U.S.: May grape sales likely to be up on 2019 after slower spring period, says Pandol
Table grape sales in the U.S. in May are likely to be higher year-on-year following a period of lower sales in the spring that came despite the fresh fruit category overall being significantly up, according to John Pandol.
The special projects director of California-based Pandol Bros. said that although the Mexican grape crop is smaller than last year, it will be more spread out with a much greater proportion of fruit arriving in May.
Pandol also attributed the year-on-year declines in weekly dollar sales of table grapes in U.S. retailers in late March and April to both a shortage of grapes with good shelf life and lower supplies than normal.
Weekly table grape sales measured in dollars from end of March through to the middle of April were down by between 13 and 18 percent, according to IRI data, although almost all the other top-ten selling fruits saw substantial growth amid the Covid-19 pandemic.
"Some fruits are doing very well, all are doing better, and grapes seem to be the exception," Pandol said.
He explained that a lot of mid-season Chilean fruit had been held in storage for longer amid expectations the end of the import season would have a strong market.
"I think a lot of the fruit in the storages is older than it normally is, and during the coronavirus times freshness and shelf life is a big driver, so something that doesn't look very fresh isn't going to get bought up like the apples or fresh Navels," he said.
In addition, he said not as many grapes were sent to the U.S. market over the last couple of months than during the same period in the last few years. A factor that likely contributed to this was the strong European market, which saw an early end from South Africa and much lower supplies from India, encouraging Chilean shippers to send more grapes there.
These two factors, he said, were much more likely behind the lower sales, rather than perceived health risks over other consumers touching fruit in open bags, in which the majority of table grapes are sold in the U.S.
At present in the U.S., green varieties are in shorter supply than reds. Pandol said that prices are highly dependent on freshness, but that generally a box of green grapes was in the US$30 range and a box of reds in the US$ 18-20 range.
"I think there was an expectation that it would be higher," he said.
Chilean grapes are now clearing from the market and should be gone in the second half of May, which according to Pandol is a relatively normal transition period.
He added that table grapes have very little reliance on foodservice, with only around 1% of volumes going through those channels. The almost-entire closure of the foodservice sector over recent weeks therefore would not have had much impact on the industry.
Mexican table grape season kicks off
Mexico, which recently began shipping its first early green varieties in the first few days of May, is forecasting volumes to be down by around 20% this year at 19.7m boxes.
But unlike last year, when supplies were heavily concentrated in June, shipments will be much more evenly spread out this year, providing the U.S. market with better volumes of fresh grapes at the start of the season.
"I don't think we will have weeks over 3m boxes this year. Last year we had four weeks of over 4m and much of that was not sold - it was too much too fast," he said.
"I would guess when we'll all done, May's sales will be a bit higher. I think June will be the same because it's always a full month either way, and then it gets to be competition between competing commodities like cherries. Will cherries go to the Far East or will they be more robustly in the U.S. market as they have been for the last two seasons?"
"During the summer here, there are a lot of sources for a lot of products that always compete with one another. It's like billiard balls - you never know where they're going to end up."
Less demand for higher-priced table grapes?
One dynamic that could stem from the Covid-19 pandemic - which has led to the loss of around 30m jobs in the U.S. over March and April - could be lower demand for expensive fruit.
Table grapes sit generally around the mid-to-high-end of the pricing spectrum, but many newer and premium varieties sell at significantly higher prices than others.
Pandol said that with high levels of unemployment and more people facing economic difficulties, there will this year likely be greater demand for value-priced table grapes.
But the lower consumer demand for expensive grapes could also limit retailers' ability to sell some grapes at very low prices, such as below US$1 per pound - lower than farmgate prices. He said this is because retailers often sell some grapes at a loss in order to get consumers into the store, compensating with high prices for other grapes.
“We see stores retailing products at less than cost, but because it is less likely the chains can make it up on higher-priced grapes, we might see retail prices based on more reasonable everyday margins. It might kind of rationalize the pricing in the category a bit," he said.