Overlapping grape expectations in Europe
Chile's grape industry may have had volume setbacks from the Copiapó frosts this season, but the combination of earlier production and overlap with Californian and Peruvian supply in the U.S. led growers to look for alternatives. The answer? Europe, where southern African exporters had almost free reign at the beginning of their season. At www.freshfruitportal.com we speak with a European distributor and two Southern Hemisphere exporters about upcoming price falls and the state of transition.
It all begins with Brazil, or perhaps California; either way it ends up with high volumes of grapes in Europe in the coming weeks.
Netherlands-based Exsa Europe starts its Southern Hemisphere program with Brazilian fruit, before shifting to its mainstay of South African grapes, accompanied by smaller volumes of Argentine and Peruvian fruit.
Managing director Eddy Kreukniet tells www.freshfruitportal.com the Brazilian grape industry had a good strategy this year with an 'early-in early-out' policy for its European shipments, even though it did clash with local supply a bit.
"But because Brazil was out early it meant that South African and Namibia came in and the market was virtually empty, so from December to mid-January there were very good prices," he says.
"On average, for the first four to five weeks, prices were €2 (US$2.63) higher than the last year."
A promising prospect, especially if you are a Chilean exporter that has found more difficulty than usual in the U.S. market.
Subsole commercial manager Juan Colombo says the Chilean season has been earlier this year, and exporters encountered lower prices in the U.S. due to later Californian supply and more Peruvian Red Globes.
"So because of the situation in the U.S. exporters looked for an alternative, and have decided to send more grapes to Europe, and a lot of people have had the same problem," he tells www.freshfruitportal.com.
"As a result there's going to be a lot more Chilean table grapes going to Europe this year - everyone had very high expectations.
"South Africa has had a lot of rain and should have good volumes during February, and Chilean fruit will start to arrive more in February. It’s been a very unprofessional transition; there needs to be more coordination between the players involved."
So could European grape importers be in for a mini version of what happened with Chilean cherries in Hong Kong recently for Chinese New Year?
"I hope not. For the glut of fruit that we're going to have in Europe we just have to manage; the thing is that the European market is much more price inelastic than the U.S. market.
"In the U.S. if there is too much volume the price can drop and volumes will respond, but in the Europe it’s a little less responsive, so you don't have those same kind of price falls you get in the U.S.
"It would be nice if we had two captive markets in the U.S. and Europe, but that's not the case; we have to share with the others in Europe."
Colombo expects overall volume to be down on last season.
South Africa's prospects
Kreukniet says the European grape market is full but not oversupplied, with a need to get the right rotation to prevent stock from building.
"The market was undersupplied until recently but in the next two weeks it’s going to go back to normal volumes as other countries like Argentina come in, and Chile, and Peru with their red globes," he says.
"You have to make promotions with the supermarkets - prices will probably drop in the next two weeks.
"There are two big vessels arriving in a short period, with one on Friday and one on Tuesday, and there’s another one shortly after that, so you’ve got three big vessels coming in a 10 day period."
He highlights South African grapes have been later this year, while other physiological issues of the fruit have impacted on retailers.
"What we've seen is that during this last part of growth the fruit that’s coming is ripening quite quickly, and that influences the market on this side, as many people decide to pack with more comfortable packaging.
"You have a higher brix, which is good in a way but you have to be fair and say that it’s influencing shelf life. That has followed us throughout this season."
The Grape Company marketing executive Jaco Kruger says there is not a lot South Africa can do to adapt to the situation when it comes to finding new markets.
"Europe and the U.K. are the main markets for us as we can’t ship to the U.S. We can send to Asia and the Middle East but we still have to ship to Europe and keep our market there.
"The next few weeks should be tough but you can only do what you can do."