Buoyant market conditions and higher-than-expected yields are putting a spring in the step of UK potato growers, many of whom came under huge pressure last year when supply far outstripped demand.
In response to 2014’s price pressures, the industry pulled together to create a slight drop in acreage, and this is reflected in Kantar figures for the 52 weeks to 13 September. Although value decline of 11.6 per cent still points to long-term price deflation, volumes are almost flat with a 0.1 per cent increase.
Suppliers and packers are cautiously optimistic for the 2015 season, with many reporting that retail pressures are subsiding slightly, while the launch of the EU-funded AHDB Potatoes’ campaign aiming to increase consumption by up to two per cent annually will add extra momentum.
Mike Scott, managing director of M&S potato supplier Manor Fresh, believes the trend for aggressive deflationary pricing may be starting to slow. “My view of the UK retail potato category is that the deflationary pricing cycle we have seen for the last 18 months is gradually starting to unwind, and overall volume sales are at least stable,” he says. “This relatively balanced UK position is broadly reflected across northern Europe, which is positive.”
Meanwhile, retail director for Greenvale, Andy Clarkson, says the main talking points have been the lower area, average yields and a more buoyant marketplace. “The retail market is currently performing well in terms of value, with YOY numbers remaining similar,” he says. “There are, however, signs that the strategy of lower retail prices and reduced numbers of promotions is starting to drive volume back into the category. Some of the category’s price premiums and discounts are now out of place with this current strategy, however these are the areas that are being used to run promotions.”
Crop-wise, the main message is that growing conditions have been improving as the season goes on, with a cold start to the year being compensated for by the recent “mini Indian summer”. Clarkson continues: “The early concerns about the lack of sun in the north and slow growth of the crop has in the main part been overcome. Harvest is currently in full swing, with growers lifting in good conditions, reasonable yields and good quality. This, on the back of the buoyant market conditions, means there is a spring in the step of many growers.”
There is some risk of oversupply, Clarkson warns, especially in the processing market, while in the pre-pack market some varieties, such as King Edward, Charlotte and Desiree, will remain tight due to lower acreage.
Scott agrees that crop conditions and general product quality has been good over recent months, particularly in the eastern counties. “Heavy rain showers throughout July and August in Norfolk and Suffolk particularly have caused some sporadic crop and field issues, which have required some careful management by the team at Manor Fresh,” he adds.
Head of marketing at AHDB Potatoes, Nick White, believes 2015 will be reasonable, not exceptional, with more stability in the market from a pricing point of view. “Last year was all about oversupply versus dropping demand; this year there was a slight drop in acreage which has helped the balance. All the macro trends remain the same but there haven’t been any unexpected pressure points – in general the industry is becoming more stable and balanced.”
White is proud to announce the body has a raft of well-known bloggers on board, including food writer of the moment Deliciously Ella, to help engage younger consumers. “These bloggers’ reach is phenomenal – it is as impressive as any TV programme. When they say things people listen, so it’s a key avenue for us,” he explains.
But it’s not just industry-wide campaigns that are working to boost consumption – Scottish supplier Albert Bartlett has been busy with NPD, Hollywood movie tie-ups and branding. Marketing director John Heginbottom says: “We’ve been working hard on a range of projects – we have launched some new varieties in our brand, run activities with 20th Century Fox around the launch of their latest movie, The Martian, trialled a sachet in packs containing a garlic and herb roast mix, run a joint promotion with Mum’s Masala and launched our new brand packaging. We are experiencing continuing volume growth in our business, but it doesn’t come easy. We are constantly looking at ways to engage and inspire the younger consumer.”
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