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How Australia is tapping fresh produce opportunities in China

"Australia is in quite a nice position to be able to segment the market by focussing on being a niche market player rather than getting caught up against the big volume suppliers."

The importance of suppliers building long term trade relationships with China and adapting to its customers’ tastes was recently stressed by Loren Zhao, co-founder of the country’s rapidly-expanding online fruit retailer, Fruitday.

Speaking as part of the London Produce Show breakfast panel, Zhao singled out Australia and New Zealand as countries doing a good job in this regard. He said that in the future, China “will be consuming most of the global produce” and he said it is looking to these suppliers, which he said are already focusing on India and China. “It’s very important to grow products with the Chinese customer in mind.”

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Zhao said the US and Australia are spending a lot of money in order to change their fruit varieties and grow newer ones in response to demand from Chinese customers. “We see that they also want to invest for the market for us.”

“A lot of exporters just want to trade and they want to sell everything to China but other exporters want to cooperate…like Zespri and Sunkist,” he added.

Promising export future: Australian table grapes and citrus

Speaking to ED at the London show, PMA Australia-New Zealand CEO Michael Worthington said table grapes are a good example of where Australian growers are adapting to Chinese tastes.

“Australia is producing a lot of very good quality red and black grapes which the Chinese love. Crimson seedless has been a very successful variety, because it’s obviously seedless but it also has good Brix. There are some black grapes coming on to the market that have got a very high brix, so very much going for sweetness, which suits the Chinese palate,” he said

“The Chinese very much buy on colour and a sweet taste, so I think Australia is in quite a nice position to be able to segment the market by focussing on being a niche market player rather than getting caught up against the big volume suppliers such as Chile” he said.

“On the citrus side, the Australian navel quality is very good – probably the best in the market – and well-recognised in China, and some of the mandarins that Australia is now producing also fit in very well with Chinese consumers because of their good colour and flavour.”

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“Another real positive is that grapes and citrus fit very well with online sales – you can make nice convenience packs of table grapes. And with online sales booming in China, this is a great area for a niche marketer such as Australia to supply.”

Aussie Cherries also popular in China

Tasmanian cherries provide another example of Australian fresh produce fitting very well with Chinese tastes, Worthington said. “Tasmanian cherries tend to be larger size, very high quality and coming from grower-marketers of a small enough scale that they can go very niche as opposed to being a mass supplier that’s always trying to shift big volumes.”

Hopes FTA will see new protocols expedited

Worthington said it’s hoped the recently signed free trade agreement between China and Australia will speed up quarantine protocols allowing more fruit varieties to be traded between the countries.

“There’s a number in the pipeline both ways, such as stonefruit from mainland Australia and I am confident that as direct trade builds up (as opposed to the traditional “grey channel” supply into China via Hong Kong), we will see more vegetable lines, such as broccoli and carrots, and products such as mangoes and avocadoes exported out of Australia.”

Efficient distribution: key to success in e-retail

On online sales, he said China is doing very well in its ability to get the produce to consumers. “I think in a lot of other countries, particularly western ones, that last mile of logistics is the biggest challenge to growing online sales, whereas in China they’ve got these multiple small distributors on motorbikes and bikes and everything else that can get the product to the consumer.

“It’s a mixture of finding the right product, that is of a high enough value, matched with a distribution system that’s very much more efficient, as opposed to trying to look at it just purely as a price point and keeping the cost of an online sale at or below what you’d pay if buying in a supermarket,” he said.

 

Relief map of Australia by Hans Braxmeier (http://www.maps-for-free.com/) [CC BY-SA 2.5 (http://creativecommons.org/licenses/by-sa/2.5)], via Wikimedia Commons

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Slow wholesale trade in fruit and vegetables in the UK last month

Wholesale trade in fruit and vegetables was slow and steady in the UK in the first half of June but picked up towards the end of the month as the weather improved, according to the UK Government’s Department for Environment, Food and Rural Affairs (Defra).

Wholesale trade in fruit and vegetables was slow and steady in the UK in the first half of June but picked up towards the end of the month as the weather improved, according to the UK Government’s Department for Environment, Food and Rural Affairs (Defra).

In its report on fruit and vegetable wholesale prices for June, Defra said the amount of UK-grown produce varied as some crops were coming to the end of their season and other summer crops were coming onto the market. “Imports from the continent ensured supplies of soft fruit and salad were good across the month.”

Defra also reported:

Berries
Strawberries: demand was high but prices fell 24% to £1.85/kg as more fruit including Scottish and Dutch and Belgian imports came onto the market
Raspberries: demand was also high but the price fell 11% to £6.86/kg as supplies increased. The quality of the fruit remained high across June which stopped the price falling further

Pears
UK-grown pears: supplies continue to fall as the season comes to a close
Conference pears: prices rose 13% to 0.59/kg

Vegetables
Asparagus: prices continued to fall, down 18% to £5/kg
Broad beans: prices fell 37% to £1.42/kg as supplies increased and demand dwindled
Savoy cabbage: price up 25% to £0.51/head
White cabbage: price up 33% to £0.48/kg as new season crop supplies were short
Cauliflower: prices rose across the month as supplies dwindled
Leeks: prices rose as supplies were short awaiting the new season crop

source: Defra

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Waitrose banks on omnichannel strategy

Last year Waitrose opened another 20 ‘little Waitrose’ convenience shops and 13 new core shops. It now has 339 shops in England, Scotland, Wales and the Channel Islands, including 61 convenience shops.

Upmarket grocer expanding in online and convenience as it braces for more pain in the world’s toughest food market.

In February, Waitrose regained its crown as the best UK supermarket after a year in which its like-for-like sales increased 1.4%, it had an average 400,000 more customer transactions a week, and its slice of the UK grocery market largely stayed above 5%, rising from 4.8% two years before.

Even so, a deflationary market and fierce competition from the fast-growing discounters Aldi and Lidl – forcing it to cut prices and invest in improved service – saw its operating profit tumble 23.4% to £237.4 million. And Waitrose expects returns for the grocery sector “to be materially lower for a period of time.”

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The UK grocery market is rapidly fragmenting and the ‘big four’ – Tesco, Asda, Sainsbury’s and Morrisons – are being squeezed at one end of the price and quality scale by Aldi and Lidl, and at the other end by upscale rivals Marks & Spencer and, particularly, Waitrose.

According to Kantar Worldpanel data on Great Britain’s grocery market, Waitrose’s share has risen from 4.6% in the 12 weeks to October 14, 2012, to 5.1% as at this June 21, while Lidl went from 2.8% to 3.9% and Aldi, overtaking Waitrose, from 3% to 5.5%.

Novel ‘Pick Your Own Offers’ scheme

Fighting back amid the unrelenting price war in the UK, in June Waitrose introduced a new scheme offering loyalty cardholders 20% off their favourite 10 items from an initial list of almost 1,000 lines.

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Waitrose CEO Mark Price described the ‘Pick Your Own Offers’ scheme as ground-breaking but admitted it would be expensive for the grocer. Cherry vine tomatoes have been among the most chosen products so far.

Building online and convenience offer

Being “Britain’s leading omnichannel retailer” is now one of Waitrose’s key strategies, according to the John Lewis PLC financial statements for the year to January 31. The priorities listed under the goal include building Waitrose’s online presence, broadening its convenience offer, and developing compelling reasons to visit shops.

In order to grow its online grocery business, in March Waitrose opened a 90,000 sq ft bespoke e-fullfilment centre in Coulsdon, South London.

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Waitrose e-fullfilment centre in Coulsdon, South London

In regard to its convenience offer, last year Waitrose opened another 20 ‘little Waitrose’ convenience shops and 13 new core shops. It now has 339 shops in England, Scotland, Wales and the Channel Islands, including 61 convenience shops.

Central London was the focus for the new ‘little Waitrose’ openings last year but this year Waitrose has said it will go further afield in Greater London for its planned 7 new ‘little Waitrose’ shops.

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The ‘little Waitrose’ shops range from 3,000-7,000 sq ft, in comparison to an average sales area of 20,000 sq ft for traditional Waitrose branches. In August last year, in a bid to attract ‘transumers’ – the fast-growing market of travelling consumers – Waitrose opened the first of its railway station outlets, a 2,500 sq ft ‘little Waitrose’ store at King’s Cross in central London.  

And among measures to encourage visits to stores and respond to changing shopping habits, Waitrose has introduced new services, hospitality – such as opening more in-store cafes – and grazing areas where shoppers can try food and drink. “Branches like Salisbury are tapping into growth in casual dining with a wine and tapas bar.”

Responding to food trends

In its Food & Drink Report 2014, Waitrose reported on its response to food trends including “a huge surge” in flexitarianism – where someone follows a plant-based diet but occasionally eats meat products.

“Shoppers are choosing a ‘hero’ vegetable – such as a stuffed mushroom or a spiced aubergine – and adding a sprinkling of bacon chunks or chorizo pieces. To meet this growing demand we have launched new vegetable meals, such as our mushroom and spinach filo parcel and a new baby kale and butternut squash microsteam pack to save time for our flexitarian shoppers.”

Waitrose also said consumers’ taste buds are demanding new, exotic flavours and increasingly there’s a mix-and-match approach, using ingredients associated with one country in dishes from another. “Yuzu, a Japanese citrus fruit, is now often used in French dressings, and Kimchi, fermented cabbage from Korea, is employed as a burger dressing.”

The same report said that compared to 2013:

  • Exotic fruit online sales were up 81%
  • Stuffed mushrooms sales were up 22%
  • Stuffed pepper sales were up 17%

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Inside Waitrose, Canary Wharf

Summer brings higher salad, fruit sales

According to recent weekly trade updates by Waitrose, it is seeing strong increases in its sales of salad bowls and British asparagus, which for the week to June 6 were up 43% and 41% respectively on the same week last year, while frozen fruit surged 26% and soft fruit saw an 11% uplift. And for the week to July 3, it said the start of Wimbledon saw strawberry sales up 15%. Amid the good weather, its ‘food to go’ range was up 10%, with salads proving particularly popular, at 21% higher than last year​. Waitrose has also reported that with the bumper UK cherry harvest this year it has 20% more of this fruit on sale.

sources: various, including Waitrose, Kantar Worldpanel

JB

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What Europe’s new retail landscape means for fresh produce

Planet Retail’s Bianca Casertano on how Europe’s changing retail sector will affect the fresh fruit and vegetables category.

Planet Retail’s Bianca Casertano on how Europe’s changing retail sector will affect the fresh fruit and vegetables category

Yesterday we shared the Frankfurt-based retail analyst’s analysis of the key shifts in grocery retail in Western Europe. Casertano charted the rise of the discounter and convenience stores, the demographic changes behind the decline of big box stores, and the blurring of lines between hypermarkets, discounters and convenience stores. Here, in part two, read Eurofresh Distribution’s interview with Casertano after her presentation on this topic at the  AECOC Fruit and Vegetable Congress in Valencia in June as she discusses the fresh fruit and vegetables category.

What do these changes imply for the fresh produce assortment in stores?

What is really interesting to know is that the shift from big box formats to small box formats, and online, means a change in product ranges. What you had in the past, this huge volume of fruit and vegetables on offer, will decrease both in volume and product diversity.
In city locations with a small sales area, you have to choose which fruit and vegetables you offer. Normally you choose the convenience oriented things, and focus on less variety. You can’t offer all the exotic fruit and vegetables anymore, as in hypermarkets.
For example, in a hypermarket or in a normal supermarket you can find carrots with some greenery on them. In convenience stores, maybe baby carrots is the product you need, because it’s ready to eat and there’s another package size. The shift towards small, inner city locations will have a huge impact on these product groups.

Could you share an example of innovation you’ve seen?

Demand is growing for pre-prepared and pre-washed products, because people don’t want to spend much time on that. There are some convenience store where you can wash your fruit so you can eat it right after you buy it. I think that is a genius idea. It costs almost nothing and it helps you increase the sale of fruit and vegetables. How often do you enter a store and you would like to have an apple or a peach right now? And some ICA stores in Sweden allow you to make your own smoothie onsite from pre-cut fruit and vegetables you buy there. These are small examples of innovative things that can increase sales for this segment.

What should the sector bear in mind amid the changing retail landscape?

That multi channel is on the rise. They are not straight borders anymore, the formats will merge, and this means more complexity. For retailers that means more investments but these high investments will definitely pay off in the end. Because at the moment, if as a hypermarket operator you say, “No, I don’t want to launch ‘click and collect’, e-commerce is another sector and I don’t want to have to do something with it,” then you will fail, because people expect to at least have the possibility of. Although it’s not profitable for the retailer, they have to react to this trend. Also, because of the demographic changes I talked about, retailers need to go more into the inner city locations, not the outskirts anymore.

Is a move to less loose and more pre-packed product inevitable?

I see a trend in Germany towards more of these products, packaged products, or already washed products, because people don’t have time anymore to prepare their food. They want to have it ready to eat, and therefore I think this will increase in the future.

How might the growth of e-commerce affect producer prices?

As far as the online trend is concerned, I think you can’t offer fruit and vegetables online for a higher price just to get the right margin. Grocery e-commerce is very cost intensive and people won’t pay a higher price just because the system is more expensive. I don’t think that prices will go up, because people won’t accept that. What we currently see in Germany is that prices for groceries have really decreased but people don’t have the feeling, because overall they think they have to spend more for everything, but this is not true for groceries.

You have stressed there are risks in over-generalising and that not every market follows the convenience trend. How does your home market of Germany vary?

In Germany you don’t have so many hypermarkets. you have a high density of discounters. Everywhere you have a small shop within the cities, so if you want to buy something you can buy it anywhere. And in Germany margins for grocery food are so low that it’s very difficult to have a profitable online business for grocery. German shoppers are quite conservative, as well.

A last word of advice?

Suppliers often bank on countries in emerging markets and not on cities. This is a huge mistake because there are so many huge cities in emerging markets, cities with more than 5 million inhabitants.

Just as an example, there are 40 countries in the EU which have less population than Moscow. As a retailer, and also as a supplier, you have to focus on these mega cities, not on the country. This is an area in which Planet Retail has invested significant research.

JB

Read part 1

Photo: (top) Bianca Casertano during AECOC conference, by Roger Castellón

See some of our photos from this year’s AECOC Fruit and Vegetable Congress

 

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It’s a good year for fresh produce, says Fresca boss

Fresca is the parent company of multiple operations including Mack, which is said to be the UK’s largest privately-owned fresh produce supplier

As chief executive of the Fresca Group Ltd, Ian Craig has an eye over wide swathes of the UK’s fresh produce sector.
Fresca is the parent company of multiple operations including Mack, which is said to be the UK’s largest privately-owned fresh produce supplier and serves an extensive customer base spanning major supermarkets, independent retailers, foodservice operators and wholesale markets, and more.
The Kent-based group also spans the major glasshouse facility Thanet Earth – which grows cucumbers, tomatoes and peppers and was headed by Craig until he took over the Fresca helm last July – and other businesses including  DGM Growers, MMG Citrus, Wallings Nursery and the importer Primafruit.
With sales of £427 million (€585m) in 2013/2014, up from £403 million (€552m) the previous year, the Fresca group returned to the black with a before tax profit of £7.4 million after a £0.4 million loss (after exceptional items) in 2012-13.
In this interview at the London Produce Show in June, Craig told ED that fresh produce is regaining its place in the sun. He said consumers just need some inspiration on usage in order to enjoy fresh fruit and vegetables he described has having “the best eating varieties” of his lifetime.

What impact is the rise in the UK of the discounters – Aldi and Lidl – having on suppliers?

We are very clear in that most of our businesses are very focused on particular retail customers. It’s a strategy that we’ve been following for some time, even extending the relationship in some cases to commit and supply in a totally dedicated business model. This strategy has helped us manage most of the potential for conflict. What we try to do is to make sure that we’re providing the service and the quality standards and the values that our customers want from us. That’s our job at the end of the day. I think the challenge for everybody in the industry is to recognise that comparatively new retail entrants into the market have brought a different value perception to some key products. That’s probably changed the perception forever in the eyes of consumers.
To maintain our success and deliver that value in the short to medium term, we have to look at our entire supply chain and how we can do things more efficiently and more effectively and look for varieties that deliver what each customer and each consumer requires.
Lining up and looking at the different channels and the different requirements of those channels is really important to make sure that we can service all of our customers successfully.

What are your challenges today in retail supply?

We’re at an interesting time in the UK. Clearly, we read about the broader challenges faced by our customers, but we’re still in the food industry, and people still eat food every day. I think fresh food and fresh produce will enjoy growth in the UK in 2015 where we can see people having more disposable income again. We can see people able to make more informed decisions about what food they choose.
I think fresh produce has its opportunity again; we need to make sure we present the right produce in the right way, with some ideas for the consumer about how they use that product. There are generations – and as a parent I see this in my children’s friends all too frequently – that don’t know what to do with some of the products we sell.
If we can get some usage education and work with our customers to do demonstrations in store, I think we can inspire people to consume even more product. It’s the sorts of things that are on the table in front of us today, they’re the best eating varieties in my lifetime. It should inspire people to eat more fresh produce.

What trends are you seeing with cucumbers and peppers?

What we’ve seen in the UK, I think, in the last couple of years, again, is peppers and cucumbers largely retailed as commodities. The clearest example is in the cucumber. In Winter 2012/13, cucumbers in the UK retailed at an average of 99 pence each. This last year, it’s probably been 50 pence, so a massive deflationary effect, with value implications right back down the chain.  It’s been a real challenge.
Having said that, the consumer has responded, they’ve seen a cheaper product on the shelf so demand/volume sales have been up in both areas, and quite dramatically in peppers over the last two winters. The traffic light pack is by far the most popular seller and all retailers need to have significant volumes of that on the shelf because it’s becoming a basket item, a weekly shopping item just like the cucumber is.

Are snack peppers doing well?

Snack peppers are interesting. We’ve committed space in our glasshouse at Thanet Earth for snacking peppers, for the small, sweet bite peppers in a multitude of colours. We’ve seen those be very successful. I think there’s more demand to be fulfilled in those areas but we need some consumer usage education on how to make use of them – not just a substitute for the normal bell peppers in cooking but how they can be used as canapes and so on. That is an interesting development.
To be quite frank, the pepper market needs some inspiration because the flat, retail pricing of the bell pepper means it grows across Europe but is not getting the returns really needed in terms of the investments to support the production of peppers. It is a challenging commodity.

How is demand for cucumbers and in what format do you mainly supply them?

Cucumbers continue to sell extremely well. In the UK consumers’ eyes, it is a very, very important weekly purchase.
The vast majority are individually-wrapped still in the shrink wrap plastic, not the most environmentally positive way of doing it, but it protects the product and reduces the dehydration effect. It makes cucumbers a very simple product to handle. There’s little scope for major innovation in cucumbers, but there’s encouraging work going on in the search for more options in virus resistant varieties.

Which tomatoes are customers preferring?

I think tomatoes is a very exciting area. We’re seeing consumers switching more and more to the smaller varieties, the sweeter eating varieties.
The key variety in tomato remains Piccolo because it is the most consistent, sweet eating variety. We have a high volume of varietal development at Thanet Earth, and we do that in conjunction with Hadlow College, as well, where we sponsor a student to look after our development glasshouses each year, and we see great feedback from that.
We work in conjunction with our customers to find the right selection for their shelves and try and offer some form of exclusivity every year on a new variety. ‘On the vine’ ranges are absolutely key to category success, and when you open the package, it’s still important to get that smell of tomatoes that we all remember from our youth. The products are a much more consistent eating quality from facilities like the high level investment we have at Thanet Earth in our glasshouses. When the product every day is consistent, we see strong consumer demand for that consistency.
Provenance also matters a lot in tomatoes, there’s strong consumer support for British production, so having the source as ‘Kent’ and having the Union flag on the pack is very strong in the eyes of the consumer, encouraging repeat purchases.

What’s happening with grapes?

Very interesting area, grapes. Again, I think grapes is one of the categories that’s come under greatest pressure from the deflationary effects in the UK retail market. We’ve seen in many ways a flattening of the retail structure on grapes, the differentiation between new varieties, different coloured varieties, has been diminished by the need to sell grapes at a known retail value, so we’ve seen grape packs being sold at values historically lower than we’ve seen for a very long time.
I think to some extent you can see the impact of that on the shelf where quality can be less predictable now than it has been in recent years.

Is avocado demand still growing in the UK?

For us this is a fantastic product area. We have excellent business with a number of retailers, and we have invested more in our ripening facilities in Kent to ensure that we can deliver the right quality at the right time.
I think the consumer’s expectation is that when they take the avocado home these days, that it’s ripe and ready to be used. We’ve worked hard on our ripening techniques and ripening management and on our sourcing.

The interesting thing about the avocado market in the UK is that it is growing substantially both in value and volume. It’s probably one of the very, very few produce categories that has shown growth, but without an obvious reason. I know how much hard work companies like us have put into quality management for avocados in recent times so my preferred theory is that the consistency and new-found reliability of the product has earned consumer trust and value perception.

Chief executive of the Fresca Group Ltd, Ian Craig

JB

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Huelva’s strawberry sales up 21%

Spain’s strawberry capital, Huelva, has bounced back from last year’s poor results with a nearly 21% boost in turnover – to €355 million – in its latest season.

Spain’s strawberry capital, Huelva, has bounced back from last year’s poor results with a nearly 21% boost in turnover – to €355 million – in its latest season.

Freshuelva, the association of producers and exporters of strawberries from Huelva, says the sector has ended the 2014/15 season with strawberry production up 3% on last season, to 288,660 tons, even though the land base decreased 9%.

Importantly, after one of its worst seasons in recent times in 2013/14, sales – totalling €355 million – were back to levels similar to those of 2012/13. This recovery was thanks to a 22% increase on last season in the average price, according to figures reported by member companies.

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In a press release, Freshuelva said the price was helped by the fact that fruit quality in the first quarter of the year was excellent, thanks to favourable weather. However, and as has often occurred in previous years, at the end of March there was a peak in production which saw a considerable drop in prices.

About 78.5% of this year’s strawberry harvest was sold for fresh consumption and the rest used for processing. Freshuelva said the quality of the strawberries meant those from Huelva still found a market in Europe in May despite then competing with local production in countries such as France, Italy, the UK, Germany and Belgium.

Because of the intense heat in recent days, which reduces fruit quality and consistency, the harvest of fresh strawberries has come to a close.

The raspberry season has also concluded, with production up 20% on the previous season to 14,480 tons. Despite repeating last season’s 5% fall in the average price, Huelva’s raspberry sales rose again, this time by 15.7%, to €90.3 million.

In the first quarter of the season, 95% of the raspberries picked were exported, which was up significantly on the previous season. Prices dropped notably in May and early June as local production came on in the two main markets where Huelva’s raspberries are consumed – the UK and Germany.

The blueberry and blackberry harvests, which started in mid-March, continue, though at a slower pace.

source: Freshuelva

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Understanding the rise of discount and convenience stores

Planet Retail forecasts that over 2014-19, discounter Lidl will see its parent, Germany’s Schwarz Group, log sales growth of 4.8%, well above that of Western Europe’s next biggest retailers – France’s Carrefour (2.6%) and the UK’s Tesco.

Why are the discounters growing so fast in Western Europe? That and other big trends were addressed by Planet Retail’s Bianca Casertano while speaking at the AECOC Fruit and Vegetable Congress in Valencia in June.

The Frankfurt-based retail analyst set the scene by saying that in the next four years, big box stores – such as hypermarkets and superstores – will remain the dominant retail channel. But while their sales growth is slowing (their compound annual growth rate of 1.9% will be mainly due to inflation), that for convenience (5.7%) and discounter stores (4.6%) is another story.

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Planet Retail forecasts that over 2014-19, discounter Lidl will see its parent, Germany’s Schwarz Group, log sales growth of 4.8%, well above that of Western Europe’s next biggest retailers – France’s Carrefour (2.6%) and the UK’s Tesco (3.9%, though the weakness of the Euro makes its CAGR look much stronger than it really is.) The German discounter Aldi is expected to achieve 4.3%.

Over 2009-2019, the big box format store segment will drop from 33% to 28%, losing 5 percentage points of market share, “which is massive.”

“The winners will be the discount and convenience stores,” Casertano said.

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What superstores should do

Demographic changes lie behind the big box decline. There are more older people, one person households, smaller families, and people without cars or without enough money for petrol. More people either don’t want to or don’t need to do a big shop once a week, or perhaps prefer to shop on a daily basis. This is really the problem now for the hypermarket operators, Casertano said.

“Big box won’t be the format of the future, there will be a shift towards discount and convenience stores, to inner city locations – this will be the really, really huge trend.”

To counteract this, big box chains need to become more attractive. An example is France’s Casino group, which now offers bulk buying similar to that usually associated with ‘cash and carry’ operators, and a ‘drive‘ (‘click and collect’) format.

Another way is to focus on food service, such as with restaurants. The bottom line is it has to be a nice experience to go to a hypermarket and too often it’s not, she said.

Casertano also said the big box retailers need to localise store management to ensure their assortment meets local needs. “This will be key in the future.” Metro Group, for example, has recognised this and has completely different formats in the south and north of Italy. It costs more, but in the end pays off, she said.

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Metro Group: the Metro Cash & Carry store “Casa dell’ HoReCa” in Rome locates fresh and frozen fruit and vegetables within one department to help clients save time. (Source: Planet Retail)

“The flight to convenience”

Meanwhile, Casertano mapped a shift in retail towards small, city-centre locations, something Tesco has adapted to quite successfully with its Tesco Express stores. “There’s also a trend towards franchising, because investments are much lower,” she said, citing Carrefour Express as a good example in Spain.

And she said Migros, Switzerland’s largest retail company, provides a good example of a food service focus in a convenience store with its Bio Take Away outlet, under Zurich’s main train station, which offers only organic products and has a high proportion of fruit and vegetables.

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Discounters now softer, more sophisticated

Casertano said the discounters are “growing so massively” not because they are opening more stores but because they have evolved, going from a hard, ‘no frills’ discount format to one cleverly taking the best of every channel.

For instance, some now sell multi-packs that copy the bulk buy attraction of the ‘cash and carry’ stores; they offer specialist food ranges, fresh fish and more brands, to be more like supermarkets; and are found in inner city locations and with more food-to-go, like the convenience stores.

Casertano said this convergence is occurring across all retail formats – the lines between hypermarkets, discounters and convenience stores are blurring. Hypermarkets are thus merging more with e-commerce and discounters – Carrefour, for instance, has discount areas in the middle of its outlets. This blending will increasingly be the trend, she said.

Online grocery not so lucrative

Grocery e-commerce is gaining importance and more retailers are rolling out additional services including ‘click and collect’ and home delivery. But it’s not easy to gain an edge in e-commerce because the discounters‘ advantages (cost savings through lower overheads for staff, handling, supply chain, and limited range) mostly apply in-store, not online.

“Lidl, for example, has an online shop, but just because customers expect retailers to. It’s not very profitable. I only know a very few…retailers who’d say their online business is profitable,” Casertano said.

She also stressed the risks of over-generalising and the need to remember that markets vary. For example, drive-through grocery collection works well in France but so far not in Germany.

Use the power of fruit and veg to influence impulse buying

Casertano urged the many retailers at the congress to invest in store refurbishment and make their fruit and vegetable departments more appealing.

“The first thing you see when you enter a store is the fruit and vegetables, and this is key.” People often base their shopping on the produce they buy there, such as choosing a red pepper on promotion because it looks nice and is cheap, and then deciding to buy other products, such as minced meat and rice, to fill it. “And all these articles are based on the fruit and vegetables they bought.”

This impulse buying is a huge advantage offline retail has over online. “You have to make these departments more attractive – this is really, really important,” Casertano said.

JB

TOMORROW: Find out more about what these changes imply for the fresh produce assortment in stores when we publish part two of this article, an interview with Planet Retail’s Bianca Casertano.

See some of our photos from this year’s AECOC Fruit and Vegetable Congress

 

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Fresh ideas for this year’s PMA Fresh Summit

Being held October 23-25 at the Georgia World Congress Center in Atlanta, Georgia, the Fresh Summit Convention & Expo are expected to attract 18,000 attendees and 1000+ exhibitors from over 60 countries.

A showcase displaying products and services making it easier to eat healthy while out and about is one of the new features for this year’s PMA Fresh Summit.

Being held October 23-25 at the Georgia World Congress Center in Atlanta, Georgia, the Fresh Summit Convention & Expo are expected to attract 18,000 attendees and 1000+ exhibitors from over 60 countries.

This year the highly popular New Products Showcase has been renamed the Fresh Ideas Showcase. Organisers say this series of display cases will be a magnet for attendees wanting to discover the ‘coolest of the cool’ at Fresh Summit before setting out to tour the vast show floor. Such showcases have been ranked the most effective promotional tactic for driving attendees to exhibits, they say.

The new “On the Go” showcase will join the tried-and-true display cases which can hold any variety of new product or service, as well as the Just 4 Kids showcase.

Participants in the Fresh Ideas Showcase will be automatically entered in the new Best Product Promo category of Fresh Summit’s best of show contest. Judges will assess them on their online product listing in the exhibitor directory (pre-show evaluation), on-site display case, and promotion of the product in their booth. The winner will receive a shelf in the 2016 Fresh Ideas Showcase and a half-page digital ad in the winter issue of the PMA’s magazine ‘fresh’.

Find out more about Fresh Summit here.

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Tighter fruit and veg import checks paying off, says EU

Last year there was a small rise – from 4.1% to 4.4% – in the percentage of consignments of the fruit and vegetable on the list that were refused entry to the EU.

Table grapes from Peru and aubergines and Chinese celery from Cambodia are to be under tighter scrutiny for pesticide residues by the European Union.

They are among food products recently added to a European Commission list of imports targeted for food safety controls over and above the routine ones.

Among other foods joining the watchlist are:

  • Vine leaves from Turkey (pesticide residues)
  • Dragon fruit from Vietnam (pesticide residues)
  • Betel leaves from India and Thailand (salmonella)
  • Dried apricots from Turkey (sulphites)

Some products have now been taken off the list having achieved satisfactory levels of compliance, among them:

  • Pomelos from China (tested for pesticide residues)
  • Oranges from Egypt (tested for pesticide residues)
  • Frozen strawberries from China (tested for norovirus and hepatitis A virus)
  • Coriander and basil from Thailand (tested for pesticide residues)
  • Coriander, basil and mint from Thailand (tested for the presence of salmonella)

Last year there was a small rise – from 4.1% to 4.4% – in the percentage of consignments of the fruit and vegetable on the list that were refused entry to the EU.

EU TOTAL 2014

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In a report on the results of its reinforced border checks in 2014, the Commission said nearly 100,000 consignments subject to these controls reached EU borders in 2014. “Of those, 11,291 were sampled for laboratory analysis and 496 (i.e. 4.4%, slightly above the 2013 result of 4.1%) were found in breach of EU legislation and were prevented from entering the EU market,” it said.

In a press release, the Commission said the report shows “that the system of controls at EU borders on fruit and vegetable imports from non-EU countries is protecting consumers from potential food safety risks.”

The report is published in the framework of Regulation (EC) No 669/2009 on an increased level of official controls on certain imports of food and feed of non-animal origin, which contains the list (reviewed on a quarterly basis) of imports subject to increased border controls.

The following tables are excerpts from the report, which can be read in full here.
The list of “Feed and food of non-animal origin subject to an increased level of official controls at the designated point of entry” can be seen here.

 

 

 

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Healthy lifestyles and exoticism at the Russian retailer 7th Continent

7th Continent, one of the largest Russian retailers, promotes healthy lifestyles and a large variety of exotic and flavorsome fruit and vegetables.

7th Continent, one of the largest Russian retailers, promotes healthy lifestyles and a large variety of exotic and flavorsome fruit and vegetables.

7th Continent was one of the leading food retailers that detected the all-year round demand of Russian consumers for fresh fruit and vegetables, and not only during the season period. “According to our researches, buyers have become more discriminating,” said marketing director Alexey Zakharkin. “Some economise by choosing the cheapest goods, others keep looking for novelties and exotics, but both categories of consumers pay attention to nutritional benefits. That is why we keep diversifying the assortment of our fresh category, we increase the quantity of our suppliers in order to offer our customers a large choice and good quality of products at reasonable prices.”

Supporting this strategy, a model of a fresh market (Vegetable bazaar) was created in 7th Continent supermarkets and Nash hypermarkets. From the very entrance, a customer is directed to the fresh department with counters of fruit and vegetables. Buyers thus not only easily find what they need, they are also stimulated to purchase healthy food.

Sweet potatoes, durian and spicy herbs

Indeed, one can find anything at the Vegetable Market, from potato to wheat sprouts; from 10 varieties of apples to flavoured durian. There are fruits and vegetables from every part of the world; at any season, one can treat oneself with raspberry and bramble, melon and watermelon, and any other fruit loved by Russians but only available in season. There is a special gourmet zone with fresh spicy herbs, greenery and lettuce.

Due to the short shelf life of fresh produce, the managers of 7th Continent pay close attention to their quality, checking it at every stage of sale. In each store there is a quality control service and every two hours the assortment is inspected to ensure a “fresh abundance” display.

On the wider horizon, the retailer establishes partner relations with Russian and foreign farmers and producers. To ensure the quality of goods offered, the relevant manager visits the plantations and the production of potential suppliers, examining the safety, wholesomeness and taste of the products before concluding the contract.

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Hyper, Super and Gourmet stores in 14 cities

7th Continent, founded in 1994, is a federal Russian retailer operating in two formats: supermarkets and hypermarkets. It has 136 supermarkets (brand name 7th Continent) in Moscow, Moscow region and Kaliningrad, and 20 hypermarkets under the brand name Nash Market are located in 14 Russian cities and towns.

The average daily traffic is 1,000-1,500 customers in the supermarkets and 2,500-4,000 in the hypermarkets. Of the supermarkets located in the center of Moscow, 26 are “gourmet” stores; their customers are residents with high income and tourists. Other stores are focused on customers with medium incomes.

NB

7th Continent corporate site