Year-round melon, pineapple and citrus importer VIDAfresh is continuing to chart a strong course through the choppy waters presented by the UK’s uncertain and challenging trading panorama, as Brexit looms at the end of this month. From his office in Kent, company chief executive Terry Watts gives a frank interview with PBUK about VIDAfresh’s proactive approach to dealing with difficult situations, and winning new business as a result.
Since being identified for the second time as one of the London Stock Exchange Group’s 1,000 Companies to Inspire Britain during 2018, Watts discloses that, despite the economic climate, VIDAfresh has increased its business by 20 per cent in the past 12 months, having consolidated to focus on the year-round supply of melons, pineapples and citrus.
“We are just finishing Q3 [the third quarter] of our ninth financial year, and we are already at £43 million, compared to £35m at this time last year,” he announces. “We will comfortably break through the £50m barrier by the end of Q4.”
Believing that challenging times still present opportunities, last year VIDAfresh identified where the firm could take more market share from its competitors, who it recognised were “too nervous” to invest in their businesses because of the uncertainty of Brexit.
“Our dedication and commitment to deliver our summer melon programmes was rewarded by us winning more market share in the Brazilian and Central American seasons, from where we will import in excess of 2.5 million cartons of melons,” Watts explains. “In addition to the growth in melons, we won new and sizeable retail pineapple business.”
Watts says this growth came on the back of the “amazing demand” for melons during the very long, hot summer of 2018 in the UK when there was not enough production to meet extremely high demand for melons across the whole of Northern Europe.
“Fortunately, we have built a great grower-partnership base in Spain and Italy, which gave us fantastic support with great continuity throughout the summer,” says Watts (at left). “It was not easy to manage such an unexpected surge in demand, but we rose to the challenge and did an amazing job for our clients, even if some will never admit that!”
To support the additional business, VIDAfresh recently appointed Nick Hall and Rob Harvey, who will strengthen the senior commercial team for the future. Next, VIDAfresh is actively seeking a business acquisition in order to diversify into other produce categories. As yet, however, the right company with the right people has not been located.
“We have had in-depth discussions with two companies in the past three years, but unfortunately we did not manage to conclude a deal with either of them,” reveals Watts. “Both would have been excellent partnerships as they would have added categories that would have complemented what we currently do.”
Planning for Brexit
In the meantime, VIDAfresh is preparing as boldly and effectively as possible for the unknown outcome (deal or no deal) of the UK leaving the European Union (EU) on 29 March. Naturally concerned, Watts says his team has been looking at all options to protect the company, its suppliers and its clients.
“The problem is that nobody knows what we are facing, so how can you plan for the unknown,” he questions. “We can have a contingency to airfreight melons, pineapples or citrus, but who’s going to pay for that?
“We continue to have ongoing meetings with haulage and shipping companies to ensure that we will be able to have continuity of supply but, of course, they are working in the dark as much as we all are.”
One of the biggest worries among traders is what impact Brexit will have on the value of the Pound Sterling in the UK.
“A weak Pound will really push up costs,” predicts Watts. “However, Sterling has strengthened recently, so I’m trying to remain confident that costs will be controllable."
VIDAfresh’s EU-based growers are also concerned, considering that the UK is a major outlet for their product.
“Their main worry is that no one knows what the outcome of Brexit will be. As they are in the process of planning their seasons, they are concerned that if — for one reason or another — they are forced to market more of their production in mainland Europe the market will be over-supplied, which will put prices under pressure,” Watts explains.
On the whole, however, Watts is keeping a positive outlook. Personally, he thinks it will be business as usual after Brexit, albeit with a few hurdles to overcome, which he believes the UK is more than capable of handling. “The world won’t end on 29 March, whether we leave the EU with or without a deal,” he stresses.
“The UK is the second-biggest economy in the EU and the fifth-biggest in the world. The remaining members of the EU will want to trade with us – both as suppliers and buyers – because doing business with the UK creates and sustains jobs all over Europe. No EU government will want to be accused of putting their people out of work for the sake of a punishing the UK for wanting to leave the EU.”
Whatever happens, and with the political decision out of the industry’s control, Watts urges all players to come together since many will face the same challenges. In the case of VIDAfresh, for example, a number of its clients are direct importers themselves.
“Now is the time to work closer together to ensure we help each other get through what could be a difficult transitional period, and not simply put unrealistic demands on importers or expose us to unnecessary and unrealistic financial risks just to make sure they have continuity of supply,” he states. “I have no doubt that some companies will try to profiteer by implementing ‘surcharges’ for trucks, ferry space, etc.”
Fortunately for VIDAfresh, due to seasonality, the company will not be importing any fruit from Europe at the end of March. As a result, Watts is hopeful that any border issues will be resolved by the time VIDAfresh’s European import season starts, thereby causing little or no impact on its business.
“We will be in the middle of our Central American melon season, and it will be several weeks before we start sourcing from our European producers,” he explains. “So I am confident we will have a normal summer season – unless of course Brexit is delayed until the end of June, when we will be very much involved in our summer programmes.”
The next steps
Despite the uncertainty, VIDAfresh plans to continue growing, albeit in a sustainable and profitable way; meaning the next financial year will be one of consolidation.
“There is no point doing business for the sake of it; we do not want to be busy fools,” states Watts. “We are already reviewing what we have done, who we have done it with, and whether or not it was worthwhile – either financially or strategically.”
Realist Watts is not complacent, either, accepting that in this day and age suppliers are only as good as their last delivery.
“The problem is that some clients have short-term memories, and all too quickly they forget the great job you did for them when a competitor puts a cheaper deal on the table,” he laments.
In the produce trade, however, Watts is quick to note that a low price is never the best price. “That needs to be backed up with a guaranteed continuity of supply of the right quality, the right varieties and the right sizes, and that can only be done with the right supplier who has the right grower base,” he affirms.
Relationships with shipping companies are also key, adds Watts, who points out that container space from Central America for 2019 was “extremely difficult” to find because of a complicated shipping market caused by companies increasing freight rates or even pulling unprofitable services to recover their losses and/or investments of recent years.
“However, with our overall high, year-round volumes, coupled with longstanding direct and long-term relation
ships with many of the major carriers, we managed to secure our current space requirements at highly competitive rates,” he explains.
What’s more, Watts confesses that VIDAfresh’s success has inspired some of its competitors to try to replicate its achievements over the past nine years.
Fortunately for VIDAfresh, Watts claims that most of its competitors are “exposed to unavoidable high fixed costs” because of their “hugely expensive and hungry” storage, packing and distribution facilities “that need to be fed every day.”
VIDAfresh, meanwhile, operates from an office that allows the business to be “completely flexible” with regards to how its clients want to be supplied.
“They can take containers directly from the farm, or we can put them through a packing facility if they require labelling, etc.,” Watts explains. “We do not have the burden and liability of high fixed costs that need to be covered every day.”
New varieties, brands
As for other strategic plans, VIDAfresh is trialling new melon varieties to help sustain the ongoing growth in the UK’s melon consumption.
“This has a lot to do with the development of new hybrids that meet, and often exceed, consumer expectations and satisfaction,” states Watts. “We have attended field trials in California, Israel, Spain, Italy, Brazil and Central America in an effort to always be market leaders in our categories.”
VIDAfresh also hopes to roll out across its supply base the brand ‘Melon King’, which it successfully designed and registered for a major client.
“They were very pleased with the final result as it really stands out by adding colour to their displays, compared to the normal, boring black or green cartons,” Watts points out. “We hope it will become one of their leading melon brands.”
VIDAfresh will be exhibiting for the first time at The London Produce Show and Conference on 5-7 June 2019.