How consumer trends and global events are impacting fresh produce sales in Australia

Berries are one of the more popular fruit commodities, according to an internationally renowned keynote speaker on food industry trends, but the challenge is making them profitable for growers and providing value for consumers.

Speaking at the BerryQuest conference, Dr. David Hughes explained that he sees hollowing out of the middle market when it comes to consumer purchasing, not just for berries but across the fresh produce sector.

"In winter, you get a lot of consumers deciding whether they heat and whether they will eat, which is not good," he explained. "It will probably get worse before it gets better. There may be trouble ahead - and there will be. Whenever you get spiking food prices, you get political problems - particularly in emerging countries. If you think about pre-COVID times, it was all about just in time, so the efficiency of supply chain management, etc., but what we found with food security issues was that the supplies don't suddenly and efficiently arrive because of things like the container being stuck on the seas. That leads to a reduction of single source supplies and the need for better partners in case one lets them down.

"It also leads to retailers reducing product range for many categories. What I see happening is strong demand for the value end, the more affordable end where people say, how do I save money on the food that I buy? Then you have the other end, the top 40 percent, say people who earn more than $150,000 a year, saying we can still afford more treats as we go out less. So, both ends of the market will grow, but the middle bit will get squeezed."

Dr. Hughes is from the United Kingdom and noted that in his country, the average weekly house spend on household fresh fruit is the equivalent of $7.50 (AUD), and Australia is not much higher, which creates a lot of opportunities for fresh produce industries to lift purchasing.

"Berries are popular with consumers, they really are," Dr. Hughes explained. "This suggests a huge future, but are they profitable for growers? That's the real challenge. I think as an industry, we have failed to communicate fresh berry product value to consumers. It always intrigues me that Australians pay around $5 for a cup of coffee, while fresh berries are around the same price. I feel consumers are saying berries are nice, but they are expensive. Yet, they will buy two coffees a day, which during the working week is $50. That's five times more than they spend on fresh fruit for the household. So, we need to do more to communicate the value. However, in the United States, research shows berries from a price perspective are relatively inelastic. So, if prices go up, consumers continue to purchase fresh berries."

In addition to the consumer purchasing trends, retailers are also making big statements, according to Dr. Hughes, especially around reducing the carbon impact.

"The fact is for all major supermarkets is that 97 percent of their carbon impact is in their food supply chain," he said. "They are promising to be carbon neutral, but what they are really doing is calling on their farmers to be carbon neutral. Private label focus is another issue for fresh produce retailers because that can constrain branding opportunities. Fresh berry quality and availability have improved substantially over the past decade, which is partly responsible for some of the limited successful berry product differentiation.

"Some supermarkets are selling premium strawberries at a higher price, for example, where the variety developers think that is superior, but do consumers? I don't really think so. To them, it is not that premium. Since 2020, berry import cost inflation has increased substantially, and that has further accelerated consumer rationalization. This combination of recent events has accelerated commercialization and berry supply management, and there's an emergence of even bigger marketing powerhouses. So stronger companies will have the power to invest more in research and development, more in brand development and productivity enhancements and robotics."

Some of the opportunities to help pass on value to consumers could be around the online purchasing or delivery of berries or using technology to find new ways and make them more conveniently available to consumers. While focusing on the health properties through labeling and things like "Nutri-Score," which is used in some countries in Europe, to open up a wider share of the consumer market and create new opportunities.

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