Economy still on shippers’ minds - The Packer

Economy still on shippers’ minds

02/12/2010 01:43:54 PM
Andy Nelson

The recession may be officially over, but West Mexico fruit and vegetable importers are still casting a wary eye on spring markets, as consumers remain in bargain and value modes.

Some Mexican growers who in recent years ramped up acreage are for the most part standing pat in 2010, said Kevin Batt, greenhouse category manager for Vancouver, British Columbia-based The Oppenheimer Group, which markets Mexican greenhouse-grown vegetables for Divemex SA, Guadalajara, Mexico.

There’s no guarantee that caution will be replaced anytime soon.

“A lot of guys are evaluating whether to grow as much next year,” Batt said. “Demand came to a bit of a halt, and people aren’t willing to take as many risks.”

There may be a few more tomatoes on-the-vine from Divemex this spring, but for the most part, the company’s tomato mix is holding steady, Batt said.

“The tomato category has taken a beating the past couple of years, so there aren’t a lot of people who are willing to stick their necks out,” he said.

That said, Batt said he thinks 2010 should be better than 2009 for spring purchases of Mexican bell peppers, tomatoes and cucumbers.

“I think retailers are standing back, evaluating the past 12 months and realizing they need to put themselves back in the game,” he said.

“I think there’s movement there again. There will be a lot more people willing to take ads. Obviously it’s not where it was in ’08, but it’s better than ’09.”

One effect of the economic downturn has been a return to basics, said Jesse Driskill, operations manager of the Nogales office of Meyer LLC.

In particular, he said, in packaging.

“It’s probably (going) more back to a traditional deal — straight 25-pound boxes,” Driskill said. “They’re foregoing fancy marketing.”

That said, the economic con-ditions for West Mexico spring vegetable shippers this year should be a huge improvement on a year ago, Driskill said, when the salmonella outbreak was still fresh in consumers’ minds and there was a glut of product on the market.

With the freeze problems in Florida, a glut certainly won’t be a concern, he said.

“Obviously things are much better this year than last,” he said.

Mexican shippers, he said, are likely to get a tremendous boost this spring from Florida’s woes, Driskill said.

Some input costs are higher this year, but thanks to contin-ued concerns about the econ-omy, shippers and retailers would be wise to think long and hard before raising prices pro-portionally to cover the difference, said Chris Ciruli, a partner in Ciruli Bros. LLC, Nogales.

“Our fuel prices are up, but we feel like we have to be sensitive to that (the economy), and keep prices where product can be moved,” he said.

That said, shippers of Mexican produce will have a running start to their spring deals, with demand expected to be brisk on many items in February and March, because of the extensive freeze damage in Florida, Ciruli said.

Rick Burkett, salesman for Nogales-based Farmer’s Best International LLC, agreed that transportation costs would likely be higher for the spring deals.

“Diesel in Mexico has re-cently taken quite a jump,” Burkett said. “It’s definitely higher than last year.”

The recession may officially be over, but don’t tell that to shoppers, said Nick Rendon, division sales manager in the Nogales office of Los Angeles-based The Giumarra Cos.

Even when they’re shopping for fruits and vegetables, people are budget-minded, and that’s not likely to change in the spring of 2010, Rendon said.

The challenge facing produce shippers and marketers, he said, is to give them good bang for their buck.

“Consumers are concerned about the price of their produce,” Rendon said. “It’s impor-tant to offer them value.”

As was the case in 2009, the recession isn’t expected to put too much of a dent in demand this spring for Mexican mangoes sold by Farmer’s Best, Burkett said.

“I think last year was fairly depressed overall, but we were very successful when it came to mangoes,” he said. “People want to feed their families wholesome foods that are a value.”

It’s not just mangoes, Burkett said. Fresh produce in general is less likely to feel the ups and downs of changes in the economy.

“We’re a little more insulated,” he said. “It’s not like buying a new TV or car. There’s a different mindset when it comes to fruits and vegetables versus the whole economy.”

An increased focus on healthful eating also is keeping West Mexico shippers and others in the industry afloat during the economic downturn, Burkett said.



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