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Frits Popma, Popma Fruit Expertise:
“Private labels may harm future of banana sector”
Clear figures on the distribution of the market under the banana brand are hard to find. Much data is outdated or simply not specific enough. According to the British NGO Bananalink, three quarters of the global market were in the hands of five companies in 2011. Arranged by size, these were Dole, Chiquita, Del Monte, Fyffes and Noboa. Statistics on the Dutch and European markets focus primarily on exporting countries and not on the companies. Yet there is a growing trend in the banana market: the rise of private labels, which may have major consequences for the entire sector.
Frits Popma (left) gave a training about the supply chain to NEH Philipines in Davao.
In 2007, five international researchers from various universities did research on the rise of private labels. The study involved private labels in general and not specifically within a particular product, but the image outlined by the research speaks for itself. Researchers expect the market share of private labels to have increased to thirty percent in 2020. In 2003, private labels already accounted for a substantial proportion of the market in several European countries: 38 percent in Switzerland, 23 percent in Spain, and 21 percent in France. Economic downturns, such as in the 80s and early 90s, were a driving force for the emergence of private labels. During these times, US supermarkets invested heavily in private labels with new logos, slogans and more shelf space.
Research and development
The greatest threat to the banana companies are supermarket chains that are increasingly setting up their own import line. Frits Popma: "One of the developments that exist in the sector, is that the supermarkets go shopping themselves. They go to Ecuador or Costa Rica to broker their own deals, even though they often lack the proper knowledge. Bananas are often sold under a private label instead of under the A-brands. Big brands like Dole, Chiquita, Fyffes and others have overhead costs. Expenses like shipping, marketing, R & D and the cost of quality control are all included in the prices. Supermarkets often just focus on a low price, enticing growers to sell cheap in order to guarantee sales. But these growers cannot always guarantee supplies. Just last year, a major US retailer couldn’t deliver, as its supplier couldn’t produce the usual supply.”
Frits: "But what worries me most about sidelining multinationals are the implications for research. The costs for this are also included in the prices. The A-brands invest heavily in developments, but also in battling panama disease and other threatening viruses. These studies cost millions, not something a small grower is likely to engage in. I am not an advocate of multinationals, but something has to be done.” And that's exactly what upsets Frits: the threat to the survival of the banana. "They are getting cheaper, but where does it all lead? I sometimes wonder how long we’ll even have bananas in stores…”
Popma Fruit Expertise
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