UPDATED: Inflation challenges berry sales - The Packer

UPDATED: Inflation challenges berry sales

04/11/2011 09:20:38 AM
Mike Hornick

(UPDATED COVERAGE, April 13) MONTEREY, Calif. — The steady growth in volume and cash value for berries typical of the last several years will be challenged in 2011 by rising prices, according to speakers at the Global Berry Congress.

“We’re seeing inflation in produce at the retail level,” said Steve Lutz, executive vice president at the Perishables Group, West Dundee, Ill. “When retailers promote, they don’t promote as aggressively as they did last year.”

On-promotion prices for all fresh produce items are up 6% this year, Lutz told an international group of growers, buyers and related businesses at the event, April 6-8.

There were 190 delegates from 16 countries.

Those prices have added importance for berries, with 45% of their U.S. volume sold on promotion, compared to a 30% average for all produce.

 Mike Hornick

Global Berry Congress panelists Ed Garner, (from left), communications director for Kantar Worldpanel, Steve Lutz, executive Vice president at the Perishables Group, and Dan Crowley, sales manager for Well-Pict Berries, discuss the effect of promotions on berry sales.

“As that promotion price pushes higher, you’ve got a price-sensitive consumer (and) you begin to see more switching behavior,” Lutz said. “Will we, in a sense, create switching from berries to grapes to apples or items that have a slightly lower price point?”

In this environment a 10% increase in berry prices, for example, would translate into a 15% loss in volume, according to Lutz. “Price is motivating consumers to trade down, and that’s not a positive trend,” he said.

“It’s up to our trading partners to stay very aggressive at price point,” said Dan Crowley, sales manager for Watsonville, Calif.-based Well-Pict Berries.

The number of households purchasing berries dipped 2.1% in the last year. There was also a drop in same-store purchases.

“It appears to be deal shoppers … going out of their way,” Lutz said.

But the recent past has been good to berries — all varieties. Through the end of February, dollar value was up 7.4% annually, and volume was up 8.2%. Because they’re popular with more affluent shoppers, they’re likely to hold onto their retail space, Lutz said.

In the United Kingdom price is a concern, but not always an overriding one, said Ed Garner, communications director for Kantar Worldpanel.

“The market’s going in two directions at once,” Garner said. “The recession’s been bad for some people, good for others.”

Blueberry sales in the U.K. grew substantially, gaining 12.1 million British pounds in value and 20% in volume over the last year, Garner said.

In the U.S., Lutz said, blackberry and raspberry distribution is closing in on strawberry and blueberry levels.

“Some of the gains we’ve enjoyed have been a result of increased distribution,” he said. “Once the pipeline is full, you have to work on how to differentiate packages sizes and units to continue to drive the same level of growth.”

It was the first time the congress, begun in 2008, was in the U.S. Plans are to have it in Europe in May 2012 and in the U.S. again in May 2013. More than a dozen speakers and panelists took part in the Monterey event at the Hyatt Regency.



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