Soft fruit has been the star performer in the past year in a fresh produce category that was dragged into round-pound pricing by the recession, says Michael Barker
Things are changing fast in fresh produce.
Once a category where retailers were happy to take high margins on commoditised products, the recession brought a paradigm shift in their approach in favour of a value-led proposition.
Growers complained that high-quality fruit and veg were being pushed into value and round-pound lines, eroding profits at both ends of the supply chain.
And the weather has not been the farmer's friend in recent months, with volcanic ash disrupting deliveries of exotic fruits and, closer to home, drought hitting production of Jersey Royal potatoes.
But growers and marketers have been determined to improve margins and drive up volumes. With more fresh produce brands launched in the past year than at any other time in recent memory, companies have signalled their intention not to be drawn further into the value price war. Overall it seems to be working, with value sales of fresh produce up 1.5% on volume growth of 0.5% [Kantar 52w/e 21 February].
Soft fruit has done particularly well, with sales up 5.4% to £1.5bn and volumes rising 6.5% [Kantar] on the back of regular price promotions and the use of gondola ends.
Supermarkets have given strong support to soft fruit in terms of generous shelf space and promotional activity, says British Summer Fruits chairman Laurence Olins. But the sector has also benefited from year-round marketing support, he stresses, with British, South American and Spanish growers contributing a total of £600,000 annually to ensure the message is constantly in the UK consumer media.
"It's a virtuous circle," he says. "We had better availability in summer 2009, we have a 12-month consumer-led campaign. Consumers are getting the message about the link between berries and good health, diet, beauty and so on. And we've had tremendous support from retailers."
While growers in other sectors of produce have bemoaned government research spending cuts, soft fruit has led the way in R&D thanks to private investment by leading suppliers. That has led to numerous launches boasting enhanced flavour and yield such as Camarillo, Sasha and Fenella strawberries and Autumn Treasure raspberries.
The pace of private investment backed-R&D has given the sector a crucial advantage, says Olins, and helps explain why berries are outperforming the market so significantly.
Blackcurrants are also selling well on the back of a campaign to promote the health benefits, says British Blackcurrant Foundation chairman Jo Hilditch. The Foundation is stepping up its efforts to persuade consumers to eat a range of different-coloured produce, while Ribena which buys up most British blackcurrants is leading the way in varietal development.
"There is a real need for varieties that can cope with climate change," Hilditch adds. "There are exciting varieties in the pipeline."
With research showing consumers ate less healthily in the recession, marketers and growers have had to be particularly innovative in driving sales. That has brought a proliferation of brands (see box) and high-profile marketing.
A clear division has emerged between sectors that are considered cheap essentials and those thought of as expensive luxuries. Although still a relatively small part of the market, value line sales of fresh produce have risen 17.8% to £475m in the past year, with sales of premium fruit and veg falling 3.6%.
Tropical fruit, which suffers from being at the premium end of the price spectrum, was one of the big losers in the recession, with both value and volume sales plummeting as consumers re-evaluated their spend and supermarkets gave space over to value lines. This year heavy promotion and a downward trend to round-pound pricing have seen volumes rise 3.4% but values drop 2.1% to £315m.
Core tropical fruits such as pineapples and melons proved more resilient with values and volume both up significantly in recent months while the more exotic lines suffered badly, says Fresh Del Monte's UK MD James Harvey. That reflected the fact that pineapples and melons are now considered everyday products, he claims. "It's important that consumers have access to good quality fruit, something they can rely on receiving from a trusted brand, and so we continue to support promotions to achieve this aim," says Harvey.
Del Monte has also developed a new melon variety with an enhanced taste that should be ready for Brazil's growing season this year. It claims the premium variety will persuade consumers to trade up.
In contrast, sales of apples have been largely static, with volume up 1.6% to £511m but value falling 0.6%. "I've been concerned," says English Apples & Pears chief executive Adrian Barlow. "It's very important apple sales continue to advance against the background of the huge endeavour to get people to eat 5-a-day."
The apple sales figure is a particular disappointment at a time when growers have improved the appearance, eating quality and storage ability of the fruit, and introduced new varieties such as Jazz, Kanzi and Cameo. "There is unfortunately a reluctance on the part of Britons to eat sufficient fresh produce," he says. "We lose out because of the immense public appetite for confectionery."
Despite that, Barlow points out that there has been better news for domestic apples than imported, with sales of English rising significantly on the back of increased retailer support of home-grown apples. In the period from 1 August 2009 to 3 April 2010, 9% more English apples and pears were sold year-on-year, he says, with notable rises in Gala and Braeburn.
Meanwhile, salads continue to defy poor summer weather, with the category seeing 1.7% value and 0.3% volume growth. Within lettuce, the trend of producers re-engineering pack sizes downwards has paid off, says Florette commercial director Sandy Sewell.
"If a pack is £1, people will buy it," he says. "We've seen much larger uptake in the first quarter because people are looking for value, and coming back into the category after the recession."
In a trend for convenience evident across fresh produce, Sewell says there has been a significant move away from wholehead lettuce back to prepared. Florette has had strong sales on the back of its ongoing World of Florette ads and expects to add £5m of incremental sales to the category following the launch of its World Cup Three Lions Salad.
The potato is a further example of a commoditised product that is trying to develop strong brands to add value. Albert Bartlett has led the way, pulling off a marketing coup by signing Hollywood actress Marcia Cross to front its Rooster brand and seeing sales rise 135% in the last quarter of 2009 on the back of it. Rooster followed this with an on-pack tie-up with Disney's Toy Story 3, starting in March this year.
The Jersey Royal Company has also sought to rise above last season's promotional hell by creating premium branding for this year. And they will need all the help they can get. Experts estimate crop yields could be 50% lower than previous years after Jersey suffered the worst drought in 34 years.
To top it all, sales of potatoes are down 3.7% in value. Education stressing spuds are healthy, quick, tasty and economical is fundamental to returning the category to growth, says Caroline Evans, head of marketing and corporate affairs at the Potato Council.
But the potato isn't the only vegetable to be suffering. The past year has been difficult for vegetables in general; root crops saw a 0.6% value rise but a 2.7% volume fall. Meanwhile, brassica sales fell 0.9% by value to £462m with volume down 2.7%. In an attempt to change their image, the Brassica Growers Association is dropping 'brassicas' from all marketing as part of a new Love Your Greens campaign.
Whether this campaign will be enough to reverse declining sales remains to be seen. The growth of branded players and hefty marketing and promotions have succeeded in boosting sales of some types of fresh produce, most notably soft fruits. Growers and government health departments will be hoping other sectors can replicate soft fruit's success.
Can Buzz Lightyear take potatoes to infinity and beyond? Buzz and the Rooster star command will certainly give it their best shot.
Focus On Fresh Produce
Things are changing fast in fresh produce.
Once a category where retailers were happy to take high margins on commoditised products, the recession brought a paradigm shift in their approach in favour of a value-led proposition.
Growers complained that high-quality fruit and veg were being pushed into value and round-pound lines, eroding profits at both ends of the supply chain.
And the weather has not been the farmer's friend in recent months, with volcanic ash disrupting deliveries of exotic fruits and, closer to home, drought hitting production of Jersey Royal potatoes.
But growers and marketers have been determined to improve margins and drive up volumes. With more fresh produce brands launched in the past year than at any other time in recent memory, companies have signalled their intention not to be drawn further into the value price war. Overall it seems to be working, with value sales of fresh produce up 1.5% on volume growth of 0.5% [Kantar 52w/e 21 February].
Soft fruit has done particularly well, with sales up 5.4% to £1.5bn and volumes rising 6.5% [Kantar] on the back of regular price promotions and the use of gondola ends.
Supermarkets have given strong support to soft fruit in terms of generous shelf space and promotional activity, says British Summer Fruits chairman Laurence Olins. But the sector has also benefited from year-round marketing support, he stresses, with British, South American and Spanish growers contributing a total of £600,000 annually to ensure the message is constantly in the UK consumer media.
"It's a virtuous circle," he says. "We had better availability in summer 2009, we have a 12-month consumer-led campaign. Consumers are getting the message about the link between berries and good health, diet, beauty and so on. And we've had tremendous support from retailers."
While growers in other sectors of produce have bemoaned government research spending cuts, soft fruit has led the way in R&D thanks to private investment by leading suppliers. That has led to numerous launches boasting enhanced flavour and yield such as Camarillo, Sasha and Fenella strawberries and Autumn Treasure raspberries.
The pace of private investment backed-R&D has given the sector a crucial advantage, says Olins, and helps explain why berries are outperforming the market so significantly.
Blackcurrants are also selling well on the back of a campaign to promote the health benefits, says British Blackcurrant Foundation chairman Jo Hilditch. The Foundation is stepping up its efforts to persuade consumers to eat a range of different-coloured produce, while Ribena which buys up most British blackcurrants is leading the way in varietal development.
"There is a real need for varieties that can cope with climate change," Hilditch adds. "There are exciting varieties in the pipeline."
With research showing consumers ate less healthily in the recession, marketers and growers have had to be particularly innovative in driving sales. That has brought a proliferation of brands (see box) and high-profile marketing.
A clear division has emerged between sectors that are considered cheap essentials and those thought of as expensive luxuries. Although still a relatively small part of the market, value line sales of fresh produce have risen 17.8% to £475m in the past year, with sales of premium fruit and veg falling 3.6%.
Tropical fruit, which suffers from being at the premium end of the price spectrum, was one of the big losers in the recession, with both value and volume sales plummeting as consumers re-evaluated their spend and supermarkets gave space over to value lines. This year heavy promotion and a downward trend to round-pound pricing have seen volumes rise 3.4% but values drop 2.1% to £315m.
Core tropical fruits such as pineapples and melons proved more resilient with values and volume both up significantly in recent months while the more exotic lines suffered badly, says Fresh Del Monte's UK MD James Harvey. That reflected the fact that pineapples and melons are now considered everyday products, he claims. "It's important that consumers have access to good quality fruit, something they can rely on receiving from a trusted brand, and so we continue to support promotions to achieve this aim," says Harvey.
Del Monte has also developed a new melon variety with an enhanced taste that should be ready for Brazil's growing season this year. It claims the premium variety will persuade consumers to trade up.
In contrast, sales of apples have been largely static, with volume up 1.6% to £511m but value falling 0.6%. "I've been concerned," says English Apples & Pears chief executive Adrian Barlow. "It's very important apple sales continue to advance against the background of the huge endeavour to get people to eat 5-a-day."
The apple sales figure is a particular disappointment at a time when growers have improved the appearance, eating quality and storage ability of the fruit, and introduced new varieties such as Jazz, Kanzi and Cameo. "There is unfortunately a reluctance on the part of Britons to eat sufficient fresh produce," he says. "We lose out because of the immense public appetite for confectionery."
Despite that, Barlow points out that there has been better news for domestic apples than imported, with sales of English rising significantly on the back of increased retailer support of home-grown apples. In the period from 1 August 2009 to 3 April 2010, 9% more English apples and pears were sold year-on-year, he says, with notable rises in Gala and Braeburn.
Meanwhile, salads continue to defy poor summer weather, with the category seeing 1.7% value and 0.3% volume growth. Within lettuce, the trend of producers re-engineering pack sizes downwards has paid off, says Florette commercial director Sandy Sewell.
"If a pack is £1, people will buy it," he says. "We've seen much larger uptake in the first quarter because people are looking for value, and coming back into the category after the recession."
In a trend for convenience evident across fresh produce, Sewell says there has been a significant move away from wholehead lettuce back to prepared. Florette has had strong sales on the back of its ongoing World of Florette ads and expects to add £5m of incremental sales to the category following the launch of its World Cup Three Lions Salad.
The potato is a further example of a commoditised product that is trying to develop strong brands to add value. Albert Bartlett has led the way, pulling off a marketing coup by signing Hollywood actress Marcia Cross to front its Rooster brand and seeing sales rise 135% in the last quarter of 2009 on the back of it. Rooster followed this with an on-pack tie-up with Disney's Toy Story 3, starting in March this year.
The Jersey Royal Company has also sought to rise above last season's promotional hell by creating premium branding for this year. And they will need all the help they can get. Experts estimate crop yields could be 50% lower than previous years after Jersey suffered the worst drought in 34 years.
To top it all, sales of potatoes are down 3.7% in value. Education stressing spuds are healthy, quick, tasty and economical is fundamental to returning the category to growth, says Caroline Evans, head of marketing and corporate affairs at the Potato Council.
But the potato isn't the only vegetable to be suffering. The past year has been difficult for vegetables in general; root crops saw a 0.6% value rise but a 2.7% volume fall. Meanwhile, brassica sales fell 0.9% by value to £462m with volume down 2.7%. In an attempt to change their image, the Brassica Growers Association is dropping 'brassicas' from all marketing as part of a new Love Your Greens campaign.
Whether this campaign will be enough to reverse declining sales remains to be seen. The growth of branded players and hefty marketing and promotions have succeeded in boosting sales of some types of fresh produce, most notably soft fruits. Growers and government health departments will be hoping other sectors can replicate soft fruit's success.
Can Buzz Lightyear take potatoes to infinity and beyond? Buzz and the Rooster star command will certainly give it their best shot.
Focus On Fresh Produce
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