The EU remains one of the largest fresh produce markets in the world. Despite the recent, and in some cases, ongoing economic challenges that have to be faced up to, it is still a fundamentally attractive market for fresh produce suppliers around the world. This is based on the 500 million consumers found in Europe, relatively high levels of consumer affluence and the demand for a wide range of high value and innovative fresh products.
The US has traditionally faced competition across a wide range of temperate product categories from other international established suppliers such as Chile, Brazil, Canada, New Zealand, Israel and South Africa, as well as from within the EU from the likes of France, Italy, Spain and the Netherlands.
Consumer tastes in the EU are changing however. To these products can be added a range of exotic produce sourced from suppliers such as Thailand, India, East and West Africa and the Caribbean. Overall fresh produce consumption across the EU is relatively static. What we are now seeing is the competition to supply retail and foodservice customers hotting up in a way not seen before.
This is also being fuelled by the emergence of a number of newer suppliers all eager to secure a place at Europe’s fresh produce table. These might include the likes of Ethiopia, Uruguay and Vietnam. It would have been not too long ago that these, and other similar emerging countries, would have been regarded as not geared up enough as to supply the EU market. This is beginning to change. All three were profiled at last month’s London Produce Show, as having serious ambitions to develop business in Europe. While maybe not presenting a head to head threat to US exporters, all of them will just add to the multitude of supply sources and products that European buyers can now consider.
Both Vietnam and Ethiopia have large domestic markets to consider too – some 90 million in both cases. They have fast growing populations and expanding per capita incomes. Uruguay is a much smaller country with a domestic population of just some 3 million. In many ways for its industry to expand further, it has to look for new export markets.
Production in all 3 countries has risen in the last 10 years. Vietnam’s exports have risen rapidly with China and the US being the prime target markets to date. So far, only the Netherlands in the EU shows up as an important export destination. We believe this will change in the future. Vietnam will begin to target Europe more closely with a range of Asian style vegetables and tropical fruit products.
Uruguay mainly produces apples, grapes and stone fruits, but is probably best known for its citrus and to a less extent its berry exports. Exports to the US are still largely under developed due to problems with non tariff and phytosanitary barriers. The EU has been the main export market, along with Russia. Even if the situation in the US market eases, Europe will still be a prime market for Uruguayan exports, which to date are concentrated around the UK, the Netherlands and Spain.
Ethiopia has seen its vegetable exports to the Middle East and Europe develop rapidly in the last 5 years. The success of its cut flower industry has been phenomenal. Ethiopia is now the 4th largest flower exporter in the world, after the Netherlands, India and Kenya. Investment in the sector has been flooding in from a combination of Europe, the Middle East and to a less extent China, as well as local entrepreneurs. There is no reason to suspect that this investment won’t reach its way in the fresh produce sector in the future. The best farms in Ethiopia are well organised and managed. While the overall enabling environment is still some times challenging, they can already compete effectively with other international suppliers. There will be more, not less of them in the future. This situation is replicated in Uruguay and Vietnam where there will be more international standard produce companies in the future.
In the face of this increased competition in the EU, what do US companies need to be thinking about ? In many ways, the basics still apply, but just need to be worked at harder. For success in the EU, the ground rules are easy to understand – if challenging to implement, but would include developing:
- an aligned position to their leading retail customers and investing on an ongoing basis in new facilities for production, procurement, storage and distribution
- a degree of scale in their business and so achieve a degree of importance to the customer base, rather than being one of a number of potential suppliers from which a retailer can pick and choose
- a capability to supply customers on an AYR basis and invest in marketing and promotional support to support their customers, and in some cases, their own brands
- a streamlined supply chain which has removed any unnecessary costs and inefficiencies
- high levels of environmental good practise and corporate social responsibility
The other main implications for the US are that there will be an opportunity for inward and outward trade with these markets. This should not be overlooked, nor should the potential need for US based expertise in fruit farming, post harvest skills and expertise, education, training and supply chain technology. These will all be in demand as these markets continue to grow rapidly and they look to play catch up with the established suppliers to the global fruit markets. Europe, Latin America, the US and Africa – now all part of an interconnected global market where what happens in one region impacts on the rest – and if we didn’t know this already – we had better get used to it.
• John Giles is a divisional director with Promar International, a leading global agri food market research and consulting firm and a subsidiary of Genus plc. He has worked extensively in the fresh and processed produce sectors and in some 60 countries around the world. He can be contacted at the following email: [email protected]