Drop retail banana prices

10/29/2010 12:21:08 PM
The Packer Staff

A problem could turn into an opportunity for banana shippers and their retail partners.

Here’s the problem: Because of high volumes and weak demand worldwide, a market analyst predicts a slump for banana industry leaders Chiquita and Dole that could extend into 2011.

BB&T Capital Markets analyst Heather Jones is so pessimistic, on Oct. 28 she changed her rating on the company’s stocks from “buy” to “hold.” Jones forecasts lower retail prices on bananas in coming months — and therein lies the opportunity.

Considering how cheap bananas are, it’s amazing the effect a slight increase in the cost of them has on consumers. Last June, for instance, the U.S. Department of Agriculture reported an average retail price of 55 cents per pound for bananas, up at least a dime from a couple of weeks earlier and from 46 cents the year before.

Fifty-five cents per pound is still pretty cheap, compared with about everything else sold in the grocery store, much less the produce department.

Many consumers, however, don’t like the idea of paying a dime or so more per pound for bananas.

If a dime more gets their attention, we’re guessing a dime or so less — particularly in the current economic climate — would, too.

It could be a perfect opportunity for shippers and retailers to put their marketing heads together and come up with plans to compensate for lower margins with super-strong movement.

Even if temporary, 39 cents per pound would get consumers’ attention.

In the long run, growing consumption is always good for business.



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