Suppliers urge retailers to allay volume surge with Chilean fruit promotions

01/15/2010 02:40:39 PM
Abraham Mahshie

With volumes of Chilean grapes low and prices high as the winter season starts, suppliers are warning retailers to have promotions in place for an expected surge in volume.

Suppliers fear a sharp decline in pricing if volume hits all at once — that would lead to heavy grower losses and a backup in supply. Uncertainty also surrounds the potential damage of El Niño rains in the southern growing regions.

“What we’re all afraid of is, if the prices are too high, not having any promotions in place,” said Anthony Stetson, vice president of sales for Pandol Bros. Inc., Delano, Calif.

“We’re wondering when is that time that we have volume high enough to promote — maybe January, maybe February.”

Stetson said grapes are not a promotable item when the market is selling at near $40 a box, but by the time promotable volumes are expected to come in February, consumer interest will be at a low.

Craig Uchizono, vice president of Southern Hemisphere for the Giumarra Cos., Los Angeles, said that success in moving the Chilean grape volumes will depend on “participation from all levels,” including retailer promotions and good communication from growers.

Manuel Jose Alcaino, president of Decofrut, Santiago, Chile, said the high prices at the start of the season have very clear causes and are not likely to continue.

“The situation right now is due to a very, very, very short amount of inventory of domestic grapes, especially in white seedless, like thompsons,” he said. “The supply from Brazil was also short and the production from Chile was delayed.”

Alcaino said Chile produces 30 million boxes of thompson seedless grapes, what he called the “queen of the table grapes.”

“With the shortage of this year plus some of these vineyards going out (of business), we feel we might be in the area of 2 million to 4 million boxes less,” he said of an item he characterizes as a staple on American consumers’ grocery lists.

Alcaino said grape production in the Aconcagua Valley may be down 25%, or 5 million boxes.

“The Aconcagua Valley is a big part of the whole Chilean production,” he said, describing the losses suffered by growers last season after a sharp decline in prices.

“The market in March kind of tanked and there was a lot of red ink for the growers in Chile.”

Alcaino said although the economy may influence supermarkets to push for lower prices, the reduction in supply may create an amenable situation for Chilean growers.

“We’re hoping that this reduction in volume could help stabilize the market during that key period, which is a good sign,” he said.

Josh Leichter, director of the grape category in the Vancouver, British Columbia-based Oppenheimer Group’s Newark, Del. office, said that even with all the talk about a shortage of volume, retailers should not be too concerned.

“It’s important that retailers realize there still will be promotable volumes of grapes,” he said. “It’s an important item in stores in winter months as far as driving sales.”

Chilean grape suppliers are closely monitoring signs that the weather phenomena El Niño, known for causing heavy unseasonal rains, may be weaker this year.

Leichter said normally this time of year Chile does not have rain, but in an El Niño year, there is the potential for rain.

“As of right now… we haven’t seen anything. There’s pretty good spring weather down there,” he said. “I think any fruit that is not picked and packed and off the vine has the potential of being rained on at some point in the future.”

Alcaino said he also discussed the climactic conditions with leading experts recently who indicated uncertainty that the rains will actualize materialize.

“I think El Niño already produced most of its effects,” said Alcaino, citing a lack of high temperatures characteristic of the phenomena. “We probably had the coldest spring ever.”

Stetson said weather predictions are no more than speculation at this stage, but if they come the effects could be serious.

“If there is El Niño rain in January, we will need promotion in February regardless of the volume,” he said, referring to the effects of hastened picking and shortened shelf life that would result.

“If you have a lot of volume, that could make it pretty bad.”

Omar Abu-Ghazaleh, imports manager for Pacific Trellis Fruit LLC, Reedley, Calif., agreed that there are significant concerns about late deal rains.

“Initial rains and initial cold weather have not affected the crop much, but there is some concern for February and March,” he said.

Brian Schiro, grape category manager for Jac Vandenberg Inc., Yonkers, N.Y., agreed.

“I think we can deal with what has transpired, but the question is if there is more untimely rains that’s what will be detrimental.”

Leichter said a “significant portion of the crop” is at risk for rain damage.

“The net effect has a lot to do with the amount of rain and how the grower manages the crop post-rain,” he said, describing how humidity and moisture can cause decay in the bunches, and that spraying can help but would drive up costs.



Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left

Join the conversation - sign up for FREE today!
FeedWind
Feedback Form
Leads to Insight