GAIN reports

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Rush of investment in Egypt’s retail sector

There’s a significant surge of investment in Egypt’s retail sector as the shopping habits of the country’s consumers’ increasingly move towards modern retail.

The shopping habits of Egyptian consumers are increasingly shifting towards the modern retail sector, resulting in a significant surge of investment in this sector, reports the USDA.

In its report ‘Nile Nuggets for January 2016’, it says the Al-Bustan Real Estate Development Company will invest LE (Egyptian pounds) 3 billion to build four new “HyperOne” branches in New Cairo, Shorouk City, Badr City and Assiut.

Also, the Fathalla Gomla Market Group will invest LE 70 million to establish a 10,000 m2 supermarket in Borg El Arab.

Furthermoe, UAE- based Spinneys is said to be “aggressively expanding” with plans to open 23 new branches in the Delta and Upper Egypt governorates in the next two years with a total investment of LE 5 billion. [$1 = 7.83 LE]

According to the report, the company currently owns six branches in Cairo, the Red Sea, and Qena and retail manager Mahmoud Meawad has stated that Spinney’s has the goal of achieving 35% market share in Egypt’s retail market.

Source: USDA, Nile Nuggets for January 2016
Image by: Alma E. Guinness [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons 

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Peru’s booming grape exports

Attractive prices, numerous overseas market opportunities and a major ramp up in production are behind the major boost in Peru’s grape exports.

Peru’s grape exports have skyrocketed in the past decade, going from practically non-existent in the year 2000 to about 280,000 tons last year, reports the USDA Global Agricultural Information Network (GAIN).

In a new report, GAIN says that grapes are now one of Peru’s main agricultural exports, totalling $646 million the 2014, up 43% on the previous year. They were also up 50% in volume to 267,270 tons.

It said this significant change has been driven by attractive prices and numerous overseas market opportunities, and a major boost in production as a result of new areas planted in Peru.

Peru’s main grape markets in 2014 were:

  • US 44,123 tons
  • Netherlands 41,908 tons
  • China 35,391 tons
  • Other important destinations: Hong Kong, Russia, the U.K.

Grape production in Peru

Grape production in Peru was estimated to reach 520,000 tons last year.

The central valleys along the coast (e.g., Ica, Lima) are where Peru’s grape growing is concentrated. However, new areas in the Piura and Lambayeque regions on the northern coast are rapidly developing. While the average grape yield in Peru was 20 tons/ha in 2014, yields in Piura were up to 34 tons/ha.

The country mostly grows Red Globe but other varieties include Crimson seedless, Flame seedless, Sugraone and Thompson seedless.

Climate challenges

Pests are one of the challenges Peru faces as it seeks to significantly increase its grape production. “Countries with colder climates do not struggle with pests such as nematodes, but due to Peru’s mild weather, this pest has become a problem,” the report says. However, in the northern region of Piura, warm temperatures permit up to two harvests per year, which helps offset the negative effects of pests. Also, Peruvian producers are working to develop more resistant varieties.

Another challenge for the industry is the potential impact of the forecasted severe El Niño. “The majority the growing areas are expected to face either flooding or droughts depending on their location. Without proper preventative measures by farmers and the government, the industry may experience losses in productivity which may take time to recuperate.”

Source: GAIN Report, Peru: Fresh Deciduous Fruit Annual (January 7, 2016)

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Trends and opportunities in the UK food service market

Healthy food options are the hottest trend in the enormous market formed by the food service sector in the United Kingdom, says a new GAIN report.

Healthy food options are the hottest trend in the enormous market formed by the food service sector in the United Kingdom, says a new GAIN report.

Reporting on opportunities for American exporters in the hotel, restaurant and institutional (HRI) market in the UK, the report says fresh and dried fruit are among the US products doing well, along with snack foods, nuts, salmon and seafood, cooking sauces, salad dressings, confectionery, dips and salsas, frozen foods, wine and beer.

“The UK government is increasingly promoting healthy eating and healthy lifestyles. There are opportunities for U.S. products that are natural, wholesome and healthy,” GAIN advises.

As an example of the focus on healthier living, it says fruit and vegetable juices are now more popular in the UK than carbonated drinks.

But despite the preference for healthy eating being the most significant trend in recent years, obesity rates in the UK – about 24% of the adult population is now technically obese  – are now the highest in Western Europe.

Other trends in food service in the UK

Burgers remain the number one item on menus, but other trends are becoming more mainstream in the UK, such as world cuisines, healthy food and indulgence.

“Consumer demand for new foods is strong in the UK and is continually driven by high numbers of non-UK citizens making the UK their home. Fastest growing business types are likely to be new fast food, street food, pop up restaurants, international cuisines, and coffee shops and sandwich bars,” the report says.

The report’s snapshot of major food service trends in the UK includes the following:

  • BBQ foods – Southern US foods or South American influences. Things like pulled pork, brisket.
  • Provenance – Products marketed with a focus on the country of origin, how the product was cooked, farm names and references to smaller, family owned business’ on labels and menus.
  • Street Food – Quality ingredients, seasonally sourced, quick food.
  • UK growth hot spots in 2014 – Glasgow, Leeds, Manchester, Bristol and London.

Growth forecast for UK food service market

In 2014, the UK food service sector (food and beverage sales to consumers) was estimated to be worth £46.6 billion ($74.5bn), up 2.9% on 2013.

GAIN says the sector has picked itself up after the economic crisis and predicts this year it will continue to grow, returning to the spending levels of 2008, a previous peak.

Source: GAIN report: “United Kingdom: Food Service – Hotel Restaurant Institutional”
Veggie burger image: By divinemisscopa (http://www.flickr.com/photos/copa41/1312623057/) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

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Trends in food retail in Russia

Grocery remains one of the sectors least affected by the macroeconomic and political situation in Russia. That’s mainly because it offers basic products of high necessity and the market’s growth is supported by the increasing sales value of large area store chains which are continuing their expansion in Russia.

Grocery remains one of the sectors least affected by the macroeconomic and political situation in Russia. That’s mainly because it offers basic products of high necessity and the market’s growth is supported by the increasing sales value of large area store chains which are continuing their expansion in Russia.

But even so, a new USDA GAIN report on retail foods in the Russian Federation says over January-September 2015, Russian retail sales turnover fell 8.5% year-on-year (in comparable prices) reaching $338 billion in value terms and food sales were down 8.3% to $165 billion.

Russia’s ban on a numerous food and agricultural products from Canada, the United States, Europe, Australia and Norway in August 2014 had a tremendous effect on grocery segment and hit retailers and Russian consumers hard. The sudden drop in food supply led to price hikes in several food categories ranging from vegetables to dairy products. “Market analysts have stated that even if Russian producers are able to replace all imports eventually, prices are not likely to ever fall back to previous levels,” the report says.

Organic, Healthy and Ready-to-Cook Products

Another trend in food retail in Russia is that busier lifestyles, particularly in Russia’s largest cities, has created steady growth in demand for products such as chilled ready meals and frozen ready-to-cook products. Supermarkets, hypermarkets, and independent grocery stores have responded by boosting their offerings of chilled and ready-to-cook meals.

Similarly, increasing health-consciousness has spurred a greater offering of healthy, low-fat, salt-and sugar-free foods, fresh exotic fruits and vegetables. High-end supermarkets have begun to develop a range of organic foods, and some entrepreneurs have tried to develop supermarkets specialising in organic produce.

Though disposable income in Russia is expected to drop along with the falling ruble and rising inflation, making all imported products more expensive for Russian consumers and causing prices for organic products to rise in the near future, Euromonitor experts estimate the category will keep growing at 5% yearly to reach $90 million by the end of 2019.

Internet retailing in Russia

The number of internet users in Russia grew 5% in 2014 to 87 million, with the biggest growth of new online customers in Russia’s regions. Indeed, regional expansion was the main driver of internet retailing expansion, as saturation in the markets of big cities negatively reflected on the channel’s overall growth towards the end of 2014.

According to a Profi Online Research study, only 17% of Russians order grocery products online. Respondents asked why they did not buy grocery items online most often mentioned doubts regarding quality and freshness – particularly for fruits and vegetables.

Source:  GAIN report RFATO028, December 9, 2015, Russian Federation, Retail Foods

Image of Moscow City 2013 by Dmitry97ken (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

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How fruit symbolises the change in North Korea

A symbol of the recent change in North Korea is that tropical fruit and imported products, which used to be sold at stores only for high-ranking North Korean government officials or foreigners, are on sale all year in jangmadang (marketplaces) where commoners usually go to buy daily necessities.

A symbol of the recent change in North Korea is that tropical fruit and imported products, which used to be sold at stores only for high-ranking North Korean government officials or foreigners, are on sale all year in jangmadang (marketplaces) where commoners usually go to buy daily necessities.

So reported University of North Korean Studies professor Yang Moon-soo in a speech on the implications for agriculture from the marketisation of North Korea which has been published as a USDA GAIN report.

“Ordinary North Korean people have a new custom, it is said, setting rare fruits, such as pineapple and banana, on the table for a wedding feast or birthday party,” Yang also said.

Other signs of the country’s move to more of a market economy are streets teeming with cars in downtown Pyongyang, car sales ads plastered all over the city and fast food franchises and Italian restaurants increasingly popping up, he said. Also the number of cell phone subscribers has soared from around 1,600 in 2008 to more than 2.4 million in the second quarter of 2014.

Yang said another example is the intercity bus terminal in Pyongsong, where the largest wholesale market in North Korea is located. The number of intercity bus routes from the terminal rose to 49 as of the end of 2013 and is reportedly still increasing, with individual investors, not the North Korean government, running the bus businesses.

“These recent enormous changes in the North Korean economy and society are closely related to the phenomenon called ‘marketization,’” he said.

North Korea’s Food Supply and Demand

The above table provides an estimate of North Korea’s food supply and demand situation, but does not reflect the situation in North Koreans’ real lives, Yang said. “The problem is that the official food supply and demand in North Korea is different from what North Koreans actually experience; they have access to informal markets to supplement official supplies. This gap between the (estimated) official situation and the true situation tends to get bigger as time goes by and free markets develop.”

The report is an abstract by Professor Yang, an invited speaker at the 4th annual Roundtable on DPRK Agriculture hosted by FAS/Seoul, presented a paper entitled “Marketization in North Korea: Implications for Agriculture,” which describes the steps being taken toward an unofficial market economy in North Korea and its future prospects.

Image of Mansudae Art Studio. Pyongyang, North Korea by (stephan) [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons.

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Small increase forecast in Italy’s peach, nectarine crops

Italy is also major peach and nectarine exporter, mainly within the EU-28. In 2014, it exported 298,442 tons of peaches and nectarines, 19% less than 2013.

Peach and nectarine production in the 2015/16 marketing year (June-May) is forecast to inch up 2.2% in Italy, the largest peach and nectarine producer in the EU-28 and second in the world after China, reports the USDA’s Global Agricultural Information Service (GAIN) in its recent Italy stone fruit annual.

Stone fruit production has a big role in agriculture in several Italian regions, both in the north (especially Emilia-Romagna and Piedmont) and the south (Campania). The bulk of the Italian harvest occurs in June and July, according to GAIN.

  • In 2015/16, peach production is forecast at 579,000 tons (555,237 tons in MY2014/15).
  • Nectarine production is forecast at 760,000 tons (765,064 tons in MY2014/15).
  • The cling peach harvest is likely to reach 74,000 tons (61,836 tons in MY2014/15). Fruit quality is forecast to be good.

Italy’s stone fruit exports

  • Italy is also major peach and nectarine exporter, mainly within the EU-28.
  • In 2014, it exported 298,442 tons of peaches and nectarines, 19% less than 2013.
  • Lower volumes were exported to Germany (- 12%), the top export destination, representing 44% of total exports.

Italy’s stone fruit imports

  • Italy imported 75,213 tons of peaches and nectarines in 2014, a surge of 25.8% on 2013.
  • This growth was driven by increased volumes from its main supplier, Spain (+31%).

Italy’s stone fruit consumption

  • Most Italian peaches and nectarines are consumed fresh.
  • While Italian consumers generally prefer large, sweet, and pulpy fruits, Northern European markets prefer smaller, slightly sour, and crunchy fruits.

Read more here.

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Southern Italy set for 30% rise in cherry volumes

Southern Italy, which accounts for two thirds of national cherry production, is forecast to register a production increase of 30% (especially for early varieties), thanks to ideal weather conditions during fruit set.

Italy’s MY 2015/16 cherry production is preliminarily forecast at 131,200 tons, according to the USDA Global Agricultural Information Service’s (GAIN) latest Italy stone fruit annual.

Southern Italy, which accounts for two thirds of national cherry production, is forecast to register a production increase of 30% (especially for early varieties), thanks to ideal weather conditions during fruit set.

Calibers are forecast to be smaller than 2014 and quality excellent, and good quantity and quality are also expected in Emilia-Romagna, the report says.

 

Cherry trade in Italy in 2014

Exports: Italy exported 10,419 tons of cherries, mainly to Germany (4,686 tons), last year.
Imports: It imported 10,698 tons of cherries, mainly from Spain (5,105 tons), Turkey (1,937 tons) and Austria (1,053 tons).

Read more here.

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The new face of grocery retail in Spain

There has been a boom in proximity retailing and urban stores in Spain, with various Spanish and foreign retailers opening stores on busy shopping streets in city centres, generally with lower amounts of retail selling space. Examples include Condis Express, Carrefour Market and Supercor Expres.

Spain is slowly recovering, but its five years of economic recession have left a lasting impact on its retail sector and consumer behavior. Shoppers are now more price-conscious and retailers have had to adapt to the increasing importance of convenient locations and the incipient threat from low-cost retail formats.Those are among the observations in a new USDA GAIN report on opportunities for US exporters in Spain’s retail food market.

Consumer confidence

The report says Spain is expected to continue to show positive signs of recovery, with a return to pre-crisis retail sales figures likely by 2019. “This situation will likely be reflected in consumers gradually increasing their expenditure again, so opportunities will continue to arise for U.S. exporters,” it says. In the retailing industry, some operators have started to see slow positive growth for the first time in several years, especially in grocery.

Shopping habits

GAIN says that, according to Euromonitor, another effect of the economic crisis is consumers are now reluctant to travel to hypermarkets and big shopping malls on city outskirts, due to the cost and inconvenience. “As a result, the future of many of the large retail centers built during the good days of the Spanish economy are compromised.”

There has thus been a move to proximity retailing and urban stores, with various Spanish and foreign retailers opening stores on busy shopping streets in city centres, generally with lower amounts of retail selling space. Examples include Condis Express, Carrefour Market and Supercor Expres.

Product trends

Spanish consumers are also increasingly health conscious, GAIN says, noting that naturally healthy and free-from products are more widely available in supermarkets and specialty stores. “One of the most interesting and promising categories are healthy products indicated for food intolerances. According to Euromonitor, in 2014, food intolerance products sales grew 27% in value to reach $306 million.

Online sales in Spain

Online retailing is steadily increasing (+7% in value in 2014) and expected to continue to be prosperous in the medium term, as more store-based companies move to online commerce.

Its top internet retailers are focusing on building trust among their collective consumer base. According to Euromonitor, the reasons consumers give for shopping online are:

  • Convenience 78%
  • Better prices and offers 73%
  • To save time 66%
  • Easy purchase process 56%

However, mobile retailing is outperforming internet retailing overall in Spain, where smartphone penetration is estimated at around 80%, one of the highest rates in the EU.

Table 2. Grocery Retailers Company Shares (% Value)

Source: GAIN report SP1542, Spain, Retail Foods Annual 2015

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Strong apple, pear crops forecast for Czech Republic

Apples are among the most popular fruit consumed in the Czech Republic and are an important part of the Czech diet. However, the market for fresh apples in the Czech Republic has generally been declining due to stronger interest in new fruits, rising consumer purchasing power and a wider range of fruit choices in stores.

Despite an extremely hot and dry summer, the Czech apple and pear crops remain strong, estimated at 140,660 and 9,372 tons respectively, according to a USDA Global Agricultural Information Network (GAIN) report.

However, due to the high age of fruit trees and lack of capital to renew orchards, the area for and number of fruit trees are declining, it says.

Harvested areas
MY2014: apples 8,721 ha, pears 704 ha
MY2015: apples 7,624 ha, pears 681 ha

Commercial production
Nevertheless, while last year Czech growers harvested 130,902 tons of apples and 3,758 tons of pears, this year commercial production should rise to 140,660 tons of apples and 9,372 tons of pears, based on figures from the Central Institute for Supervising and Testing in Agriculture, GAIN said.

Non-commercial production
Non-commercial production is thought to account for more than a third of total apple production and more than a quarter of pear production in the Czech Republic. That estimate is based on figures from the Czech Statistical Office’s annual report on production of selected crops, which includes household estimates, which places Czech apple production in 2014 (including non-commercial production) at 207,990 tons, and pear production at 12,351 tons.

Fresh Domestic Consumption
Apples are among the most popular fruit consumed in the Czech Republic and are an important part of the Czech diet. However, the market for fresh apples in the Czech Republic has generally been declining due to stronger interest in new fruits, rising consumer purchasing power and a wider range of fruit choices in stores. “Young people in the urban areas prefer new and exotic fruits such as kiwi, pineapple, kumquat, and passion fruit,” GAIN said.
Euromonitor lists the most popular locally-grown varieties as Golden Delicious, Idared, Jonagold, Gala, Discovery, Spartan, James Grieve, and Sampion. Among the most popular imported varieties are Golden Delicious, Red Delicious and Gala from Italy, and Paula Red and Royal Gala from Slovakia and Austria. “Gala organic apples from Italy are quite popular among organic varieties.”

Processing
According to Euromonitor, in 2013 retail accounted for 36.6% of domestic consumption, while food processing was the main driver of total consumption.
Prices for processing apples are about 60-75% lower.

Source: Fresh Deciduous Fruit Annual 2015: Czech Republic, Global Agricultural Information Network GAIN

Image of the Czech capital, Prague, at night: by lawyergaoge (used under Creative Commons CC0 licence)