Despite all attempts of the government to protect the domestic sector, consumers in border regions don’t pay that much mind. Swiss consumers spend about 11 billion Swiss franc (9.5 billion euro) across the border. In 2016, more than 8 billion Swiss franc (8.3 billion euro) was spent in physical shops outside of Switzerland. Of that, about half, 4.2 billion Swiss franc (4.4 billion euro) was spent on food and other consumer products.
Most consumer tourists prefer to buy dairy, meat and other products such as cosmetics across the border, where prices are better than in the Alpine country. During those trips, daily products, including fruit and vegetables, are also bought. An estimated 3 billion Swiss franc (2.55 billion euro) is spent across the border on food. It’s unknown how much of that is spent on fruit and vegetables.
Consumer tourism less appealing
“The Swiss fresh market is much protected by the government, which is why the prices for fresh produce, milk and meat are very high. That’s why consumers go abroad for these products,” says Andreas Allenspach, buyer for Coop. “This is even more appealing, because consumers can request their VAT back in the country of purchase, but they don’t have to pay VAT in Switzerland,” says Marc Wermelinger from professional organisation Swisscofel. This tax difference can easily result in a profit between 12 and 25 per cent. It’s therefore not surprising this is mostly a problem in border regions. “As a result, supermarkets near the border have seen up to 10 per cent of their turnover disappear,” Marc continues.
Three years ago, the Swiss Central Bank suddenly abandoned the fixed permanent exchange rate between the Swiss franc and the euro. The financial markets were startled: the value of the currency plummeted in a short period, although it also recovered. With it came an end to the Swiss Central Bank’s programme, which lasted years, to keep the exchange rate with the euro stable. “When the government abandoned the permanent exchange rate, you could see more Swiss people were prepared to travel great distances to do their shopping abroad,” Andreas says.
Import puts pressure on prices
Because the difference between the Swiss franc and the euro dropped by 30 per cent, ‘consumer tourism’ has become less appealing. “Yet consumers still import many products.” Ever since the exchange rate was abandoned, it’s been fluctuating between 1.05 franc and 1.20 franc for one euro. Because of that, the currency’s price is stable and high, and consumer tourism remains at a similar level. To change that, the euro has to become even stronger, Andreas expects.
However, it’s not just the consumers in border regions who profit from the favourable exchange rate. The rates are also positive for importers of fruit and vegetables. “That sometimes leads to pressure on prices of Swiss products,” Marc says. About 60 per cent of the fruit in Swiss supermarkets is imported. For vegetables, that is 40 per cent. “The Swiss sector is in a stage of structural changes,” Marc continues. “More and more growers are selling their own products.” Grower’s associations like in the EU don’t exist in the Alpine country. “Our growers, cooperatives and private traders are used to working together.”
Plenty of room for exotics
The supermarket organisation Coop wants to buy from growers as directly as possible, but that’s not always an option. “A distinction between traders also has to be made for that,” Andreas says. “For example, traders of apples or pears have their own shed and cold store for storage. They have their entire infrastructure in order.” For other products, particularly vegetables, the supply chain chooses direct purchases. To that end, Coop works with domestic grower’s associations. For the import from Southern Europe, the retailer has their own purchasing organisation in Spain, Alifresca.
“For overseas products we work with permanent importers,” Andreas explains. The Greenery and Valstar are two large Dutch partners of Coop. The exotics have an important place in the Swiss retailer’s assortment. Baby bananas, pomelos and passionfruit are on the shelves particularly in an international city such as Geneva. “That’s important in a city with many nationalities,” Andreas continues. The basic assortment of exotics is expanded with products including tamarillo and kumquat during holidays such as Christmas and Easter. “The category is quickly growing, particularly for avocado and mango.”
Limited Swiss production
The domestic production is limited compared to other countries. In 2016, 374,300 tonnes of potatoes were grubbed up. Despite this volume being under pressure in recent years, this product is still top of the list regarding production volume. In vegetable production, after potatoes come carrots and turnips (2016: 68,529 tonnes), lettuce and chicory (2016: 66,037 tonnes) and tomatoes (2016: 41,965 tonnes). Apples, pears, cherries, apricots and berries are at the top of the list regarding the production of fruit. Since 2000, this volume dropped considerably, yet a rising line can be seen in production since 2010. In 2016, production amounted to 226,487 tonnes. For grapes, production amounted to 136,352 tonnes that year. The pear production decreased significantly since 2000. Although nearly 117.000 tonnes of pears were harvested in 2000, sixteen years later only 43,922 tonnes were harvested.
Despite the limited volume, local-for-local is a growing trend in the Alpine country. Swiss fruit and vegetables are highly valued by consumers. “That’s also because of the issue of sustainability,” Andreas explains the context. “We have two labels for these products. One is from the government for Swiss products, the other is our own label for local products.” Because of the room given to local products, supply can differ per supermarket. “Quality is also very important. The Swiss get paid high salaries, and are therefore willing to pay more for high quality fruit.”
Import restrictions
Vegetables are grown throughout the country, except in the mountain regions. The fruit production is mostly concentrated in a smaller number of regions. Around Lake Constance in the northeast of the country and in Valais on the border with Italy, cherries, apricots and top fruit among other products, are grown. The cherry tree orchards can also be found around Basel, while top fruit can also be found around Lake Geneva.
This domestic production is protected by various import measures. The import restrictions are flexible and can be adjusted to the market situation. When there’s no domestic production, or when there’s more demand than production, import tariffs are lowered. When local production is sufficient to keep the market balanced, import is impossible. Some products are exempt from the import restrictions, exotics products, for instance, such as bananas and pineapple, but also asparagus, garlic and mushrooms can also be imported to an unlimited extent.
The import restrictions are constructed like a three-stage rocket, which is different for each product. In some periods there are no restrictions, some periods have limited import, and finally there are periods in which import is not allowed. Besides, for some products import is regulated in detail. This is the case for, among other products, cherry tomatoes, peretti tomatoes and round tomatoes. For other products, such as a number of cabbage types, there are import restrictions year-round.
Find additional informations about swiss market here.
More information:
Swisscofel
Marc Wermelinger
marc.wermelinger@swisscofel.ch
www.swisscofel.ch
Coop
Andreas Allenspach
www.coop.ch