When it comes to trade disruption, Donald Trump has undeniably “accomplished” a lot in his first two years in office – and the nut sector, along with a host of others in food and drink, must be less than impressed by the American president’s posturing.
Since the US is the world’s largest producer and exporter of tree nuts, such as almonds, walnuts and pecans, Trump’s trade wars with China, India and Turkey have unsurprisingly caused uncertainty and concern in the American tree nut sector.
One product that has been particularly hard hit is American walnuts, with hefty retaliatory fines of up to 120 per cent from India hurting growers and suppliers in California, where the majority of US production is based. With sales dented last season, some growers have been forced to revise plantings and put off buying new equipment, it has been reported.
According to Peter Meadows of California Walnuts’ marketing agency, The Garden, the US sent “considerably less” volume to China, India and Turkey last season compared to the year before, however as California enters a new campaign, he says the full effects of the tariffs are only now being felt. With US production set to rise, it is likely more walnuts will be sent to other markets in Europe and beyond, meaning prices may fall.
In its market report for August and September, London-based supplier RM Curtis writes: “With a larger new crop still forecast in California… and with clear aggressive competition showing from the three other key competitor origins of India, China and eastern Europe, California looks ready to respond to the challenge, with some lower export and domestic pricing for 2019 shipments.”
Despite the increased tariffs, the California Walnut Commission says it is “cautiously optimistic” that ongoing negotiations can resolve matters. “They believe common sense will prevail and we’ll see a review of those tariffs into something that’s more sustainable from both a selling and a purchasing point of view,” says Meadows’ marketing partner at The Garden, Iain Forbes. “If we’re seeing consumers wanting quality product, let’s enable that to happen.”
The body says it has been involved in discussions with Congressional Leadership, the US Department of Agriculture and the United States Trade Representative (USTR) to make sure industry concerns have been heard and that the California walnut industry is included in tariff discussions as well as relief measures, where appropriate.
“Despite these challenges in some of our global markets, we are encouraged by strong consumer demand as well as recent product innovation,” says Michelle Connelly, executive director of the California Walnut Board and chief executive of the California Walnut Commission. Crop estimates are also encouraging, with the crop expected to be 10 per cent bigger in 2018 than last year at 690,000 tonnes. Despite a hot early summer, with many days well over 35°Cin California’s valleys,overall conditions were quite temperate, “providing nice quality and colour”, Meadows says.
This is welcome news for nut importers in the UK, who are seeing strong growth in consumption. The total nuts sector, including snacking nuts, home baking and ingredients, is worth £137.1 million, according to a report by RM Curtis. Sales are rising by 10 per cent year on year, and this rate of growth is expected tocontinue until 2020.
Snacking nuts have seen particularly strong growth from consumers looking for healthier, natural snacks that they can easily eat on the go. As well as improved health consciousness, the trend for healthy snacking has been driven by consumers’ busier lifestyles and a related rise in consumption outside of core meal times.
The dried fruit sector hasn’t enjoyed the same success in the past year, with overall sales remaining steady at -0.4 per cent, however the fruit snacking segment has achieved slight growth of 0.8 per cent. Baking fruit has dragged sales down slightly, with sales falling by three per cent. In its report, RM Curtis notes that “the big decline in homemade desserts presents a major challenge for the baking fruits sector”.
Nevertheless, the company sees opportunities to grow sales of dried fruit snacks as parents become more mindful of child obesity and their children’s sugar intake. These provide a good alternative to confectionery, and the industry will be encouraged by a decline in sweet and chocolate sales, which have fallen 1.4 per cent in volume and 1.7 per cent in value, according to the report. Indeed a 2017 survey by market researcher Mintel revealed that 54 per cent of ‘snackers’ are interested in healthier versions of their favourite snacks.
With the food-to-go sector forecast to be worth £22.8bn by 2023, this presents major opportunities for dried fruit and nut suppliers, as well as the retailers that stock their products. In response, RM Curtis has revamped its branded snack offer and in October it is relaunching its Snacking Essentials brand to include two new ‘shot packs’: Mango & Coconut and the Nutty Protein Mix.
The company notes that new launches in the snacking and food-to-go segments are increasingly taking account of the time of day that they’re consumed and the role they fulfil. Snack ‘missions’ include getting an ‘energy boost’ or ‘fuelling up’, and in this vein the supplier is planning to launch a three-strong range of Energy Balls aimed at on-the-go consumers. The range includes Goji & Coconut, Blueberry & Almond and Cacao & Orange.
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