Pineapples on course

The three-month period from June to August was a boom time for pineapple sales. Both Sainsbury’s and Asda ran significant price-based promotions that drove a 58 per cent year-on-year uplift in June, a 83 per cent y-o-y rise in July and a 42 per cent increase in August.

Dickon Poole, group marketing manager at JP Fruit Distributors, projects a market value of around £30 million in this calendar year, which takes into account the 25 per cent of pineapples sold in the UK that he believes slip the net of TNS researchers.

After a difficult, low-volume 2003, the market has received abundant supplies and with new players throwing their hats into the ring, the 25 per cent expansion this year could be repeated in 2005 if the market can find room for the fruit.

“The growth trend is there,” says Poole. “After a slow start to the year, there were some signs of recovery, but the accelerated growth began in week 26 - that’s when the pineapple business will take off if there is an abundant crop. It has been a dramatic middle part of the year though, at a time when you would traditionally expect consumers to be moving into softer fruit.”

He adds that the decision to promote fruit heavily on the retail shelves was right, but colleague Steven Fagg, JP’s director of fruit, says that much of the expansion this year has been achieved through BOGOFs and the industry needs to find another mechanism to drive sales.

The penetration figures suggest that 0.5 per cent fewer UK households (19.1 per cent) bought pineapples in the 52-weeks to September 2004 than in the previous 12 months, while weighted frequency rose by 6.2 per cent in the same timeframe, to 3.4 purchases a year. “Because the retailers are extensively using BOGOFs it is hard to gauge whether the same households are buying more or whether the figures do not pick up all sales,” says Fagg. “We have to analyse whether BOGOFs are the right promotional mechanism for pineapples. Penetration data suggests that consumers generally will buy one pineapple, but are unlikely to buy two. By forcing BOGOFs through, we may not be giving consumers the right experience. The second pineapple cannot just be there for decoration - it is being sold to be eaten.”

Del Monte is credited with revolutionising the UK pineapple marketplace with its introduction of Del Monte Gold. A company spokesperson says: “Del Monte sees this [the market dynamics so far this year] as an opportunity for market growth. Pineapple penetration is poor and usually after a promotion a residual uptake is observed. Del Monte Gold usually commands a better price as although other suppliers also have sweet pineapples they are seldom the same consistence of quality.

“Del Monte prides itself on the post-harvest treatment of fruit, which leads to the product quality. Consumers see the Del Monte Gold as reliable. Obviously we do see the long-term growth and as a supplier we offer a superior product.

“We see the growth as an opportunity for further branding not just for Del Monte Gold but also for other products such as prepared pineapples where we currently have two offerings. Pineapples are often seen by the consumer as difficult to handle and our prepared offerings eliminate this obstacle, whilst allowing us to penetrate new markets such as convenience and snacking.”

Duncan White, director of Agrofair, the first company to bring Fairtrade pineapples into the UK in 2002, from the Asoproagroín farms in Costa Rica, says demand for Fairtrade pineapples has increased in line with the general growth trend in the market.

“Agrofair is restrained at the moment while we build up the right volumes and sizes to offer the UK supermarkets a consistent supply. We are a month or two away from being able to deliver this now and we expect to be launching into other supermarkets shortly,” he says.

“The demand is there and the quality of the product we bring out of Costa Rica is very well received. We fully expect the market for Fairtrade pineapples to grow and follow the general consumption trend.”

JP is Tesco’s sole pineapple supplier. Tesco accounts for around 30 per cent of the UK pineapple sales and with its other retail and non-supermarket business, Poole says JP represents between 40 and 50 per cent of the fresh pineapple category in the UK. “That we increase consumption is the biggest task,” he says. “The biggest concern in the marketplace at the moment is that there is an awful lot of new fruit that will become available from Latin America - particularly Brazil - and parts of Africa in the next 12 months. There is already sufficient fruit to supply this marketplace, but production has increased substantially and that puts more emphasis on us as suppliers into the market to find ways to encourage consumers to eat more.

“There is a huge marketing job to be done and somebody has to take responsibility. Surely the key is that pineapples are both healthy and good to eat, but the consumer needs to be told. We have a whole raft of ideas that we are discussing with our customers. They are not based on price, but mostly on educating the consumer about the fruit.”

At Compagnie Fruitiere, md Nigel Law says the company is well equipped to handle the requirements for cost efficiency. Some 55,000 tonnes of pineapple will leave its West African plantations this year, with bigger volumes to follow in the next few seasons. “The price of pineapples in the UK represents very good value for money,” he says. “There are obviously considerable price pressures, but we are in there with our customers. It is very much up to our supply base to ensure that the efficiencies are in place to enable them to remain competitive when new sources come on stream. West Africa is closer to Europe than Latin America, which gives us a logistical advantage and as scale increases, so will the economies.”

The UK is undoubtedly a target market for producers of the newly on-stream fruit, which will not revolutionise the variety selection, but will offer potential cost efficiencies and shelf-life extension through shorter logistics routes than some established supply sources.

Law adds that the UK market should not look at itself in isolation. “It works both ways. Consumption of pineapples is increasing around the world and there are new potential markets every year. As long as the number of buyers of the product increases in different countries and consumption is kept in line with production expansion, then there should be little slack and the UK market will not suffer.”

The price expectation at retail level in the UK has stabilised at around £1.05 a fruit on average, which unlike many other fruits, is a decent rise in the last decade. As a long-term trend, there is a general increase in both volume and price, with the odd blip when promotions take hold. Fagg says that, combined with well-targeted promotions, two specific price points hold the key to expanding the market: “If we continue to charge a reasonable retail price for a small pineapple - 99p - it remains a no-risk purchase for the consumer. A consistent performance from the product will allow consumers to enjoy the eating experience and increase penetration. Hopefully this will then justify in their minds the decision to trade up to a large pineapple at £1.49. If we can achieve this and gain more shelf-space across the year, then the BOGOF peaks can be eliminated and we have a realistic alternative to get more consistent take-up.”

Consistency is the key, both in terms of supply and consequently consumption. Another way to expand the take-up, of course, is to provide a point of difference, which Law intends to do through continual improvement of his existing varieties and a new introduction in the next few months.

“Our production reflects our belief in the future for both main varieties - Cayenne and Extra Sweet - not to mention future varietal diversification,” he says. The Cayenne Lisse product, whilst benefiting from good shell colour and good sugar levels, assures a higher acidity ratio for the significant number of consumers who prefer this.

“Ana’Dou volumes are increasing as we spread our production base across several countries. Customer response has been very favourable to this new African Gold product whose golden shell colour and taste merits meet UK customer expectations at all levels. The French “Saveur de l’Annee” consumer award, in which consumers placed the product as one of the top 10 in the French marketplace, speaks volumes. We also have a full range of sizes from 6’s down to 12’s in this variety, catering for all demands,” says Law.

Another line that will definitely find a welcoming audience is a new offer of West African Fairtrade pineapples, due to be available in the next few months. And new sources are widening the net still further. “In Ghana, our group’s new production company Golden Exotics Ltd enables us to widen our sourcing opportunities for both Gold and Cayenne product to complement the existing Ivory Coast range,” says Law.

Del Monte, meanwhile, has been working with Brazilian growers and is focused on the development of the Honey Gold variety, which it expects to be available in fresh produce aisles by 2006. Fresh Del Monte developed this new and unique pineapple variety to capitalise on rising consumer demand for pineapples, to solidify the company’s global leadership position in the increasingly competitive pineapple category, and to address increased interest by consumers eager to add a wider range of fresh fruit and vegetables to their daily diets.

“We are enthusiastically looking forward to introducing the new Del Monte Honey Gold™, a delicious pineapple that will be an immensely popular extension to Fresh Del Monte’s ever-expanding product line,” says Mohammad Abu-Ghazaleh, chairman and chief executive officer. “Our development of this new variety reflects our growing global industry leadership in the pineapple category, highlights our long-term strategic commitment to product line diversification, and showcases our exceptional, innovative research and development capabilities as well as the accomplishments of our scientific team.”

The chances of the UK market becoming a battleground for pineapples remain. But with penetration still painfully low, careful programme planning, combined with consistent pricing performance and sensible promotional activity should ensure that the growth of the last decade continues well into the future.

FAIRTRADE ABOVE BOARD

While Fairtrade growers are bolstered in their early years by premium price levels and donations from the Fairtrade administrative pot, the objective is to develop suppliers to the point where they can stand firmly on their own as companies.

“From our point of view at Agrofair, our main objective is to increase the volume of Fairtrade fruit we sell in the UK market, while ensuring that growers receive sustainable returns and continue to be profitable,” says Duncan White. “While the supplies are relatively low in volume, it is important that we maintain a premium price level, but economies of scale will eventually make us more competitive.”

The principle aim of any company, including a Fairtrade supplier, is to create a sustainable platform that gives ultimately gives it independence and the ability to compete on an even footing in the global marketplace, he adds.

“With Fairtrade as a whole, if producer groups become strong and a force in the conventional marketplace in their own rights; that is excellent,” says White. “In pineapples as a category, there are reasonable price levels - but in products like bananas for example, where the price pressures are enormous, Fairtrade is a lifeline for many producer organisations.”

Agrofair is owned by overseas growers. On a recent trip to London, Roberto Ugalde, a farmer for 15 years, said: “Fairtrade has given me a better living. It has freed me from debt and now I even have my own capital I can work with to invest in my farm. Before Fairtrade life was more stressful. I had more worries. Now thanks to Fairtrade I have a sense of pride. I can offer my children a future and feel comfortable with that. This is what I want for my children and what all fathers’ want - to give their children a future and feel secure about it.”

His colleague Juan-Luis Rojas, says: “All of the farmers are far more motivated thanks to Fairtrade. They know they get a fair price and a premium. I receive training in farm management and I get direct contact with the market. This signifies something important because you never have this with conventional trading partners when there are so many intermediaries. I never thought I would visit the headquarters of the supermarkets or see the fruit I have grown arriving at the harbour, which I have during this trip. I have seen the whole supply chain and it gives me a much bigger feeling of importance.

“The most important thing we have learnt is to work in harmony with the environment; to learn about what are harmful chemicals and what are not allowed. This avoids pollution of the clean water and allows us to respect natural forests. Before Fairtrade we used to grow pineapples just to get huge quantities of production and not respecting the environment. Now we can educate our own children in how to take care of nature. Our children will continue to give us a constructive future.”