Markets climb on short supplies, cramping January promotions

01/18/2013 11:04:00 AM
Andy Nelson

The slow start to the Chilean grape season is being felt in the marketplace, importers and officials said.

“The spot market is very high right now,” said Mark Greenberg, president and chief executive officer of Capespan
North America LLC, St. Laurent, Quebec. “Growers with fruit in the market must be happy.”

Demand is so strong, many buyers are willing to overlook quality, which has not been great at the beginning of the deal, Greenberg said.

“Flames that aren’t especially good are selling for $36,” he said. “There’s a lot of small fruit.”

Movement should remain slow and prices high until February, at the earliest, Greenberg said. Fruit was running seven to 10 days behind schedule as of early January, and that would likely continue, he said.

“No one’s going to be promoting at least through January.”

When things do change, Greenberg said he hopes it’s not too sudden.

“I hope the volumes increase, but in a healthy, gradual way.”

The risk, he said, is that U.S. and Canadian retailers forget about grapes because of the dearth of product early in the deal and then are slow to promote when promotable volumes start arriving.

“Chain stores need time to adjust their pricing,” he said. “It’s hard for them when there’s nothing there and then 10 days later the price is $15 lower” because of a surge of supplies.

Retailers who have slow-moving higher-priced inventory won’t be too quick to start selling cheap grapes.

“I represent growers, so I like high prices,” he said. “But I don’t like to see retailers lose interest because they’re too expensive. We need to get promotions for when the fruit arrives.”

In early January, the Chilean season was still sputtering, though that would likely change by February, said John
Pandol, special projects manager for Pandol Bros. Inc., Delano, Calif.

“Volumes are down for this time of year, but they are catching up,” Pandol said.

But they won’t likely catch up entirely, Pandol said. Traditionally, 50 million boxes has been a benchmark for Chilean grape shipments to the U.S.

“It’s come off the past few years, as other markets have been viewed as more attractive,” he said.

That won’t likely be the case as much this season, Pandol said. Exchange rates in rival destinations don’t enjoy the advantages over the U.S. they have in the past.

Still, this season, with the combination of that downward momentum and growing problems in Chile, totals will likely be closer to 40 million boxes, Pandol said.

“We’re getting a slightly larger piece of a smaller pie,” he said.

Karen Brux, North American managing director of the Sonoma, Calif.-based Chilean Fresh Fruit Association, also reported strong demand at the beginning of the 2012-13 season.

“Demand and pricing are very strong, and we expect this to hold steady in the coming weeks,” Brux said Jan. 14.
“The late California varieties were short this season, and with Peru and Brazil winding down, this presents a very strong market for Chilean grapes.”



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