Monday 2nd April 2012, 11:19 London
European suppliers 'must add value'
New report by Rabobank highlights how a changing fresh produce industry has altered the role of suppliers
A new industry note from global food and agricultural financing leader Rabobank has urged fresh produce suppliers in western Europe to develop added-value solutions to food retail in order to maintain their position in the value chain.
According to the Rabobank Food and Agribusiness Research and Advisory Industry Note, suppliers of fresh fruit and vegetables are in pole position to help retailers increase or retain profitability of their fresh produce departments and solve sourcing issues, by supplying either strategic services or strategic product offers.
The group noted that fresh produce suppliers can become strategic partners if they are able to offer customers innovative products with a 'first-mover' advantage, or even complete exclusivity.
Examples include the move by some suppliers to offer fresh-cut produce to retailers, strengthening their position in the convenience market, while also pointing to the success of some groups in developing club varieties in apples or pears that are sold exclusively by some retail chains, often at the premium end of the market.
"Although more and more food retail chains are considering sourcing directly from growers, it remains to be seen whether they succeed in their mission to cut out intermediaries and achieve cost savings," said Rabobank's senior analyst for fresh produce Cindy van Rijswick. "Suppliers that can either unburden retailers or are able to supply them with unique products are certain to remain an indispensable link in the fresh fruit and vegetable value chain.
"In Rabobank's view, the increasing battle for commodities and the subsequent higher and more volatile prices will lead to important changes in sourcing strategies and food and agribusiness supply chains," van Rijswick added. "Rabobank expects substantial changes in the fresh fruit and vegetable market supply chains as well, but for different reasons. The complexity in fresh fruit and vegetables sourcing is not only about the requested volume, but also the quality, business risks, food safety and other issues that are important for the retailer or consumer."