Fresno, Calif.-based Rabobank NA predicts table grapes will be “rising stars of the U.S. produce aisle,” providing attractive returns for U.S. grower-shippers and retailers during the next three to five years.
In a report released Feb. 11, Karen Halliburton Barber, author and senior produce analyst for the firm’s Food & Agribusiness Research and Advisory group, said increasing competition will force grower-shippers and retailers to focus on innovation.
The table grape category, valued at $2.5 billion, accounts for 9% of all U.S. retail fresh produce sales, according to the report. If the trend continues, the sector could reach $3 billion in the next three to five years and shipments could increase another 10% during that period, she said.
But higher production costs and labor shortages already are forcing grower-shippers to shift to more input-efficient varieties with higher yields.
Consumer preferences for quality, flavor, convenience and health also are evolving, prompting grower-shippers to become more innovative.
Aiding market growth is the perception of grapes as a tasty, convenient and healthful snacks. Combined with larger sizes and attractive packaging, the trends are expected to lift the entire sector.
At the same time, grower-shippers are trying to figure out the right variety mix. Many retailers want to have red, green and black varieties available through the entire season.
One of the keys to continued growth is consistent quality, because grapes compete early in the season with berries and late in the season with apples. Taste, with brix levels exceeding 20 degrees, and an appealing appearance with larger sizes, is important, according to the report.
To differentiate U.S. grapes, grower-shippers and retailers will need to enhance consumer experiences with innovative tastes, shapes, colors and packaging, Barber said.
She cited Cotton Candy grapes from The Grapery, Bakersfield, Calif., which created a media buzz and stirred consumer interest. Some retailers expect to double volumes of the variety, despite its hefty price tag.
Other innovative varieties include the long-dark purple Witch Fingers, also from the Grapery, and a gummy bear-flavored grape, which are still being tested.
Although U.S. Department of Agriculture public breeding programs still account for the bulk of new varieties, proprietary varietal development continues to increase and made up about 10% of total shipments in 2012-13. That compares with just 5 percent in 2008-09.
“Given the recent proliferation of new varieties with cost and output advantages, the secret of success for individual players lies in selling the right variety at the right time and price, as everyone seeks to market at least two, if not three, colors of quality grapes in all seasons,” Barber said.
Innovative packaging, including clamshells and the major shift to high-graphic stand-up pouch bags, also will continue to influence product movement.
Barber said she expected the upward trajectory to continue during the next three to five years as export growth contributes with record shipments.
“What we’ve had happen is record shipments and that 100-million box milestone was met,” she said. “At the same time, the prices have stayed fairly strong for the growers, so it’s looking fairly positive. More growth and exports will be an important part of that as well, and it seems to be an upward trend happening for the industry.”