U.S. "absolutely key" for BanaBay positioning in 2017 - FreshFruitPortal.com

U.S. "absolutely key" for BanaBay positioning in 2017

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After a very challenging summer with short supplies from Central America, trader BanaBay was rocked by increased competition for Ecuadorian fruit, prompting a new approach for the U.S. market. mark-osullivan-edit

"For three months this year the U.S. was probably the only market we could have sold to with bananas and made money," managing director Mark O'Sullivan told www.freshfruitportal.com during the inaugural Amsterdam Produce Show and Conference this month.

He said the shortage from Central America meant the U.S. bought a "huge amount of fruit from Ecuador", leading to higher prices.

"The rest of the world couldn’t cope with that," O'Sullivan said.

"A month ago it sort of finished and Central America started picking up. It’s always a difficult time of the year for bananas anyway, but normally prices will change and become more in line with market conditions.

"But because that didn’t happen, because the U.S. needed fruit desperately, the price remained much higher and it made the global picture look very bleak for us."

BanaBay has made forays into the U.S. market before, but now the plan is to put more efforts into the country not just in bananas, but in other supplementary products BanaBay is developing like plantain chips and chocolate-coated bananas.

"Over the next six months I want to be trading regularly with the U.S. and I want to find who are the key partners," O'Sullivan said.

"One of the key things for any business to enable itself to grow is to look at how you can diversify your portfolio, and looking at different things that are going to support the customers that we’ve got. 

"And that’s really the transition we see within the business – we want to work closer and closer to our customers, understand how their businesses develop and what are the key strategies they want to achieve."

To be clear, BanaBay has some ownership from Ecuadorian banana growers, so the outcome of higher prices wasn't all bad. However, as a trading company the circumstances did force a new strategy.

"In any sale you need to have that end-to-end basis of price that can work, but with the price being extremely high during a period when bananas are not at the forefront of people’s minds, people are moving on to summer fruits.

"It’s a difficult market at the best of times, but normally the price will then reflect down to allow you to accommodate certain sales. Then that volume dropped by over 50% during that period because we had no U.S. market to accommodate that."

The trans-Atlantic shift also comes just 18 months after BanaBay decided to stop supplying into the U.K.

"Our main supply was always going into wholesale markets there, which with the banana wars in the U.K. and the price being pretty much maintained whether it’s 68 pence to 79 pence a kilo across the year, it makes it very difficult for all brands and importers to deal with those price conditions," he said.

"It’s very tight and difficult.

"Ideally with the U.K., as in the U.S., we need to have a wholesale trade but we need some project with a retailer that’s willing to look at something a bit different, and that way you can counteract both markets in the right way."

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