U.S.: New fruit categories, varieties in the works at Forever Fresh
Combining two powerhouses in the Chilean fruit industry, one of them also holding the mantle of Peru's top table grape shipper, Philadelphia-based importer Forever Fresh is planning a smooth and steady transition into winter sales of South American fresh produce. Supermarket programs will form a core part of a strategy to avoid price volatility, while also testing the waters with new products and the opening of an office in China.
"There are times when the pricing is very high but Rapel (Verfrut's Peruvian subsidiary) will stick to their programs," says Forever Fresh general manager Evan Myers when asked about price speculation for the upcoming table grape campaign.
This is not the position one might expect in a year when all indications point to an earlier end to the Californian season, and a coastal El Niño effect has slashed expected volumes from the Piura region of northern Peru.
But Verfrut, which has 50-50 ownership of Forever Fresh along with Chilean cherry giant Agrícola Garces, would rather foster long-term relationships than make a quick buck from short-term speculation in a short market.
"It is going to be serious but it will only affect this year’s crop. It will not have an impact that will last for the coming years," says Verfrut's new business development and offshore offices director Ignacio Donoso.
"We exported over five million boxes out of our farms in Peru last year. This year we will have a drop – we will go down by 40-45%, and the following year it’ll go back again.
"So we're telling that to our customers and obviously it will have an impact on our volumes, our programs and it will obviously have an impact on pricing because the production cost goes up significantly when you lose that percentage."
Donoso emphasized the breakeven point has gone up by 35-40%, and in some varieties - particularly seedless - it has risen 60% due to weather effects.
"You have to look for the long-term partnerships and we do have some that are willing to step up and pay extra money for the fruit," says Myers.
"It’s a tricky position – you have to understand both sides that if the buyers are able to go get fruit at lower pricing at the same quality they’re probably going to go there to fill their needs," he says.
Donoso says the company has stuck with Red Globes despite an Peruvian industry-wide withdrawal from the variety (he expects a U-turn for the cultivar in due course), but U.S.-oriented exports are mostly focused on seedless grapes.
"90-95% of seedless are with the traditional ones but we are getting new varieties into production so we’ll have some Timco, Allison, some Ivory. Both Timco and Allison are red seedless, and Ivory is a white seedless," he says.
Another variety the group has planted is the Chilean-bred black seedless grape Iniagrape-one.
"This is our first year and we are optimistic," he says, adding that while Forever Fresh mainly sources from its owners, the group would also source from selected growers in Chile, Peru, Argentina and eventually the United States.
Being picky with cherries
Depending on how recent rains impact the crop, Chile's cherry growers could be in a contrasting position to Peru's grape producers, with volume that's set to grow and the industry looking to produce at least 28-30 million 5kg (11lb) cases, according to Forever Fresh director of sales and operations Hernan Garces.
"So far people are talking about 35 million but we’ll have weather issues. There are still many days until the season starts. We can say whatever we like right now but Mother Nature will have the last word," says Garces.
A 30 million-carton export harvest would still be more than double the 16 million cases in 2016-17. Around 85-90% tends to go to Asia, but Garces is optimistic about the potential in the U.S. market as well.
"We truly believe in the U.S. as a mature market in cherries. We have been sending cherries there for the last eight years now and there is a market for them," he says.
"I don’t know how many cherries they can take in wintertime but this season I won’t expect more than 2.5 million cases from the industry going to the States, versus around 1.8 million last year."
Through improved post-harvest practices and the added support of Forever Fresh's quality control teams on the ground in the U.S., Garces says cherry rejections have dropped from around 20% 10 years ago to 2% nowadays.
"That's a big thing when it comes to imports of cherries," he says.
"You have at least 20 days from when you pick until they arrive in the United States by vessel, so the condition and quality can change in that time. Before shipping to any customer you’ve got to see the fruit and decide if it’s the right product for the customer."
Myers highlights Forever Fresh has a packing machine it uses for cherry imports, while also looking at new types of packaging, moving away from the standard pouch bag to a one-pound topseal pack which has been introduced to the market with "some good successes".
"The vessel fruit will be packed in the States, so that will help with some of the quality concerns some people might have in the U.S.," he says.
"There are different standards – in the U.S. people are used to the fruit in their backyard; the fruit is picked and shipped and it can be at the consumer within a week."
Similarly to table grapes, Forever Fresh will also need to find the right balance in pricing for cherries.
"Typically the opening prices for cherries come on extremely high and what that does is it sets the retail markets very high, and two weeks later or so a lot of volume starts to come in," Myers says.
"Then what happens is the retailers set high prices and they can’t react to the flood of product coming in, so all of a sudden the pricing can drop US$25 within 10 days easily on the air-flown product.
"I think this year consumption-wise we’ll need to have good quality fruit and good sizing, but we also will need the retail pricing set from the beginning at a good level where consumers are going to pick up the fruit."
So the company would rather not have prices open so high in order to avoid dramatic price falls, and Garces emphasizes ad planning in advance will be necessary with strategic partners.
"Typically out of Chile your retail in the U.S. is US$3.99-4.99 a pound and that’s pretty high," says Myers.
"The sooner you get to US$3.99 the better because then you can move the volume," says Garces.
"As Agrícola Garces we expect to achieve around 300,000-400,000 cases of cherries to the States. That’s going to be allocated in retail programs."
While Verfrut is a major player in grapes and Garces in cherries, both have similar production levels of other stone fruit like like nectarines, peaches and plums.
"We both agree that there is some fruit on the trees so volumes will be good," says Garces.
"There are no drops we’re seeing on the volumes. Maybe plums will be lower than other stonefruit, but still it might be a good thing.
Donoso says both companies are changing their portfolio mix in stonefruit, testing new varieties from the likes of Regal'in, Provedo and A.N.A. Chile.
"We’re planting some and are already producing, and it’s the same with Garces. If you see our varietal mix today on what it was seven years ago, it’s changed a lot."
Donoso estimates that between both companies across all categories - including winter crops like apples, kiwifruit, citrus and some pomegranates - they reach a production level of close to 20 million cases.
"We want to market an important percentage and a key part of our marketing strategy through our Forever Fresh offices, in North America and now Asia," he says.
This last comment alludes to a recent office opening in Shanghai, where Garces will soon be based.
"We’ll be operating a company there. It will be operating by Nov. 1 and that will also play a key role in our marketing strategy for both companies. That will be called Forever Fresh Asia," says Donoso.
In addition to the new office for Forever Fresh, Verfrut has also moved into two new apple brands - Kanzi and Evelina.
"Kanzi is planted but Evelina is still under evaluation. It’s slower than other categories to grow and produce," he clarifies.
Forever Fresh also has a 300-hectare organic banana project underway in Peru as well. Finally, an expansion in fresh produce categories would be incomplete without a move into "green gold" - avocados.
"We've got our first avocados now," says Garces.
"They should be available today. We’re going to start to grow, and that's not just with the traditional items that we’re looking at," adds Myers.