Last week the first Global Grape Summit was held at the London Produce Show. Manuel Jose Alcaíno - Decofrut , gave the first presentation. He gave an overview of the world production and export of grapes, outlining the biggest producers and exporters, he also gave an overview of last season and circumstances and actions resulted in an oversupply on the European market.
China is the biggest grape grower with nearly 22m tons of grapes, while the rest of the Southern hemisphere - Chile, Peru, South Africa etc don’t even account for 15% of the total production in world. Despite being the biggest grower, China exports very little. The biggest exporters are Chile, Peru, the US, South Africa and Turkey.
Most of China’s production is consumed on the domestic market as is that of India. The US, Europe and Russia consume more than they produce while Chile and Peru are mostly export orientated.
“The biggest player in the export business is Chile but the county’s exports this year were the lowest in ten years, the reason for this was a big reduction in Flames which were down from 7m to 2.4m cartons this season. Thompsons were also down. What we see this year in Chile is a year of changes. I see this number recovering again next year.”
Manuel pointed out that the US market accounts for nearly 50% of Chilean grape exports, although other markets such as the Middle East are very interesting and lucrative markets but the shipping time from Chile to the Middle East is around 50 days, which is not good for the quality of grapes on arrival at market.
“Peru a relative newcomer on the scene, it is doing very well in terms of production but last year was affected by El Nino which saw volumes drop by 5 million cartons to around 40 million. Peru’s main markets are the US and Europe volumes to Europe saw a big increase this season from 8.5 m cartons to 15 m.”
South Africa, the other big player has been pretty stable in its production in last few years. In the 2017/18 season South Africa was affected by drought and the following year the production got hit by late rain. Europe and the UK are the main destinations for South African grapes with 75% of the total which has been the case for many years.
Manuel sees Australia is an interesting country, “In contrast with the last three countries it has a very strong domestic market. Exports from Australia are mainly destined for the Asian market and volumes are pretty stable. They do ship to UK and are increasing volumes to the US, trying catch the early market and now also get on the late market too.”
India is a very big grower but only exports 168,000 tons which is only 6% of its production. “They produce very good white seedless and have seen consistent growth in Europe over the last four years they also have a solid position in the Far East with 15,000 tons, 3m boxes, but they are struggling in the Far East because their offering is mainly white seedless. The have the advantage in Europe that they can sell at prices that Chile and Peru are willing to come down to.
“If you look at the total world export of grapes over the year, you can see that it is constant, there are no windows anymore, this is the new reality that the industry will have to live with. It means that we will have to compete in a different way, the opportunities and prices that we have seen in the past have now gone so we will have to be more efficient, produce more at a cheaper price.
The US market has two main suppliers from the Southern Hemisphere Chile and Peru. If you add Mexico, California and Brazil to this you get a total of 161m cartons on offer in the US.
Following the laws of demand and supply prices go up as supply decreases and they go down as supply increases this has been the case for many years in the US, except last year. The prices started increasing in line with the volumes. So, what happened?
“Firstly, stocks from California had been bigger than in previous years, the varieties were also better in both white and red varieties. In the 2017/18 it was predicted that California would have a big crop and the retail sector which favours domestic production sent a very strong message to the industry saying they would continue with Californian grapes and would not take Peruvian grapes until sometime in January. This created a stampede in Peru as exporters looked for alternatives, that alternative was to move huge volumes to Europe creating an impact on the market affecting European producers as well as South African producers.
“Meanwhile by early December it became clear that the condition of the inventories of Californian grapes was not good enough and they tried to move to Peruvian grapes, but it was too late, the grapes were already on the water headed for Europe. This created a strong demand on the US market explaining the high prices at a time of big supply.
“I think this is an interesting lesson which we have to learn from. The observations that I take from here are: What is the retail sector going to do with this new reality? Clearly the domestic inventories will be bigger and better, however can we trust the inventories in terms of condition? Loyalty to local has a limit. I am a firm believer in the preference for local, but I think we have to have an open mind and watch what is happening around us.”