Sapex Grapes

Marketing Report: Grapes

Week 26 - 28 June 2019

Sapex recently attended Global Grape Summit in London. There were approximately 400 representatives of Table Grape Countries, Producers and consumers. The readings were given by a variety of people who focused primarily on Word Production, Production trends (particularly new cultivars) and consumer tendency.

Following a sort summary of the subjects covered:

South Africa only represents 1% of the world’s table grapes production. The largest producers are countries like China and India whom consumes most of their own production. Chile, which is only 8th on the list of producers, represents currently 23% of all exports. Peru is second with 13% of the exports and all the signs are there that Peru will replace Chile as the biggest exporter within the next 3-5 years. South Africa is 10th on the producer’s list, but 4th on the list of exporters and represent 10% of all exports.

Table Grape production in the world:

Table Grape production in the world
Source: USDA-Fas Fresh Decidous Fruit

Table Grape exports by different countries:

Table Grape exports by different countries
Source: USDA-Fas Fresh Decidous Fruit

Table Grape imports by different countries:

Table Grape imports by different countries
Source: USDA-Fas Fresh Decidous Fruit

The largest importer of Table Grapes is the EU (includes UK). The second most abundant importer is USA following by China. Hong Kong should be added to China’s % on above table.

Table Grapes are no longer a specialist product that is only available at certain times. It is a commodity that is available 12 months of the year in all markets. Windows of opportunity that is only served by one country is no longer existing. As an example, can only be looked at the UK market, other input countries show the same trend.

Source: Trademap, prepared by Decofruit
Source: Trademap, prepared by Decofruit

The reason for this is the development of production in countries such as Brazil, Peru, India, etc. As example, see the growth in exports from India to the last 10 years.

Indian Export in 40 foot reefer containers
Source: Oscar Slagado, San Lucar

There are also many other countries and regions that examine Table Grape production. See the yellow zones in the map. Countries can, within limits, harvest at any time of the year through viticulture manipulation practices.

Development of new Table Grape Production
Source: Oscar Slagado, San Lucar

The largest danger/problem for South Africa is probably the production in Peru and India. The growth in Indian exports has already been discussed. The increase in the exports of fruits and vegetables from Peru is astronomies.

Overview of Peur

From 2001 to 2018 exports increased with 2467%. The expectation is that exports from 2019 to 2021 will almost double. The forecast is that the Table Grape production in Peru will double over the next 5 years. There is certainly also a growth in the later production in Peru. See growth in Week 2 to 5’s exports below:

Overview of Table Grapes

Peru’s largest exports are currently AFTER the US but exports to the EU have increased sharply the last three years and are currently almost equal to US. When exports to the UK and EU are calculated , it is greater than the US.

Peru. Exports to different countries:

Peru.  Exports to different countries
Source: USDA-Fas Fresh Decidous Fruit

In comparison, the South Africa currently performs approximately 75% of it’s table grapes to EU (UK and immovable Land of Europe) from:

Peru.  Exports to different countries comparison
Source: USDA-Fas Fresh Decidous Fruit

Important here is that Peru has performed in 2016/7. Just about 17 million cartons after the EU and it is in 2018/9 almost doubled to 30 million cartons. South Africa has performed nearly the same volume per year after the EU in the period, around 45 million cartons.

Peru is therefore a significant danger, both in the increase in volume and the fact that they grow early – week 42 – 52 and late, week 2 to 5. New cultivars play a role here, but development in other areas also plays a role.

It is clear in all input states clearly that the retail (supermarkets) is increasingly playing a major role. In most countries the traditional Wholesale markets are decreasing. The message of these purchasers (Supermarkets) is very clear: consistency, both in supply and quality. There is almost no place for substandard product and the pressure is increasing. They want good quality product at lower production price.

Focus on good production practices that can produce quality grapes at lower cost is therefore essential. It is also the only way to ensure your shelf space. Windows for production do not exist any more and someone who can deliver a better consequent product will take the space. They buyers however prefers South African fruit, but quality is a larger role-player.

The growth in e-commerce is also a tendency we should take note of. In China, it has already represented 10% of sales of fresh products. The trend is only to increase forward.

E-Commerce growth
Source: George Liu, Frutacloud

In short can be summarised everything as follows:

  1. There are no longer any "windows" open to South Africa's production. In every week we produce there are 2 or 3 countries that compete with us. The areas that are most affected are the Orange river and Mpumalanga. However, there is also increasingly pressure on the later areas, coming from Peru and India.

  2. There is no place for poor quality.

  3. The retail sector (supermarkets) plays an increasingly important role.

  4. Consistency is very important for the Supermarkets. This applies to providing and quality. There is also a sharp focus on price, precisely because the production is increasing.

  5. From the table of the slide Breeders ' point of view they look good taste, high productivity and Low labor need.

  6. Children's involvement when testing of cultivars and promotions are important.

  7. The future is "private" not "public". The days of "open" cultivars or technology no longer exist. "Pay as you go".

  8. The most important stuff for the industry to continue are information and technology. Is South Africa ready for this? Are there sufficient attempts to keep our technology on a high standard?

  9. Smaller farmers are everywhere disappearing. The pressure to meet standards, prescriptions and audits become just too big.

  10. China remains a great opportunity. There is still doubt about what exactly they want in terms of taste, cultivars, etc.

  11. The main problem in China is Logistics and the cold chain. They currently invest a lot in this.

  12. Peru is great competition for South Africa. The prediction is that their production is going to be double in the next four to five years. Peru is now the number two exporter. They will soon be the number one exporter. The prediction is that Peru will perform at least 140m cartons over the next 4 years.

  13. The four major breeding companies have formed a Breeders Alliance Co Pty. SNFL, ARRA, Sunworld and IFG. The objective is to protect their interests in the world.

  14. There is a positive attitude towards South Africa in most markets. However, the message is very clear: get the consistency of your delivery and quality right. Differentiate yourself by producing grapes that the market WANTS.

Sapex remains positive about the South African table grape industry. We have great programs in the right markets and clients that support us and are also positive across the South African industry. We all will only have to cooperate to get the right product at the right time in the right market.

Greetings,
SAPEX Team

Contact

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fax: +27 21 887 7233
email: sapex@sapex.co.za