“Europe continues to be key market for fruit from overseas”

Although emerging markets such as Brazil and Indonesia import more and more vegetables from overseas, the great bulk still goes to North America and Europe, supplemented by sales to countries such as China. Cindy Rijswick, working as an analyst for the Food & Agri Research team at the Rabobank, expects that Europe will remain a stable market. "Over the past decade, fruit imports from the EU-28 countries increased by an average of 2.2.% per year"

Higher value to replace bulk
"For bulk products such as bananas, apples, oranges, tangerines and grapes, Europe is still a vast market. The import of products such as apples and citrus isn’t growing as fast as it used to. You now see the highest growth in the import of fruit with a slightly higher value, such as berries, nuts, avocados and mangoes. My expectation is that this trend will continue. More and more companies are setting up their own ripening facilities, which hopefully doesn’t lead to a huge margin erosion. It is a challenge for companies in the fresh produce industry to avoid coming with the same products as their competitors, but rather to find new ways to add value,” says Cindy.

"Of course there are factors that may limit future exports to Netherlands,” Cindy continues. “Local markets in countries like Brazil for instance, are getting increasingly important, products such as grapes being more spread out. I also expect that more produce will be shipped directly to other European countries. Bananas, to name another item, increasingly come in through containers and less through ships. The question is whether the Dutch ports can increase their share by containerization, but that will also depend on pricing.”

Fragmented
“I do expect, though, that the consolidation trend in the fruit and vegetable trade hasn’t come to an end yet. The market is still quite fragmented, and the number of large players is still relatively limited compared to other sectors," adds Cindy. Due to higher demands of increasingly larger supermarkets, scaling in cultivation and increasing demands on the internal organization in terms of ICT, logistics and quality, a certain scale is actually an advantage. When asked what strategy she recommends to Dutch trading companies, she says: "Search for product market combinations or services that you’re good at, and that allow you to stand out. For most companies, that will be on the European market."

"I think you can still earn a good living in Europe, but you do see a trend in which trading companies move backwards in the chain by becoming active in an exporting country or in cultivation itself. Or the other way round. So you see, for example, more and more foreign producers setting up a sales office in the Netherlands for the European market. Often these are companies that supply retail directly. I expect that this trend will continue and that more growers will cater to supermarkets directly. All in all, that's a threat to the Dutch trading companies. That's why you see more and more trading companies venturing in cultivation themselves."

Convenience
The fruit consumption in Europe, according to the Rabobank analyst, is fairly stable. "Across the board, there is hardly any per capita growth. When we look at the total fruit and vegetable consumption, I expect more of a rise in the consumption of vegetables - still some unexplored terrain - than fruit. For example, you can see how in catering, vegetables are increasingly presented as a meat substitute. In addition, convenience remains one of the most important trends. In the fruit segment you see a shift to products that you can eat as a snack, such as blueberries. With an orange that’s a lot harder."

More information:
Cindy van Rijswick
Cindy.van.Rijswick@rabobank.com