 706 76% 9 3% 715

TOTAL 926 100% 351 100% 1277

SOURCE: Al-Rabie

SAUDI ARABIAN LONG LIfE AND SHORT LIfE BEVERAGE MARKETS (MILLION LITRES)

“Distribution is difficult in the country, due to its size

and far-flung population centres. A number of major brands remain regional for

this very reason.”

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One has to tip one’s hat to the way the Brazilians have managed their massive FCOJ surplus. At the time of writing, Brazil’s inventory is down to around five months’ supply (but more of this later) and the Big Three processors in the country have been remarkably successful in keeping the price relatively high.

At the time of writing, the orange juice futures price is just short of USD1.52 per pound, equivalent to USD2,135 per tonne, and the Brazilian price for FCOJ is around USD2,200/tonne cfr duty unpaid Rotterdam. In autumn last year, the futures price was effectively identical and the FCOJ price was nearer USD2,350/tonne, so Brazil’s gentle policy of slowly reducing the price as time goes by is evident. But the fact that the futures price really hasn’t

changed, though it has certainly fluctuated, gives an idea of how the industry is thinking.

Futures jumped on storm warnings during the Florida hurricane season, as they always do, and jumped again whenever there was news of another downgrade of the orange forecasts in Florida and Brazil (and there were plenty), as they always do, but this is more indicative of speculators trying to make a quick buck out of one of the most volatile commodities out there.

Saner minds have assessed the size of the Brazilian inventory, which has been the major controlling factor for a year or more, and decided that given the very weak global markets for FCOJ, cuts in harvest size simply are not going to make any difference until that inventory is used up.

Yes, harvests are going to be down in both Brazil and Florida. The USDA believes that Florida will produce no more than 115 million boxes, and may downgrade that estimate further. Brazil’s earlier forecast are around 315 mln boxes for its harvest, but the country has since downgraded that to just 300 mln boxes. The Brazilian 2012/13 orange crop was 504 mln boxes, and in 2011/12, 554 mln boxes.

The fruit is expected to be smaller but higher brix content expected (in fact, Brazil has been suffering from a problem of brix levels that are too high rather than too low), but this is better than last season, when the brix levels were low. However, as Rabobank has pointed out, a global reduction in FCOJ demand of around 5% is expected this year.

Falling US demandThe US retail orange juice market is still tumbling. It was forecast that sales would bottom out this year, but as yet, there is absolutely no sign of that. “Retail orange sales in the upcoming season will depend largely on the price level,” says the FDOC, which has provided three price scenarios. Scenario 1 (middle or base price) posits that the overall retail orange juice price increases slightly from to USD6.29 per gallon in 2012/13 from USD6.20/gallon in 2013/14, a 1.5% increase. Scenario 2 (low price) envisages a price decline of about 1.5% (or nine cents/gallon) from the 2012/13 price; and Scenario 3 (high price) looks what will happen if prices increase by about 4.3% (or USD0.27/gallon) from the 2012/13 price.

This results in quite a wide variation: high juice prices will result in retail sales of 532.0 mln

BY NEIL MURRAY

Orange in bloomBrazil still has a large orange juice inventory, which is weighing on the issue of reduced production. And a lot of that inventory is being held in the US.

“Futures jumped on storm warnings during the Florida hurricane season, as they always do, and jumped again whenever there was news of another downgrade of the orange forecasts in Florida and Brazil.”



gallons, says the FDOC. A low price means 585.2 mln gallons. The FDOC is opting for the middle ground and mid-price, which forecasts retail sales of 557.5 mln gallons.

Last year, FOODNEWS said that it thought these figures were optimistic, and is still sticking to its own forecast of 550 mln gallons: the problem is that it is not just fruit juice sales that are falling. Carbonated soft drinks consumption is also down.

Energy drinks and sports drinks are doing well, but the soft drinks majors are already worried that the adverse publicity given to sugar-sweetened drinks (of any type) is going to have a long-term effect. And fruit juice contains sugar. Natural, it may be, but it is still sugar. Americans are drinking more water. This year, there was the first sign that calorie intake from soft drinks is declining in the US: 96 calories per day from CSDs and 32 calories from fruit juices, down from 106 and 36 calories, respectively.

There is still a problem with poor returns to farmers, and this may have as big an effect on fruit supply as disease. Brazilian orange growers are almost mutinous: about one-third of the country’s processing oranges are now grown by vertically integrated processors, which has reduced the amount of fruit they can supply, and farmers are giving up citrus growing in favour of sugarcane or maize, for biofuels. Once an orange grove is uprooted, it is effectively out of production for the foreseeable future. It can be replanted but it will still take six years before it starts producing viable quantities of fruit. So this is turning into a long-term issue.

The growers and the processors have tried to set up Consecitrus, an organisation to bring the two parties together and resolve their differences and (from the farmers’ point of view) guarantee a decent price for processing fruit, but Consecitrus has been bogged down in wrangling, and by the intervention of CADE, Brazil’s

regulatory watchdog, and it still has not yet got off the ground.

Even if it does, the suspicion is that the processors will be able to do their own thing regardless of what Consecitrus decides: they are more vertically integrated than they were a decade ago, and they have their own orange groves. They are not 100% reliant on the farmers any more: most recently, as of December 31 2013, Louis Dreyfus had a commitment to purchase a minimum of 114 mln boxes of oranges until 2027, down from a commitment of 132 mln boxes at December 31 2012.

Next, again, is the problem of disease. Greening is rampant. Research into curbing and eradicating the disease is under way in both the US and Brazil, and it seems likely that the industry will find a solution, but again for the foreseeable future, there is going to be a serious effect on orange production.

Then there is the problem of Brazilian costs. Fruit may be cheap but steel, energy and (especially) labour certainly is not, and the processors contend (with some justification) that they cannot control these costs. At least Brazil’s currency has

weakened, meaning (in theory) more reals per dollar with which to pay one’s labour bills.

InventoryBrazil’s FCOJ inventory is now down to about five months’ worth. In February, CitrusBR (the processors’ organisation) announced a reduction of 98,000 tonnes in its inventory over full-year 2013, compared with the previous year, down to around 550,000 tonnes. However, Brazil has been shipping more FCOJ to the US, despite the declining market there, and the inescapable conclusion is that Brazil is actually just relocating some of its inventory. It costs more to store FCOJ in Brazil than it does in North America and Europe, and holding stocks closer to end users means that suppliers can react quicker to demand.

This extra-Brazil inventory is still substantial. According to CitrusBR’s figures, it was still over 215,000 tonnes at the end of the first half of 2013. According to GTIS/Customs figures, Brazil exported over 180,000 tonnes of FCOJ to the US in 2013, more than double what it exported in 2012 and the highest export volume for at

least six years. Exports for the first two months of 2014 are down on the same period last year, but at 34,000 tonnes, are still substantial.

CitrusBR predicts that the total FCOJ inventory will be some 450,000 tonnes by the end of first-half 2014. This is based on a production estimate of no more than 850,000 tonnes of FCOJ (in São Paulo) this year, and assumes that exports in the first half of the year will remain the same as those in the second half of 2013.

How much inventory is still held in Europe and the US is hard to calculate, given that it will be in private hands, but rough calculations based on Brazilian exports to the US (still high) and US exports to Europe (still low), combined with still-falling US consumption, suggest that 100,000 tonnes may still be held in the US, and probably a similar volume in Rotterdam and Ghent in the EU.

Rabobank recently published a report predicting that by 2020, American and European demand for FCOJ will have fallen to about 1.1 million tonnes, compared with 1.5 million tonnes in 2007. Yes, demand for


NFC orange juice has stayed high in Europe – it is about the only thing that is keeping the Brazilian processors in business, and the difference between the FCOJ and NFC markets can be illustrated by the fact that customers enquiring about NFC juice have been told that they can indeed buy some, but only if they take a quantity of FCOJ with it.

True, there are new markets opening up in China and elsewhere, but the actual tonnage is still relatively small and the Chinese are only really interested in the cheapest low-quality juice, because it is almost all destined for soft drinks manufacture rather than for consumption as ‘drinking juice’.

And, in a move whose importance seems to have been overlooked, China has elevated its indigenous citrus industry (after it failed to live up to the expectations announced six or seven years ago) to a level of unprecedented national importance, by including it in the next national Five Year Plan. This means that the entire industry, from farmers to shippers of finished product, will benefit from special levels of state support and funding. The whole idea is to make China less dependent on imports.

The Chinese government has set a goal to cut down imports by 2020 to no higher than 50%

of the Chinese market from their present level of 80%. The Twelfth Five-Year Plan aims (these are its stated objectives) to improve farmers’ living standards, support the agricultural industry and create business opportunities between farmers and processing companies.

As part of this, the government will provide industrial land and cash help (or subsidies) to processors. This will allow them to stabilise their raw material supplies, ensure the quantity of supplies, and minimise raw material costs. For farmers, more agricultural land will be made available. This will improve fruit yields and quality, lower the cost of cultivation and stabilise their incomes. And it will make it very difficult now for foreign processors to enter the market.

However, there has never been a culture of drinking orange juice in China until very recently, despite the country’s massive citrus crops.

While Europe and North America have cut back their consumption of orange-flavoured beverages (between 2003-11, there was a 5.0% decline in Europe and an 18.6% decline in North America, based on consumption of FCOJ), Asia has seen growth of 17.3% to 240,000 tonnes of FCOJ from 212,000 tonnes. Much higher percentage

increases can be seen in the Middle East and Africa (58.7% and 54.5% respectively) but these involve far lower volumes: after North America and Europe, Asia is the largest market for FCOJ.

There is still no way that China can meet its domestic demand, even at present consumption levels, from its indigenous industry. The first notification that China was going to establish its own orange juice industry came in 2002, when the Chinese government announced that it was to invest about CNY3.8 billion (USD460 million at the then exchange rate) in the next few years to boost the orange (and animal-husbandry industries) in the Three Gorges to create jobs for hundreds of thousands of residents resettled as a result of the construction of the massive eponymous dam there. China estimated that it would take eight to 10 years to crank the industry up to a processing capacity of five million tonnes of fruit.

At the IFU conference in China in 2005, the timetable for Chinese juice production was outlined. It was forecast that by 2010, China would be making 800,000 tonnes of single strength equivalent (SSE) orange juice (or 145,000 tonnes of FCOJ), and this would increase to 1.5 mln tonnes in 2015 and 3.0 mln tonnes in 2020.

However, China’s output has fallen far below forecasts. According to USDA figures, China produced just 40,000 tonnes of FCOJ in the 2011/12 season. For comparison, the US produced 830,000 tonnes and Brazil 1.3 mln tonnes.

China’s production was a big improvement over the previous season’s 14,000 tonnes, and it reduced Chinese imports to 60,000 tonnes from 77,000 tonnes in 2010/11, but domestic consumption was still rising and hit 102,000 tonnes in 2011/12.

China is still a market for low juice content drinks – pure juice is relatively rare. Juice drinks account for 94% of volumes, and pure juice only accounts for 2.8% of the market. In the orange sector, pure orange juice holds 3.5% of the market, nectars hold 4.0% and low juice content drinks the rest. Three major manufacturers (Coca-Cola, Master Kong and Uni-President) hold three-quarters of the market.

“There has never been a culture of drinking

orange juice in China until very recently, despite

the country’s massive citrus crops.”

http://www.trisun.co.il



Since January 1 2014, developing countries have been subject to the EU’s new Generalised System of Preferences (GSP). The GSP is valid until December 31 2023. The number of countries and regions which are now entitled to the GSP has almost halved.

The reasons for this are as follows. Countries which have been classed as upper middle income economies by the World Bank for three years in a row, and so cannot really be considered developing countries anymore, do not qualify for the scheme.

The same is true of countries which have had a trade agreement with the EU for over two years, which on the whole either corresponds to, or is more beneficial than, the GSP.

It is not only the number of countries and regions that has changed. There were changes, albeit far less radical ones, with regard to the three forms of preferential duty. Like the old GSP, the new GSP recognises three kinds of preferential duty: GSP, GSP+ and Everything But Arms (EBA).

The key developments in these schemes are as follows.

GSP is, in a sense, the entry level of the scheme. Countries which qualify for the GSP enjoy tariff reductions on certain products. Products that are not considered to be sensitive have their duties reduced to 0%. For products which are sensitive, the ad valorem duty is cut by 3.5%. GSP also employs grading by sector: for particular products from particular countries, duty reductions are excluded.

GSP+ is a form of further development of the GSP. It offers countries with sustainable

development and responsible government, and which lack diversification and integration, additional discounts in the international trade system.

However, countries do not automatically qualify for GSP+, unlike GSP and EBA. To qualify, an application from a country is required. Unlike with the old scheme, such an application can now be submitted at any time. On first impression, this sounds like a good thing, but whether it will prove to be such in practice remains to be seen.

In the first round of GSP+ applications, this new development caused considerable disquiet because, among other things, potential applicants reacted to the development late, as we will discuss below.

In the old scheme, there were only two dates in a year when a country could enter the GSP+: January 1 and July 1. The corresponding application period was January 1-October 31 of the preceding year to qualify from January 1 and up to April 30 of the same year to qualify from July 1. This meant that all parties knew where they stood two months after the last possible application date.

GSP+ offers more extensive tariff reductions than GSP. Countries which are subject to GSP+ are not subject to duty on certain products. Unlike GSP, GSP+ does not use grading by sector. This was not the case in the old scheme, when GSP and GSP+ alike used sector grading. This is, of course, a real advantage of the new scheme.

Among many others, the products on the list which will receive GSP+ status include: all products under the commodity code 20 (Preparations Of

Vegetables, Fruit, Nuts, Or Other Parts Of Plants), which includes canned fruits and fruit juices; 1604 (Prepared Or Preserved Fish; Caviar And Caviar Substitutes Prepared From Fish Eggs), which includes canned fish; 07, which encompasses many fresh, chilled and frozen vegetables, and 08, which includes many fresh, dried and frozen fruits and nuts.

The full list of which products get GSP and which get GSP+ can be found in appendices V and IX of Regulation (EU) No. 978/2012, published October 25 2012.

EBA is a special regulation for the least developed countries. Countries which qualify for this enjoy 0% duty on all products except weapons.

Since the new scheme began, a number of countries have been subject to sector grading, meaning that certain products for certain countries are excluded from the scheme. In the food sector, this affected certain products from China and Thailand, and in fact, some from Costa Rica and Ecuador. The reasons for this will be discussed later.

The list of products from China and Thailand which were ruled out of the scheme on January 1 is long.

Chinese products subject to sector grading are fishery products (HS code 03), vegetables (HS 07), fruit and nuts (08), spices (09), nut flour (1106), processed fruit and vegetable products (20) and various food preparations (21).

Products from Thailand included processed fishery products (1604, 1605), processed fruit and vegetables (20) and various food preparations (21).

Certain products from Costa Rica and Ecuador were almost excluded from the scheme – in theory, vegetables (07) and fruit

BY CLAUDIA TOUSSAINT

The devil is in the detail On January 1 2014, the European Union introduced a revision of its wide-reaching preferential tariff scheme, the Generalised System of Preferences. This threatened to affect everything from Costa Rican pineapple to Ecuadorian tuna. Claudia Toussaint, a lawyer at Hamburg’s renowned trade association the Waren-Verein der Hamburger Börse, explains the changes.

“GSP+ offers more extensive tariff reductions than GSP. Countries which are subject to GSP+ are not subject to duty on certain products. Unlike GSP, GSP+ does not use grading by sector. This was not the case in the old scheme, when GSP and GSP+ alike used sector grading. This is, of course, a real advantage of the new scheme.”



and nuts (08) from Costa Rica and processed fishery products from Ecuador (1603, 1604, 1605) would have been affected. This is because the decision regarding Costa Rica and Ecuador’s application for GSP+ protection, along with the applications of several other countries, was accepted literally at the last minute, and the so-called sector grading is not used if a country is subject to GSP+.

The decision about which countries would fall under GSP rules on January 1 was not decided until mid-December 2013. The corresponding regulation was not even published in the official journal of the European Union until January 4, and was valid retrospectively to January 1. Yet, the countries concerned had submitted their applications as early as mid-May.

More than half a year passed between application submission and the decision. In this case, the slow decision certainly had something to do with the fact that the European Commission suggested all the applicant countries to the Council and Parliament (which must now be included in the decision) in one bloc. The decision about the applications could only be made for all of them together and, in several quarters, there were reservations about one of the countries.

We can be sure that the decisions about corresponding applications will not be made within two months, as was the best case scenario with the old scheme, because of the incorporation of the council and parliament.

Among the parties with an economic interest, the uncertainty about the late decision on the applications was considerable. This was particularly true of Ecuador. Ecuador was threatened with sector grading for its fishery products if its application was rejected. In that instance, it would have been excluded from tariff reductions of any form. For tuna, for instance, duty would have risen from its GSP+ tariff rate of 0% to a third country tariff rate of 24%!

The uncertainty was not quite as significant for Costa Rica, which had also made a request for GSP+. The reason for this was that, unlike Ecuador, Costa Rica already had a trade agreement with the EU.

Since January 1, the GSP+ regulations have applied to Armenia, Bolivia, Costa Rica, Cape Verde, Ecuador, Georgia, Mongolia, Peru, Pakistan and Paraguay.

Since February 28 2014, it has also applied to El Salvador, Guatemala and Panama, which did not submit their applications until October 2013. Here, the decision was nonetheless made within four months of the application. As with Costa Rica, the uncertainty was less severe because all three have a trade agreement with the EU.

The jury is still out on the Maldives’ GSP+ application, which is pending indefinitely, and the application of the Philippines, which was not submitted until mid-March 2014. For the Philippines, GSP+ status would mean that canned pineapple and canned tuna could be shipped to the EU duty-free.

It is not possible to say yet whether the Philippines will get GSP+ status, and if so, when they will get it. The Official Journal of the EU will continue to provide up-to-date information about these countries’ applications.

Once the Commission’s recommendation has been published, it generally takes around four months until the final decision is made.

On February 24, Azerbaijan and Iran left the scheme as a whole. From January 1 2015, China, Ecuador, the Maldives and Thailand will follow. All of these countries will then be subject to third country duties. In each case, the exclusion is because the World Bank has deemed these countries to be upper-middle income economies for three years in a row.

The new scheme sets in writing what until now had merely happened in practice: the test of whether a country should be excluded or not based on the

World Bank criteria now happens through the European Commission by January 1 of each year. This is new. The exclusion itself does not happen until a year after the publication of the decision. This gives all interested parties the necessary time to plan ahead.

In summary, the switch to the new GSP+ for developing countries, with its numerous changes, was rather demanding for the interested parties, even though most of these changes were announced some way in advance.

In particular, the very late decision about the first applicants did end up causing some concern. This was especially true for Ecuador.

This said, now that the transition to the new scheme is finished, we can assume that everyone involved will be able to live comfortably with it until 2023.

RHODES FruitExportADNov2013 11/25/13 6:21 AM Page 5

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C M Y CM MY CY CMY K

“We can be sure that the decisions about

corresponding applications will not be made within two months, as was the best case scenario with

the old scheme, because of the incorporation of

the council and parliament.”

http://www.rhodesfoodgroup.com


It was almost as if the industry were cursed: first Greece was hit by hailstorms, then the US crop turned out to be small, then both South America and, to a lesser extent, South Africa were hammered by the elements.

This season, the combined total of canned peach output by all the major producers came to 59.02 million basic cases. Last year, the figure was 66.03 mln. This means that 7.01 mln cases of peaches are missing from the market this year. Unfortunately, it is difficult to tell how this compares with apricots and pears because not all countries reported data for these products. Moreover, for these two, important producers such as Italy and Morocco are not represented.

The graph of raw material pricing shows that these difficulties made themselves keenly felt financially, too. This graph was created with the numbers presented at CANCON12 in South Africa in March.

Top global exporter, Greece, saw a hike in raw material prices from USD343 per tonne in 2012/13 to USD473/tonne in 2013/14. Greek prices have been converted from euros to dollars at an exchange rate of 1.372, since

the original data were quoted in euros. This is the same conversion rate as Spain, the other Eurozone country, used.

Greece has fluctuated from being the second most expensive origin to the sixth and back to the third most expensive (we can assume – the manufacturer had not supplied data this year for Australia, but it was consistently the most expensive for the preceding four years). Greece’s pricing has risen remarkably in recent years, from USD247/tonne to USD473/tonne, after slumping in 2009. At this rate, it is hardly surprising that Greek farmers are said to be planting like there is no tomorrow.

At CANCON12, Costas Apostolou of the Greek Canners’ Association told the industry that, according to his observations, Greek farmers were planting significantly more peaches, which could push fruit output up to 600,000 tonnes by 2016/17 (see

page 9). If this happens – and this is far from certain at this stage – we can expect the upward price trend to reverse.

Certainly, Greece has had more peaches in the past. In 2009, the planted area was 21,200ha. This has now dropped to 15,000ha.

At USD900 per tonne, Argentina’s peach raw material price was the highest price paid by any of the CANCON reporting countries in at least the past five years. Severe frosts in September and October and heavy rains in February slashed the total Argentine output to around a quarter of the usual volume, at 45,000-50,000 tonnes instead of 200,000. The sky-high raw material price is partially a result of the country’s closed economy: since it cannot easily import canned peaches, the market is dependent on domestic goods, making the shortage all the more keenly felt.

Here, again, prices will come

BY AMY BOOTH

Fruit for thought

“At USD900 per tonne, Argentina’s peach raw material price was the highest price paid by any of the CANCON reporting countries in at least the past five years.”

The year 2013 was not one which will be remembered favourably by the deciduous fruit canning industry.

CANNED fRUIT PRODUCTION IN BASIC CASES*


Season

2008/09 2009/10 2010/11 2011/12 2012/13 2013/140

100

200

300

400

500

600

700

800

900

Pric

e in

USD

Canning peach prices (USD/tonne)

SOURCE: CANCONCountry

Argentina

Australia

California

Chile

China

Greece

South Africa

Spain

CANNING PEACH PRICES (USD/TONNE)

Season

2008/09 2009/10 2010/11 2011/12 2012/13 2013/140

100

200

300

400

500

600

700

800

900

Pric

e in

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Canning peach prices (USD/tonne)

SOURCE: CANCONCountry

Argentina

Australia

California

Chile

China

Greece

South Africa

Spain


down if the industry has more normal production next year. Speaking at CANCON, Roberto Lamm of CAFIM said that demand would probably recover as this happened.

The increase is not just in countries which have been battered by the elements, though. For every reporting country except possibly Australia, prices for fresh peaches are better than they were five years ago, and the upward trend has been really quite striking. Between 2008/09 and 2013/14, prices rose by 23% in China, by 9% in California, by 32% in Greece, by 126% in Spain, by 63% in South Africa, and by 143% in Chile. The difference in Australia was 10%, measured up to 2012.

It should be noted that some of the data for the southern hemisphere producers was still an estimate because their packs were still running when the conference was held. However, it had at least started in all the areas concerned.

The weather has certainly

played a part in this, but there is still a distinct upward trend even when measuring to the 2012/13 harvest. The proportion of this which stems from rising wages and exchange rate fluctuations will vary from country to country, but it is a positive message for peach farmers.

This season, the most expensive raw material was had in Argentina, followed by (probably) Australia, then Greece, Spain, Chile, China, California and South Africa. There are a number of interesting developments here. Argentina has gone from the cheapest to the most expensive producer. Until last year, Chile was the cheapest producer. Greece and Argentina have both seen considerable price drops over the past decade, but in both instances, this has recovered.

It is interesting to note that China, often portrayed as a cut-cost producer threatening other industries, has been faced with one of the highest prices. If the growing trends towards

urbanisation and improved fresh market logistics continue, and there is no reason to believe otherwise, its position in the market may be re-evaluated.

The situation for pears is similar. Prices have risen in Greece, California, the Pacific Northwest, China, Argentina and South Africa. This said, the gains have been slight, especially in the Pacific Northwest. Spain held steady this year. Bucking the trend is Chile, where raw material for the 2013/14 season was priced at USD165/tonne, down very slightly from USD170/tonne in 2010/11. Australia may well have declined, too.

Many countries showed an uptick in apricots this year, probably because they were affected by the same issues as the peaches. This is certainly true in Chile, for instance. However, apricots are probably the fruit with the worst outlook; prior to this year, declines had been seen in Spain and Greece, while

Australia, California and South Africa were flat or almost flat. Declining interest has been a common theme in the canned apricot market in recent years, although some demand may have emerged for apricot to replace peach this year.

As far as canned peach production is concerned, Spain’s output is larger than that of either Chile or Argentina this year, which goes to show the extent of the frost damage in these countries. In a similar vein, Greek production outstripped that of the US in 2013 for the first time in several years, at 13.5 million cases compared with 13.1 mln.

After this year’s hail, Greece slid back to 7.8 mln while the US came to 13.5 mln cases. To see how production stacks up in a more normal year, please view this article online. One final thought is that this year, China’s 27.09 mln case pack is only just less than the rest of the reporting countries added together. Watch this space.

http://www.kronos.com.gr



It comes as no surprise that Thai fresh pineapple is expensive at the moment. It has gone in peaks and troughs for a long time. Nonetheless, THB8.0 or more per kilo is exceptionally expensive.

The industry suffered from the perfect storm during the 2013/14 winter crop. Packers went into the season from a short summer crop. Winter fruit production was severely reduced: initially, the industry seemed to think that the crop was just delayed, and that once the fruit really started to

come on stream, the shortage would be relieved.

However, packers waited and waited, and the peak never came. “There was never really a peak,” one packer said after the crop. “There was one week where the fruit supply was 7,000-7,500 tonnes per day, and I heard 8,000 tonnes/day from one person.”

While they were waiting, though, Thailand was hit by torrential rains. Judging by contacts’ reports, these did not wipe out plantations wholesale, but they certainly did not help, either. Workers could not get to work, some factories closed, and the fields were muddy.

Thai weather continued to be unfavourable to pineapples: after November’s downpours, Prachuab Khiri Khan moved into a dry spell. “It was very wet in November thanks to the remnants of a few different tropical cyclones, and conditions turned very dry thereafter,” Steven Silver of MDA Weathersystems said. “Prachuab Khiri Khan in particular recorded no rain during December or January – these are typically dry months but it’s atypical to see zero rainfall.”

As far as fruit prices were concerned, the situation was exacerbated in January, when poor weather in the Philippines reportedly prompted Dole to buy up raw material in Thailand (FOODNEWS February 7). This brought raw material prices up to THB7.3/kg. Meanwhile, many contracts were delayed, some by up to as much as eight weeks, as processors ran well below capacity.

At the time of writing, the fruit price has passed the THB8.0 mark. During the off-season, factories have either been operating at a fraction of their full capacity, or not operating at all. This is a market that has long been prone to fluctuations, but some are saying this is the worst supply situation the industry has

seen in 20 years. “This is the big one,” a buyer said.

Ghanyapad Tantipipatpong of the Thai processor, SAICO, commented: “Certainly, this is worse than in the past, with high fruit price but the market not reacting to accept the high price.”

Unfortunately, customs figures suggest that this shortage was not matched by an eagerness to buy in 2013. For most of 2013, export values were tracking below 2012, even though 2012 was a year of over-supply (FOODNEWS March 3).

Going into the summer crop of 2014, the shortage is really starting to bite. The industry has no stock at all, contracts are very delayed, and after such a long shortage, FOODNEWS’ contacts are finally starting to say it is a question not of price, but of availability.

Market demandSo where does all this leave us? Canned pineapple is a mature market. Some markets are growing, but none are booming. In last year’s supplement, Algeria and Egypt were identified as growing markets, but figures for 2013 indicate a decline in demand. The largest importers are the EU, the US, Russia and Japan. All have seen imports drift downwards over the past decade, although this may also be down to factors such as other markets taking a greater share, varying crop sizes, and other uses for the fruit. Similar is true of many of the other large markets.

“[Canned pineapple] may be a mature product that needs more innovation and promotion to boost sales,” Tantipipatpong said. “I believe demand is stable in main markets such as the US and Europe, but there is growth in emerging markets, including China.”

We can probably expect volumes to decline in most markets this year, given the

BY AMY BOOTH

Pineapple problems

GHANYAPAD TANTIPIPATPONG



severe shortages. Demand will recover with supply to some extent, but the industry must be careful not to burn its bridges. We know that canned fruit is a category for which sales can decline if we are not careful. “I am not able to predict how long the situation of short supply and high prices will continue. Certainly this situation is not good for the Thai industry as the category may reduce if we do not have products to supply,” Tantipipatpong commented.

Del Monte dealThe Philippines will probably ship significantly more to the US, since Del Monte Pacific has just acquired Del Monte Foods. As was noted at CANCON12, this was a positive development because it put the company back into the hands of a parent company that is in the food business.

China is one emerging market, but it is a slow burner. The trend for convenience, the growing urban population, and the hotel sector are pushing demand, but many consumers still believe that canned foods contain harmful preservatives. It is good that the growth is there, but if its growing demand for canned peaches is anything to go by, imports will probably not explode anytime soon.

As for the present situation, FOODNEWS’ contacts believe that we will continue to see low supply and high prices until the end of the year. The summer crop is shaping up to be small, and the pipelines are completely and utterly empty. If farmers planted when the price started to move up in early summer 2013, some fruit may come on stream in the 2014 winter crop, but it appears a real change is not expected until 2015 at the earliest.

Notably, it is now that raw pineapple has hit THB8.0 per kilo, so a watchful eye should be kept on the supply in 18 months’ time.

Difficult dataUltimately, debates about supply and demand for canned pineapple

are often limited to nebulous generalisations along the lines of “the Middle East is a growing market” or “China has been buying a lot recently”. There is little sense of perspective and little by way of hard numbers.

The reason for this is that the pineapple market operates with far less data than many other markets. In FOODNEWS’ experience, there are few fruit products as large as canned pineapple where the statistics are so scarce. To take another large canned fruit export market, the peach industries in Greece and the US, industry associations there are usually able to say approximately what the pack size will be after each crop, as well as commenting on planted acreage and yields.

Over a million tonnes of canned pineapple are exported every year, but unlike canned peaches, pears and apricots, there is no large, well-publicised conference where statistics on everything from planted acreage to empty can prices are shared. The FAO has statistics on planted area, yield and production quantity, but these lag far behind the current market: at the time of writing, we are nearing the end of 2014’s first quarter, and the most recent FAO statistics are for 2012.

This lack of certainty about quite how much pineapple is planted, where it is, and what the yields are, is one of the reasons why no-one really knew whether we were looking at a delay or a small crop in winter 2013. Unfortunately, it seems to be the nature of the beast for a crop produced mainly by smallholders.

At Anuga in October, Tantipipatpong spoke to FOODNEWS about why these uncertainties remain. “We have [statistics from] the Office of Agricultural Economics (OAE) and the Ministry of Agriculture and Agricultural Co-operatives,” she explained. “They do give statistics on plantation area for various crops, but it is very difficult to get accurate information, because pineapple is a shrub. It’s not a tree. You take

satellite photos in the areas of cassava, sugar cane and pineapple – they are grown in the same area – they are the type of crop that you keep on planting every 12 months. So when you take a satellite photo, it’s very difficult to tell whether the young bushes are pineapple or something else.

“So it’s always an estimate from the satellite photo. The only time when they know for sure that it’s pineapple is when it’s fully grown and has fruit. Then, it’s a slightly different colour. Otherwise, you get the shrub, and from the top, they can’t tell.”

Tantipipatpong continued that, although growers are also surveyed, it remains difficult to get an accurate picture. “It’s very difficult to survey every hectare. Farmers… don’t even own a hectare – that’s considered a big piece of land. So, we try to do surveys in conjunction with the government, but I think that in the end, as an industry, we have to try to do our own, because it’s about our sustainability,” she remarked.

StabilityThe pineapple canning industry must find a balance in order to prosper. Nobody wins when the market is this unstable. From a position where farmers were earning ruinously low rates, we have got into a position where, even if you have worked out a good deal, there is every chance that your product will not arrive on time.

“If there’s no price stability at the retail level, or between the processors and the farmers, if the fluctuation is too high and the price falls below production costs, then the whole cycle becomes very difficult to operate,” Tantipipatpong commented. “That’s not good because if the processors cannot survive and the farmers cannot survive then the retailers will not have a product.”

She added in an e-mail to FOODNEWS: “Farmer cooperatives are not well developed. The use of irrigation is limited. And we now see that weather is very erratic, possibly

from global warming. Hence, seasons change and supply becomes unstable. I see that the long term solution for the industry is closer co-operation between factories and farmers through contract farming. Farmers will have security knowing where to sell their produce and factories will know the supply.” Tantipipatpong believes that 70% is a good proportion of produce for farmers to contract.

“The industry should also consider guaranteeing a minimum price so that farmers will have a sustainable income to continue planting pineapple,” she said.

Other fruit canners have observed in the past that canned fruit is a lukewarm and inelastic category: people will not simply buy whatever the price. These sky-high prices will damage demand, which will only lead to another dip – and since this has been a real peak, we are in danger of a real trough.

This pattern has certainly been seen in the tuna market: record skipjack prices in April 2013 were swiftly followed by a decline of over 50%, to levels which are nearing the break-even price.

If this carries on, only when farmers have already jumped ship will buyers see that the prices are too low – and by then, the die is cast for the next cycle. The stabilisation attempt must continue.

“Certainly, this is worse than in the past,

with high fruit price but the market not

reacting to accept the high price.”



The percentage of Western and Central Pacific skipjack tuna caught by pole and line is less than half of what it was in 2000, but demand is continuing to grow.

This begs the question of whether companies transitioning to pole and line only will be able to keep their promises.

According to figures from the Western and Central Pacific Fisheries Commission (WCPFC) Yearbook, released late in 2013, 1.65 million tonnes of skipjack were caught in the WCPFC area in 2012. This was up on 2011, when volumes slumped to just 1.52 mln tonnes. However, the percentage of pole and line-caught fish dropped from 13.5% to just 9%. As the visualisation shows, pole and line accounted

for over 80% of Western and Central Pacific skipjack catches in the mid-seventies. This declined to just over a quarter in the early nineties as purse seining grew.

Despite the larger overall catch volume in 2012, the decline meant that less fish was pole and line-caught, at 214,981 tonnes compared with 276,765 tonnes in 2011 and 270,123 tonnes in 2010. The 2012 volume was the lowest since 1968, although it appears to be an anomalously low dip. The decline may go some way to explain traders’ growing frustration with the demand for pole and line-caught fish.

Otherwise, the pole and line-caught volumes for the 2000s fluctuated between 243,337 tonnes and 299,976 tonnes. Meanwhile, the highs and lows in the 1990s were 338,832 tonnes and 250,390. This shows that the volume, as well as the proportion, of pole and line-caught fish has declined.

Most recently, the dearth of suitable fish was highlighted when LDH (La Doria) came under fire for using tuna caught with FADs in its Oriental and Pacific brand (FOODNEWS April 11). “Currently only 10% of the world’s tuna catch is caught using pole and line, of which 50% goes to the fresh and frozen tuna markets. A significant quantity of the pole and line tuna that is available for canning is used in retailers’ private label ranges,” the company noted in a statement.

Supply scramble?FOODNEWS spoke to the International Pole and Line Federation (IPNLF) about how the industry can ensure there is enough fish to go around. The IPNLF is a charity dedicated to developing pole and line

fisheries and engaging the market.

The table shows published scientific catch figures. IPNLF communications director, Rosie Magudia, said: “While these figures are of scientific record, it is estimated by our Director of Fisheries Development Andrew Bassford that approximately speaking, Indonesia produces 150,000 tonnes and exports around 10, 000 tonnes; the Maldives produce approximately 110,000 tonnes and exports 50,000; and Brazil produces 25,000, and exports 15,000 tonnes.

“As demand increases, supply will increase to keep track,” Magudia, said. “Moreover, what we’re finding is that in certain geographies, tuna caught by pole and line is not labelled as such (for example Indonesia). So there’s a good deal more pole and line tuna out there, than can currently be accounted for. That’s why improving traceability is important.”

However, by the time FOODNEWS had gone to press, the IPNLF had not been able to explain the declining volumes seen in the Western and Central Pacific.

An additional difficulty for Europe is that fish imported into the EU has to be certified as non-IUU. This means that even if fish is pole and line-caught, it may not be allowed into the bloc.

“We do not endorse the selling of products caught by IUU means, and support EU initiatives working to curtail this problem,” Magudia said.

“Indeed, we are keen to improve traceability along the seafood supply chain, working with fishermen collectively so that they have the capacity to fulfil necessary regulations. For example, we’re talking to ISSF

BY AMY BOOTH

Hook, line and sinker

“Currently only 10% of the world’s tuna catch is caught using pole and line, of which 50% goes to the fresh and frozen tuna markets. A significant quantity of the pole and line tuna that is available for canning is used in retailers’ private label ranges.”

To view the breakdowns for yellowf in and albacore, as well as the exact percent-ages for each year, please view this story on the FOODNEWS website.

SOURCE: WCPFC

1967 1977 1987 1997 2007

0M

1M

2M

Volum

e

Total Western and Central Pacific tuna catches byspecies

SpeciesAlbacore Bigeye Skipjack Yellowf in

Species

1967 1977 1987 1997 2007

Skipja..

0%

20%

40%

60%

80%

100%

Western and Central Pacific tuna catches by gear

GearLongline

Troll

Other

Pole-and-Line

Purse seine

TOTAL WESTERN & CENTRAL PACIfIC TUNA CATCHES BY SPECIES

Can the tuna industry keep up with demand for pole and line-caught tuna?


about expanding their Proactive Vessel Register (PRV) program to include pole and line and hand line vessels.”

Commenting on the WCPFC catch figures, one source based in the UK said: “That would explain why demand in the Atlantic and Indian Oceans is so high. Northern Europe is driving that – especially the retailers in countries like Germany and the Netherlands.

“People who have made promises to Greenpeace will have to go back and either re-phrase it or talk about alternatives… There is not enough to meet the proposed demand if everyone meets their commitments.”

Consumer pressureResponding to the question of how companies can be sure of meeting their commitments to pole and line given the short supply, Magudia remarked: “Regarding companies and their commitments – of course, we

can’t force any individual company to do anything. But consumer pressure, stirred by public campaigns such as Greenpeace’s Tuna League Tables, will help ensure that suppliers try to source such tuna, not least to meet the needs of their valued customers.”

The British source said that there was growing competition over pole and line-caught tuna from the Indian and Atlantic oceans. He said that fish from Senegal was becoming “very difficult to access”.

Maldivian canned tuna is increasingly sought-after given its MSC certification, too. Customs figures indicate that the EU imported 2,394 tonnes of canned tuna from the island nation in 2013, with a further 229 tonnes going to Japan. “If the Maldives weren’t there for a few months, it would be a disaster,” he said.

Regarding consumer acceptance of other forms of sustainable fishing, he said: “I

think ‘FAD-free’ doesn’t mean anything to anyone… My personal belief is that independent accreditation is the way forward, such as by getting MSC accreditation, even if it has been caught by purse seine.

[MSC] is well recognised by retailers, and to some extent by consumers, too.”

That said, many traders have vociferously disagreed with this sentiment in the past. They argue

fISHERY NO. VESSELS TONNES CAUGHT*

WESTERN AND CENTRAL PACIfIC OCEAN (WCPO)

Japan 96 169,000

Indonesia 232 66,000

Solomon Is. 4 -

Palau 1 -

Hawaii 1 -

EASTERN PACIfIC OCEAN (EPO)

Mexico 2 500

USA 60 7,500

INDIAN OCEAN (IO)

Maldives 1000 110 000

Lakshadweep - 10 000

ATLANTIC (AO)

Ghana - 23,000

Senegal 9 12,000

Brazil - 25,000

Spain 52 20,000

SOURCE: Miyake et al. 2010; Gillett 2011a, via IPNLF Tuna Baitfish Report

GLOBAL POLE AND LINE TUNA CATCHES (2007)

CONTINUED ON PAGE 38

http://www.tunatradeconference.com



What were the main development stages of the Pomì brand in recent years?Pomì and its tomato processing facilities were acquired by Consorzio Casalasco del Pomodoro in 2007 and, since then, the firm has invested a great deal in the brand to reposition it on the market. In 2009 Pomì USA was founded, which is the sole company importing and distributing Pomì products on the American market.

From the acquisition of the trademark onwards, the group continued investing in research and development with the launch of several new products. Today, our products are distributed in over 50 countries, with a particularly strong presence on the German, Austrian, US and Russian markets as well as the Arab countries.

One of Pomì’s core strengths is its direct connection with the local farming community. Only those who have direct control

over production, harvesting, processing and packing are able to track their tomatoes from seed to store shelf.

How did the company perform in 2013, and what are your targets for this year? Where do you see potential for growth?The brand maintained the growth trend it had in the last few years, particularly on the US and Russian markets, and in some Arab destinations. For this year, we aim to consolidate our presence in those markets where we already sell, possibly with the introduction of new products, and to step into new markets such as Australia and some destinations in south-east Asia and Latin America.

Where, among your existing markets, are you facing issues?Clearly each market has its own peculiarities, but our brand has proved able to draw appreciation from customers. Conditions such as short supply chain, traceability, freshness, sustainability and the

concept of ‘Italian-ness’ are now must-have tools to create a solid customer base, especially in the most developed markets.

Italian tomatoes tend to be generally more expensive compared with produce from other origins. Are you concerned that this tendency may hinder Italy’s competitiveness on the international market?The price of raw material has historically been higher in Italy than in other European producers. The reasons for this are higher costs of production, but also different varietal and qualitative characteristics of Italian produce. At the moment,

BY DAVIDE GHILOTTI

From farm to shelf

“We aim to consolidate our presence in those markets where we already sell. And to step into new mar-kets such as Australia and some destinations in south-east Asia and Latin America.”

Pomì, the leading brand of Italian tomato cooperative Consorzio Casalasco del Pomodoro, has been following the road of added-value and traceability for its products, keeping a close link with the farming base. Its president, Costantino Vaia, told FOODNEWS about how this gave the brand an edge at home and abroad.

COSTANTINO VAIA



however, the price gap is not one of our main concerns.

Can you tell us about the recent agreement between Consorzio Casalasco del Pomodoro and Italy’s government-owned corporation ISA? What is it about and what are its objectives?The recently-established partnership between ISA Spa, a holding of [Italy’s] Ministry for Agriculture, Food and Environmental Affairs (MIPAAF), and Consorzio Calasasco del Pomodoro led to an agreement aimed at developing and strengthening the company’s production and commercial strategies, both domestically and abroad. The operation, which includes a capital injection of a total EUR12.0 million (USD16.6 mln) from ISA, will allow the cooperative to strengthen its capital assets as

well as developing a growth plan for the coming years. The strategy will include significant investments on production structures.

What issues is the Italian tomato sector facing at the moment, in your opinion?The base price paid to farmers for raw material has increased compared with last year, although not enough to cover farming

costs. The preconditions are positive, although

farms always have to deal with weather conditions that are, as we know, unpredictable. Nevertheless, Consorzio Casalasco is protected from any shortages of raw material, as it relies on a solid farming base.

Pomì has been cited as a brand that performed on a number of foreign markets by focusing on added-value for its products. How

have you tried to differentiate the brand, and what strategies have you pursued?The Italian tomato processing sector plays a strategic role in the global agri-food industry; Italy is the second-largest tomato producer after California. Pomì is borne out of a territory that has traditionally been into tomato farming and production, developing reliability in its supply chain.

The company’s strategy has been to give voice to a tomato production process in a supply system that is 100% traceable from seed to finished product. We focused on researching and developing farming techniques, production processes and packaging solutions that would meet the requirements of the market. Our work has been supported by a direct link to the local farming sector, with the intention of creating products ‘Made in Italy’ that would meet certain quality standards.

How is Pomì offering its product on the US market to stand out from rival local products? What type of packaging do you use for the US, and why?Pomì is categorised as a premium brand in the US, with 100% Italian product. It differentiates from the wide selection of local tomato products on offer not only for its connotation of an item that carries the Italian imagery of culinary tradition, but also for its packaging option. If most tomato products on the American market are distributed in cans, Pomì has pioneered the carton brick pack for both tomato pulp and tomato passata as well as other added-value items. [We did this] to have more sustainable packaging but also to respond to calls for products that were BPA-free.

Pomì recently launched new products including a ketchup and a tomato juice. How do these fit in the company’s portfolio, both in Italy and abroad? What type of customers are you targeting?The expansion of our portfolio with these two new products enables us to target also the younger consumer groups. The ketchup has a fresh and slightly spiced flavour, and is ideal as a dressing option for various dishes, whether it be boiled, fried or grilled, at every time of the year.

The Pomì L+ Juice, meanwhile, is the natural

evolution of our L+ product line, which was launched a few years back with the

purpose of offering a drink that carried the taste of tomato juice but also boosted its richness in natural antioxidants. L+

Juice can be consumed on its own or in home-made vegetable blends. It is packed in a 750g pack with a re-sealable cap.

Tomato juice, in particular, appears to be a type of product whose use and popularity is on the rise. What is your view of the

category and what do you expect from it?

Usage of tomato juice in drinks, as an aperitif or as an ingredient in cocktails, is growing strongly on a global level. In some countries, such as Russia, consumption of tomato in juice form is much higher than that of say, passatas or tomato pulps, which are more common here [in Italy and Europe]. There is a small number of players offering this kind of product on the Italian market and, even less so, in single-dose packaging options for the bar and HoReCa segments.



Amitom forecasts the next tomato crop in Turkey to come in at 2.3 million tonnes. Is this an achievable target? Turkey is going to produce slightly more than last year, possibly an increase of around 5-10%. Early indications show that tomato is still the best choice for farmers compared with alternative crops. Seed importers have confirmed that enough seeds have been sold to reach 2.3 million tonnes of total production. We will soon have a better idea once transplantings start in the fields. However, I personally believe that the estimate is realistic.

What are the reasons for the expected increase in production?There are a number of reasons for that. With the recent hike in exchange rates, Turkish packers agreed to pay on average 10% more in Turkish lira terms to farmers for contractual farming for the 2014 crop. This helped to

attract farmers to tomatoes rather than pushing them towards other crops.

Recently, there has been some capacity increases and some further utilisation of idle capacities, which led farmers to think that there will certainly be more demand for processing tomatoes.

With the current changes on the global tomato markets, packers and farmers alike reckon that Turkey will be more competitive compared with the last few years, due to less and more expensive product coming from both the US and China and, potentially, Europe.

I believe the current exchange rate between the euro and the US dollar will help Turkish packers to remain competitive against European origins such as Spain and Portugal. Turkey may, in fact, have the chance to re-establish a presence in those markets that were lost to other producers in the past years.

Has a base price for raw tomatoes been set in Turkey? What are the terms of the agreement?Most packers agreed to pay an average of TRY0.225 per kg, which is slightly more than USD100/tonne, with 30-40% paid in advance to support farming costs (for transplantings, fertiliser, drip-irrigation material and cash advance) and the rest to be paid at the end of the season or around end of November.

However, some considerable volumes of raw material are traded on the free market during the season; for those, no one could say what price they may sell at. The expectation is that it shouldn’t exceed the contract price or, maybe, it could be just a little higher.

What are current yields in Turkey for processing tomatoes? Do you think farmers will be able to increase yields in the coming years, maybe with additional use of drip irrigation or other farming techniques?Current field yields are around 70 tonnes per hectare. More modern agriculture techniques have been implemented in recent years: around 15-20% of the crop is now harvested mechanically, and most of the crop is drip irrigated.

An ideal target for the coming years would be to achieve up to 100 tonnes/ha, with most of it being mechanically harvested. If Turkey wants to stay in this game, I truly believe that we should in the mid to long run manage to reach yields matching those of Portugal. Otherwise we can never economise on costs.

Are costs of tomato production sustainable in Turkey? Have farming costs increased in recent years?

BY DAVIDE GHILOTTI

The beast from the EastTurkey should be one to watch this year. FOODNEWS talked to Arda Sahin, owner of Areks Food and managing director at Salturk Food, about the country’s plans for the 2014 tomato crop and the potential of its tomato industry.

“If Turkey wants to stay in this game, I truly believe that we should in the mid to long run manage to reach yields matching those of Portugal. Otherwise we can never economise on costs.”



I believe the current farming costs for processing tomatoes are sustainable, and the tomato price has reached a level that is more or less stable. I don’t expect costs to increase further in the near future. If producers were to keep implementing more efficient techniques, with the increase in yields of fresh material, costs might go down a little.

In times of low profitability, what alternative crops would farmers plant instead of tomatoes?Corn, cotton, peppers, corn beet and rice are competing crops for tomatoes. In the past, cotton and corn beet have been strong alternatives, whereas in recent years rice has also been a valuable competitor.

Turkey may have the capability to take over Spain in terms of tomato production this year. Do you think this is feasible and how would this benefit the

Turkish industry?Turkey produced more than Spain last year and I believe it is going to do so again this year. The country will certainly be a strong competitor for Spain in the long run. I believe Turkish producers are more organised and competitive than Spanish cooperatives. However, Turkey as an exporting country has no chance of selling to the EU due to the fact that European packers are protected by a 14.4% duty.

In the mid run, if the EU were to reinstate the existing quota, which Turkey hasn’t been able to use for a long time, Turkey could increase production to up to 3.0 mln tonnes, compensating some of the additional demand from Europe.

Tomato processors in Europe have reportedly had financial issues to deal with in some cases, due to the knock-on effects of

the economic crisis and low market. Is this happening in Turkey as well?I believe it is not as bad in Turkey as it is in other countries as most Turkish companies are either self-financed or belong to big groups that have no problems in facilitating the necessary bank credits to run the processing operations. Furthermore, Turkey has a strong domestic market giving some ground to the industry.

An existing obstacle for Turkish exporters is duties for access to the EU. Is anything being done to re-negotiate the terms of the duty with Brussels? Do you believe an accord could be reached at some point to lower the duty level?This issue is always on the agenda whenever the Turkish Exporters Unions and/or the Turkish Exporters Assembly hold discussions with Brussels. As you

might know, Turkey has a tax-free quota into the EU, which was cancelled when we stopped importing meat carcass from the EU due to the Mad Cow disease. In the last few years, the country started to import meat carcass again, which left no obstacle for Brussels to release the quota or, even, increase it. This I believe would also help the EU where tomato plantation and processing has dropped, especially after the end of decoupling.

While duties are still applicable for exports to the EU, what other regions/countries are exporters targeting?As Turkey cannot export to the EU, it has developed its export capabilities to other regions, particularly North Africa and the Middle East.

How was 2013 for Turkish tomato exports?Total exports for all types of tomato products exceeded 150,000 tonnes last year which, I believe, is a sign of recovery for Turkish exports. The season was quite promising for exporters, who re-gained some ground in markets where their presence used to be stronger, and I believe this year is going to be much better.

What is the current situation of stocks in Turkey as regards both tomato paste and canned tomatoes?Turkey holds some stocks of canned tomato paste, which are mainly targeted to the domestic market, and almost no stocks of aseptic tomato paste until the new season. The remaining stocks of tomato paste will easily be sold as we have the Ramadan period coming up just before the crop starts. At that time, general consumption more than doubles and for some basic products such as tomato paste, oil, pasta and pulses it increases enormously. This would finish or dramatically reduce stocks, so that makes it quite certain that Turkey will have little or no carry-over stocks by the beginning of the season.



Some parts of Africa already account for a relevant share of global tomato paste demand. With the economy in some of the continent’s countries moving fast, there seems to be further scope for expansion of the existing markets and for establishing a new presence in peripheral ones.

Being also a land of great contradictions, the possibilities offered by Africa’s developing conditions and by growing demand are in many cases hampered by issues of poor infrastructures and distribution. Civil war-torn countries apart until very recently and, in some cases, instability remains and is bound to cause further problems. But tomato exporters should keep both eyes on this huge market, to make the most of what it can offer.

Tunisia remains Africa’s biggest tomato producer, as we noted in the FOODNEWS World Tomato Report 2013. With its

840,000-tonne haul in 2012, the country comfortably eclipsed the combined output of fellow continental producers Algeria, South Africa and Senegal, which came in at 675,000 tonnes.

As in other countries in the region, tomato in Tunisia is a staple food. The processed tomato sector is the largest of the country’s agricultural export industries. Internal supply covers most of domestic demand, and the country’s imports of tomato products remain fairly low. After low production in 2013 (618,000 tonnes), it is expected Tunisia will go back to higher output levels this year, with a forecast of 800,000 tonnes.

Yields in the country remain low, and have not really improved in recent years, but increase in acreage can be fairly swift. Swings in production are closely related to ups and downs in tomato farmland, as well as incidences of crop diseases.

Neighbouring Libya is among

the customers for exports of Tunisian paste. The recent instability of the country affected demand, which fell to just over 14,000 tonnes in 2012, although the Libyan market has the capacity to absorb 50,000-60,000 tonnes, as it did in previous years. Last year, Italy alone shipped over 40,000 tonnes to the country.

The most important market for tomato paste in North Africa remains Algeria, with its 70,000+ tonnes of annual imports – the third largest importer in Africa. China has been the main supplier to the country for the last six years but, as Chinese product supply was hard to come by in 2012 and 2013, Algerian importers covered the gap with volumes from the US, which went from nearly nothing to almost 20,000 tonnes.

Nigeria and West AfricaThis April, Nigeria officially became the largest economy in Africa, overtaking South Africa. The country’s GDP in 2013 was estimated at NGN80.3 trillion, or USD509.9 billion, against South Africa’s USD370.3 bln.

Until recently the continent’s second-biggest economy, Nigeria has jumped to the top of Africa’s ranking after encompassing previously-uncounted industries (telecoms, airlines and others) in its GDP calculation, showing the real size of its economy.

The population factor is an important one to notice in this sense: Nigeria’s population, with 170 million people, is three times higher than South Africa, although the latter is a relevantly bigger country. According to some economists, this actually points to a scenario of underperformance for the country – on a per-capita basis,

BY DAVIDE GHILOTTI

Destination AfricaAfrica is the land of possibilities, and harbours some real potential for the tomato industry.

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South Africa’s GDP is three times larger than Nigeria’s. The fact that GDP indicators had not been updated since 1990 also speaks for itself.

Nevertheless, Nigeria is a point of reference for the processing tomato trade, as its demand for tomato products – mainly tomato paste – is unrivalled by any other destination in the continent.

Imports in 2012 totalled almost 165,000 tonnes. As a reference, a country the size of Russia imported less than that (150,000 tonnes). Even after taking into account Russia’s own tomato production (which is fairly minor), Nigeria still stands out as an eager consumer of the product.

The Nigerian market has become an increasingly central destination for tomato paste consignments. Total imports in 2008 were a mere 48,200 tonnes. Since then, they increased 28% to 2010, and by 242% by 2012.

Which producers did reap the benefits of Nigeria’s growing hunger for paste? China certainly did so, upping its exports to the country by a staggering 426%, from 26,000 tonnes (2007) to over 132,700 tonnes in 2012. The origin, now the established first exporter to many an African destinations, used the price competitiveness it could boost in previous years to elbow its way into Africa, becoming the largest shareholder for paste consignments.

Italy, the second-largest origin, used to have a bigger presence on the Nigerian market

AfRICAN TOMATO PASTE IMPORTS (2012, TONNES)

Values are the total of reported exports on GTIS for 2012. This may not include exports from countries which do not report to GTIS, but all major tomato paste producers are included.

http://www.sugal-group.com



but, as demand from China increased, imports from Italy fell in 2007-10, picking up slightly in 2011-12 (but still underperforming, if 2007 volumes are considered).

Some minor producers also increased shipments to Nigeria, such as India, while demand from European trading hubs such as Belgium and the Netherlands fluctuated widely over the years.

Coastal West Africa is the biggest region in terms of tomato paste imports and consumption in the African continent.

Put together, Nigeria, Benin, Togo, Ghana, Ivory Coast, Liberia, Sierra Leone, Guinea, Senegal, Mauritania and Cameroon bought almost 400,000 tonnes of paste in 2012. The rest of Africa combined bought about just over half of that.

Much of this demand is related to local culinary habits, with tomatoes used as a central ingredient in the cuisine of West African countries.

Another relevant factor fostering imports is the fact that in many a case, internal production – where there is one – can be simply unable to fulfil the large demand of the domestic market.

The reality of the tomato industry in some of these countries is still too irregular to guarantee a stable source of supply – in some case, to guarantee a supply at all.

Nigeria’s agriculture minister, Akinwunmi Adesina, said last year that over 50% of the country’s tomato crop is lost in one way or another, never reaching processing stage.

Nigeria produces around 1.5 million tonnes of tomatoes per year, according to estimates. Acreage is said by government sources to be over 250,000 hectares. Considering that domestic consumption is put at 900,000 tonnes, the country’s own tomato output should in theory cover part of the internal demand. In practice, the lack of adequate storage facilities, transport connections, poor distribution and a plethora of other issues mean that half of the

crop is left to rot.According to the Central Bank

of Nigeria (CBN), the country spends over NGN11.7 bln (USD72.2 mln) on tomato imports per year. To counteract this, the CBN launched a long-term programme of agricultural development, devoting NGN200 bln in agricultural lending for the establishments of farming enterprises and the improving of the infrastructure agribusinesses need.

This all points to an understanding, at governmental level, that the country’s reliance on imports should be redressed. As of now, however, it appears that any significant change in the current scenario is not due anytime soon, and Nigeria’s demand for foreign product will remain high. The latest concerns over the security of the country’s infrastructures (on April 14 a bomb went off at a busy bus station in the outskirts of capital Abuja, killing scores), mainly related to Islamic fundamentalist group Boko Haram, can also disrupt any progress in the country’s economic development.

Ghana, whose demand for tomato paste is second only to Nigeria, and was over 112,000 tonnes in 2012, is not exempt from major issues.

The infamous saga of the Northern Star Tomato Factory in Pwalugu, in the country’s north-east, bears testimony to another huge tomato paste market whose own industry still leaves much to be desired.

At almost rhythmical intervals over the years, governmental officials announced investments for the renovation of the plant, its expansion to allow the transformation of other products, its year-round processing activity.

After one of those statements (it was the year of grace 2010), it turned out that the factory was not connected to the electrical grid. Then that there were no paved roads to reach the site; its water treatment facilities were found to be non-existent and

after that, the site was shown to have been taken over by, yes, goats.

Allergic to any admission whatsoever of failure, the official statements on the bright future of the plant continued. Last December, yet another GHC1.0 mln was announced to be going for local processing operations. Arguably, the facility has yet to produce a single tonne of paste.

Ghana’s necessities are then looked after by China – the first supplier with 77,800 tonnes – Italy with almost 29,000 tonnes, and the US with 5,500 tonnes. Again, China’s price competitiveness was crucial for the origin to gain such a large share of Ghana’s import market.

The unstable political situation of some countries – Liberia was torn by war until 2003, Sierra Leone until 2002 – make the development of a local industry still hard to conceive. At the same time, the economy of the region as a whole is showing important signs of growth.

As a result, coastal West Africa is bound to remain a strong – and growing – importing market for tomato paste for the foreseeable future.

The south and the eastThe relevance of South Africa on the global tomato map appears to be due to its efficient distribution channels to market, but its weight as an exporter should not be overestimated. As of 2013, total tomato paste exports remained well under 1,000 tonnes.

Its imports of the product, meanwhile, increased to almost 20,000 tonnes in 2012, almost twice as much as in 2009. This may be due to falling internal output: production decreased from 167,000 tonnes in 2009 to last year’s 115,000 tonnes.

At the same time, tomato plays a very important role in the agricultural landscape of South Africa, being the second most important vegetable commodity in the country after potatoes.

Besides South Africa, Angola may be one to watch. With its

economy developing fast, helped in no small amount by China’s investments in national infrastructures, Angola was the fifth largest economy in Africa as of 2011.

Imports of paste stood at 24,000 tonnes and, as conditions of the general population improve, internal demand for tomato products may increase further and, crucially, on a long-term basis.

East Africa, meanwhile, remains a relatively minor destination for tomato exporters. According to trade data, the only notable exception seems to be Sudan, whose paste imports in 2012 were almost 23,500 tonnes. There may be opportunities for development of the Sudanese market in the future, but that all depends on whether the country can guarantee a degree of security and political stability in its territory.

“It turned out that the factory was not connected

to the electrical grid. Then that there were no

paved roads to reach the site; its water treatment facilities were found to

be non-existent and after that, the site was shown to have been taken over

by, yes, goats.”



BY AMY BOOTH

FOODNEWS: What is banana purée usually used for?Martin Wegener: It’s very varied – a lot goes for smoothie manufacture. Some also goes to banana nectars, although these aren’t so popular in Europe. They are also in multi-milk drinks and fruit preparations. You can find bananas in every imaginable usage.

How have these changed over the last five to ten years?The demand for smoothies and fruit preparations is getting bigger and bigger. Overall demand has increased, at least from our perspective.

What countries are the largest consumers of banana purée?We deliver round the world. We deliver to Europe, of course, and

to the British market. We deliver to the US. We are entering the Middle Eastern market, too. Our volumes are not unlimited, but we are hoping to double our capacity over the next few months, from 15,000 tonnes to 30,000 tonnes.

What’s your attitude towards markets where some consumers cannot yet afford products like smoothies?We have to think globally. Many of our markets are not homogenous, and you can have two completely different consumer behaviours in one market. A country like China has a large mass of consumers with limited buying power, but there is also a proportion of the population which is spending a lot of money on food, and given the population size, that one or two percent can have a huge impact on product demand.

In a market like that, you also have to think about how you create demand.

Sometimes it turns out that there is, in fact, a demand for higher-priced products. I would never have thought it possible that demand for NFC products would grow so much. But the NFC business has become a strong business in its own right. Concentrate is far cheaper because of the transport and overall production, but the NFC business has prevailed anyway. That is for a number of reasons. In Germany, you have the situation that you have NFC and then, additionally, products from concentrate. Before, that wasn’t the case at all.

Which other major origins are there in the banana purée market?Fundamentally, there are only the

countries Costa Rica, Ecuador and Guatemala. We are dominant in Guatemala because of our good relationship with the farmers, and I will devote myself to making sure we stay in this position.

The disadvantage of Costa Rica is that there are several factories. There is simply too much competition for the raw material, and this is pushing prices up. Ecuador is similar, and it has to ship its products through the Panama Canal so there is a slight logistical disadvantage.

How is the banana purée market today as far as supply, demand and price go?The market is stable, or indeed increasing. I foresee a relatively stable situation for the near future. Perhaps rising prices are more to be expected than falling prices.

Banana has always been a very

Apeeling bananasBuyers of banana purée are becoming less dependent on Costa Rica and Ecuador as origins. Antigua Processors’ second factory in Guatemala, which was inaugurated in April, marked the entrance of a strong new source. FOODNEWS spoke to Antigua Processors president, Martin Wegener, about the new factory.

MARTIN WEGENER



that this expensive certification should make the product a premium, rather than being a benchmark, and point out that as Europe becomes more and more exacting, it becomes harder to satisfy customers’ demands. Moreover, they say, it makes Europe an unattractive customer for key suppliers.

“Other fisheries are seeking MSC accreditation. It won’t be long before [the PNA fishery] is one of many,” the contact said. “That is a good place to be.” The largest of these is the Echebastar Indian Ocean purse seine skipjack, yellowfin and bigeye tuna fishery. According to the MSC website, the assessment of this fishery is expected to be complete within January 2014. MSC documentation from January indicates that the certificate is currently expected to be awarded in the last quarter of 2014. According to the website, it accounted for 19,493 tonnes of skipjack, 26,470 tonnes of yellowfin and 3,193 tonnes of bigeye in 2011.

Interestingly, the fishing methods listed include “purse seine operating using drifting FADs”.

FADs are the point of dispute for many sustainability groups, given their association with bycatch. FOODNEWS believes this may become a point of contention if the fishery is certified.

The IPNLF, meanwhile, is working with fisheries to improve supply. “This work focuses on initiating practical fishery projects and helping facilitate stakeholder cooperation. We help coastal communities by providing access to training and education in subjects such as safety at sea,” Magudia explained.

“We have… worked to significantly develop Indonesia’s pole and line fisheries through specific projects such as setting up a local industry association and developing a bait management plan framework, and we’ve attracted 19 members from across the supply chain – thus strengthening the voice and commitment for pole and line. The organisation is also focusing on improving demand.”

DemandThe British contact was optimistic that the current low prices for tuna (last quoted at USD1,200/tonne for skipjack) could at least

bolster consumer demand. “If it translates through to lower shelf prices, it could get the sector going again, get people interested. Let’s look on the bright side,” he said. He agreed that the supply chain has expensive stock, but thought sellers would average the cheap stock against the expensive.

“Tuna is used mainly for sandwiches, but people are switching to cheese and ham,” he said. “The foodservice guys seem to be seeing lower prices coming through in their markets.”

As far as sustainability goes, foodservice may prove to be a hurdle when it comes to sustainability. If a salad bar or sandwich shop simply does not label the origin of its tuna, most consumers do not tend to ask, unlike when they buy clearly-labelled fish in a shop. “Promoting tuna in alternate markets could begin using initiatives started with other types of sustainable seafood,” Magudia said.

“Examples include fish and chip shops that have started promoting MSC certified tuna

on menus and boards, and as branding for the shop. [There is also] Moshi-Moshi and the MSC’s promotion of MSC-certified sushi with the production of sushi with edible QR codes linking to information from the MSC.”

FOODNEWS believes that consumers are unlikely to start holding foodservice outlets to the same sustainability standards as they hold retailers to in the short- to mid-term.

First of all, sushi with specially-printed QR codes is beyond the budget of most consumers even in developed western markets. As long as sandwiches and fish and chips are a cheap on-the-go meal, most consumers will not be willing, or even able, to stump up the cash for premium catching techniques.

Moreover, converting this portion of the market to pole and line-caught or FAD-free tuna would only put massive pressure on supply in a market that is already stretched. Efforts are certainly being made to improve the offering, but for now, the industry will not be able to run before it can walk.

CONTINUED fROM PAGE 29

cheap product. Prices at the moment are around USD600/tonne cfr EMP. That’s where the market is.

You have to bear in mind that with banana, we have over 20° brix. In terms of brix, it is a very cheap product. Apple is around 11.0-11.2°. Orange has a little over 10°. Mango is 14-16° in India. Concentrate is 28°. Here in Guatemala, mango is over 20° brix. Banana is also over 20° brix, and that, of course, is a great advantage for the customers, because they get more mass.

Production is concentrated in Central and South America. Can that be a problem?El Niño mostly affects Ecuador, and when Ecuador is affected, only rarely does it affect Central America. But there is centralised production, and that brings risks. You can see that by the political developments in Ecuador. There

are political risks, there are economic risks, and there is always the risk that your factory could burn down. And all of these risks are higher the more production is concentrated. We have hedged against these risks to a great extent, but I can imagine that for this reason, in the mid-term, we might build another factory in a different country. The Philippines would be a possibility, or Colombia. We will have to see.Building a factory in Guatemala is a step in this direction already. Beforehand, the market was more dependent on Costa Rica and Ecuador.

Would there be any advantage to producing banana purée in the southern hemisphere?Bananas are primarily grown for fresh consumption. When production of fresh fruit increases, so too does the volume of fruit

that isn’t suitable for the fresh market, so it stays in balance. Banana processing must always be guaranteed – that means, the processing industry is necessary when you have a large area planted to bananas. You cannot allow large volumes of bananas to be destroyed or disposed of without getting any money for them.On the other hand, bananas are a staple. In Honduras, for instance, local demand is very high. The Hondurans are great banana farmers, but there is no processing, because the bananas which can’t be exported are sold on the local market as a cheap staple food. The processing industry competes with domestic demand there.

India is a massive producer of bananas, too, but there is huge demand, whatever the quality, from the local population. We cannot compete with that.

“When production of fresh fruit increases, so too does

the volume of fruit that isn’t suitable for the fresh

market. The processing industry is necessary when

you have a large area planted to bananas.

You cannot allow large volumes of bananas to be

destroyed or disposed of without getting any

money for them.”

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