As demand across the berry category continues to grow, the CEO of one the world’s leading marketers is understandably confident forthe years that lie ahead. Here at www.freshfruitportal.com we recently caught up with Naturipe’s Dwight Ferguson when he was visiting the offices of partner company Hortifrut in Santiago, Chile, to hear about how the business was going and some changing retail dynamics in the U.S. retail and food service market.
How would you describe your expectations for the 2015 Northern Hemisphere berry season?
I think we’re going to see record production, so therefore record industry sales for the Northern Hemisphere season this year. Many of the growing areas are early this year and many are forecasting bumper crops, so there’s going to be tremendous opportunity for all berry customers and consumers to take full advantage of the plentiful production in 2015.
I know we’re working very closely with our customers to set up promotional activities – we’ve been communicating with them for weeks now about the opportunities associated with the big crop in North America. We’re also seeing less traditional berry retailers or marketers get into the game and take advantage of the opportunity. People like Starbucks, for example, are beginning to realize all the opportunities associated with consumer dynamics and offering more products in their food portfolio that contain berries.
Is there a notable increase coming from one particular food category for these foodservice outlets?
It’s across the board. They’re very bullish on their new line of juice drinks that contain berries, for example. Fast food chains too, which are obviously very plentiful in America, have gotten into the berry game in a big way, offering up special seasonal promotions on things like salads that contain berries. So it’s not just about retailers.
Obviously retailers are going to continue to have tremendous opportunities to promote berries during that peak consumption time during the year, but the non-traditional guys are waking up and taking full advantage as well. In my mind we’re only going to see more blurring of the traditional retail channels for fruit.
I think we’re migrating to the point where berry availability is only going to become more plentiful and commonplace in big consumer markets like the United States, which is a great thing and obviously represents continued growth opportunities for all the growers and everyone else that has vested interests in the berry business. So I’m very bullish and optimistic about the future of this business.
It has been said that U.S. consumer demand for blueberries is growing at an annual rate of 20%. Can you confirm this impressive figure?
I don’t know what the actual number or statistic is but that wouldn’t surprise me. Americans, like consumers in many parts of the world, are becoming more aware of the foods that they’re consuming. They want their children to eat better, healthier foods, so naturally we’re going to continue to see good growth rates for a while to come.
Which fruits within the berry category would you say are growing the fastest?
Production is expanding on all the bush berries at good rates. The strawberry guys in the U.S. maybe less so, because in the U.S. the strawberry industry is still largely controlled by California and it’s no secret that California strawberry growers are under tremendous pressure these days.
First all of all there’s a horrible drought in California that’s been there for the last three or four years, there’s no real end in sight on that, and the drought is a big part of the challenge there. Picking labor in the U.S. continues to be a big challenge, as it is in many other markets around the world, which is a reason why technology is becoming more and more important to the production side of the business. And there’s an increase in government regulations which makes it increasingly difficult for growers to get by and make a living doing what they do.
So there’s no shortage of challenges for the California strawberry growers, which is why you may see some leveling of production growth there. That’s not to say you won’t see increases elsewhere, in Mexico for example, which could potentially more than offset that. Overall we continue to see good growth rates in terms of consumption and obviously production will continue to grow in order to keep up with all that.
What about raspberries and blackberries?
Well they’re still smaller pieces of the pie, certainly smaller than strawberries or blueberries. But they’re growing at faster rates still. Consumption is increasing dramatically fast, not just on the fresh side but also on the processed side. So our Total Berry Solution concept is certainly applicable to blackberries and raspberries as well. And our growers are looking for ways to diversify.
It was recently announced that many farmers throughout California would be taking a 25% voluntary water cut. Will this affect Naturipe’s growers?
Sure, in some parts like Delano, which is in the Central Valley where we are the biggest blueberry grower, obviously that’s going to have some impact on production. What? I don’t know exactly, but it’s bound to have some impact on production. And indirectly of course it will impact costs and yield and overall profitability associated with the crops.
So those growers are under pressure, but growers everywhere are under pressure. It’s not easy to be a grower, I think that’s one of the reasons why our business model is special, unique and beneficial to growers in particular, because we’re sensitive to those things.
What would be an average number of growers Naturipe works with in any given country?
If you’re talking about a place like Chile, there are hundreds. I think that’s part of the challenge, or maybe a better way to put it is that’s part of the opportunity for more of these growers to align themselves with strong exporters, with strong grower-owned marketing companies like Naturipe, who understand their needs and understand many challenges that are affecting their business today, and can perform for them in a very positive way and perform for them in a way that’s safe and secure, because that’s not always the case.
We’re talking about livelihood for these growers. They put their blood, sweat, tears and their family nest egg into these farms, so they’re totally dependent on the way their marketing company performs for them. We understand that and don’t take that for granted at all.
Over the next few years is there a particular part of the sector Naturipe will be focused on?
Our Total Berry Solution. I think we’re going to continue to leverage that concept of Total Berry Solution to grow and expand, not just in the fresh markets in North America and elsewhere in the world, but also in the processed berry markets or channels, Ready-to-Eat markets or channels, and of course we’re selectively looking at global expansion opportunities as well. So Naturipe is very actively engaged in pursing all kinds of growth opportunities at this point.
Roughly what proportion of the Naturipe’s business is processed sales as opposed to fresh?
Today if I had to guess I would imagine maybe a quarter of our business of processed. But again, that side of the business is growing faster than the fresh side. The fresh side is growing at a good rate as well.
I guess there are a huge number of products nowadays that use processed berries.
Absolutely, you can’t go anywhere in the United States without seeing products that have berries in them. The smoothie craze in particular has just taken American by storm. It goes back to what I was talking about earlier, about healthy lifestyles and consequently the demand for frozen and processed berries has just taken off, especially in organics.
Is your organic production seeing equally strong growth as the conventional side?
Absolutely, yes. Demand overall for berries continues to expand at good rates, but it’s even faster on the organic side. And Naturipe is extremely well-positioned to take advantage of that.
Is a significant proportion of that organic growth coming from conventional growers converting their production?
There’s a time lag in order to do that. But yes, that’s happening. And also new acreage is being dedicated to organic production as well, so it’s both conversion as well as new dedicated acreage.