The European fresh-produce sector has come through a challenging year, with flying colours, and it is looking to build on increased consumer demand for healthy eating. This article first appeared in ESM Issue 2 2021.
A year is a long time in retail, and it was around this time 12 months ago that the European fresh-produce industry was facing an unprecedented threat to its stability, as the initial wave of the COVID-19 pandemic put governments on high alert, leading to closed borders, reduced mobility, and shortages of certain products on retailer shelves.
“Right from the beginning, our category was identified as an essential segment that needed to be maintained on the shelf and accessible for European consumers,” Philippe Binard, delegate general at representative group Freshfel, told this magazine last May.
In the months since, and with supply chains largely back to 100% working order, fresh produce has gained increased importance among consumers, with the need to maintain good health and wellness during lockdown a priority for many. Some categories, too, are enjoying a boost – citrus fruit consumption has boomed in line with increased at-home working, for example.
While there’s no telling what the future will hold – 2020 certainly taught us that! – the coming year is shaping up to be a bumper one for the fresh-produce industry.
Looking Ahead
Rabobank’s RaboResearch Food & Agribusiness arm, which has commented extensively on the future prospects for the fruit-and-vegetable industry since the beginning of the pandemic, recently issued a forecast predicting the growth of the fresh-fruit market between 2020 and 2025.
It noted that consumption of fresh fruit is set to grow by approximately 5.7% over the period, driven by increased demand in China and other emerging markets, with fresh-fruit demand growing at a slower pace in Europe.
In terms of specific variants, cherries (5.7%), grapefruit (4.9%), pears (4.4%) and ‘other fruits’, including avocado and mango (8.9%), are set to have the highest growth over the period, with more traditional fruits, such as apples (3.9%) and bananas (3.1%), predicted to see a slower rate of growth. It’s worth noting, however, that smaller, niche categories (like exotic fruits) can more easily achieve higher percentage growth rates, as exemplified by the growth in avocado consumption, which has skyrocketed over the last ten years.
Elsewhere, the positive recent market development of citrus fruits can be seen in the anticipated growth of oranges, at 4%, grapefruit, at 4.9%, and lemon, at 3.1%. This category had previously been rather stagnant (in particular, grapefruit and oranges), however Rabobank predicts a revival of sorts.
Rabobank also expects that weather effects are likely to increase influence on availability and seasonality in the coming years. With this in mind, volumes sold do not always indicate whether a product was in high demand – if there is no supply of a product, consumers are going to struggle to buy it. We saw this happen with stone fruits in 2020, where consumption was very low – not as a result of a fall in demand for stone fruits, but because there was low supply from countries like Spain, which was impacted by adverse weather effects.
“To see whether a product is really in high demand, we should combine consumption figures with price data,” says Cindy van Rijswick, senior analyst, fruit, vegetables and floriculture, at RaboResearch Food & Agribusiness.
“If prices are maintained while production is increasing, a product is in good demand. This has happened, for example, with avocado. Production and imports into Europe have been increasing year after year, but market avocado prices are still holding up well, with some exceptions in certain seasons, when there was a huge oversupply.”
Seasonality is also influencing retailer CSR agendas. In January, Carrefour announced that it was suspending the sale of strawberries in its stores until mid-February, in a bid to educate consumers about the importance of seasonality, as well as offering better-tasting strawberries. Noting that the crop of strawberries available in January was ‘insufficient’, Carrefour made the move in line with its Act for Food pledge, which sought to tap into shoppers’ desire for more locally grown organic produce.
“Our aim of becoming the world leader in the food transition means that we have to make courageous decisions to encourage practices that are more environmentally friendly, and which guarantee high-quality products,” Benoit Soury, Carrefour’s organic-market director, said recently.
Proactive Decision-Making
With consumers opting for a back-to-basics approach to nutrition, fresh-produce suppliers look set to benefit, according to a new study by FMCG Gurus. This proactive approach involves shoppers adding more fresh produce to their diets and looking to ‘stay local’ when sourcing food and beverage products, particularly fruit and vegetables.
FMCG Gurus’ research shows that, in 2020, 64% of European consumers stated that they had become more conscious about their overall health and wellness as a result of COVID-19. In addition, 78% stated that they would make attempts to eat and drink healthier as a result of the pandemic. In terms of how they are seeking to achieve this, some 60% of European consumers plan on eating more fruit, while 44% plan to eat more fresh vegetables.
“However, it is not only COVID-19 impacting this desire for fresh produce, but also the issues surrounding sustainability,” says Will Cowling, marketing manager, FMCG Gurus. “Sustainability has come to the forefront, and these concerns have led to four in ten European consumers stating that they have made changes to their diet in order to be more environmentally friendly.
“Of these consumers, 44% stated they have turned to more fresh food and drink, and 45% have turned to more local food and drink. This suggests that consumers are also adopting a back-to-basics approach to lead not only a healthier lifestyle, but to be more sustainable.”
Important Role
The role that the fresh-produce sector can play in furthering the sustainability agenda requires a more collective approach, in order to deliver tangible benefits, argues Freshfel Europe.
While the sector’s environmental journey began some time ago, there is still a lack of comparable data used in environmental footprints, which, in turn, prevents consistency and leads to a ‘grey area’ when it comes to measuring how well it is meeting the standards required by the bloc’s European Green Deal priorities, it notes.
With this in mind, leading fresh-produce representatives from Belgium, France, Italy, Lithuania, the Netherlands and Spain, along with key traders and retailers, met on 18 February to kick-start discussions on how to develop a harmonised methodology, in terms of measuring accountability regarding product environmental impact.
According to Freshfel Europe, building a harmonised methodology, collecting generic and secondary data for products, and establishing a user-friendly environmental footprint tool are essential in order to enable firms to guarantee that their own calculations are comparable to others in the supply chain, and that they can provide consistent data to business partners.
Such measures could also help investment in the sector, as investors are increasingly eager to financially support companies with sustainability ambitions that can be clearly demonstrated.
“Progress in this dossier will help Freshfel Europe members to better respond to the ambitions of the European Green Deal, the ‘Farm to Fork’ strategy, and the Circular Economy Action Plan, to substantiate green claims – among other EU legislative proposals in the pipeline, such as an EU sustainable food-labelling framework, expected by 2024,” commented Nicola Pisano, Freshfel Europe’s sustainability and health director.
The group’s members have agreed to move forward and collectively build a strategy to address the different aspects when it comes to tackling often complex environmental-footprint matters, and a working group is to be established in the coming weeks, to further work in this area. ESM will keep you up to date on any developments in this regard.
Shaping The Agenda
In order to assess what the year ahead has in store for the fresh-produce sector, ESM caught up with a number of senior executives operating within this sector across the European retail landscape. As they reveal, the opportunities to grow the category as the pandemic subsides are numerous.
SOK (Finland)
Antti Oksa, Senior Vice-President, Sales And Concepts
Do you think that the COVID-19 pandemic has increased consumer demand for fresh produce at SOK?
Yes, clearly. People are eating and cooking more at home, so they are buying more bulk ingredients from our stores, especially when it comes to long-shelf-life produce, like potatoes, onions, carrots and other root vegetables, which are cornerstones in many classic cook-at-home recipes.
A small part of this demand increase can be attributed to consumers’ willingness to stay healthy, take care of themselves, and eat well to stay well, but, really, the main driver is simply the fact that people are buying more ingredients to cook with during the pandemic.
With regard to fresh produce, what challenges did you face as a result of the pandemic, and how did you overcome them?
The pandemic has obviously caused a lot of challenges to the whole food chain, but, so far, we have been quite lucky with fresh produce. Our suppliers have done an outstanding job in meeting the demand and in taking all the needed extra measures, such as taking very good care of hygiene and keeping their workforce healthy and processes running.
Have you noticed any interesting trends in recent months? For example, are sales of particular fruit or vegetable variants growing fast?
We have noticed two clear trends. First, in Finland, there is a strong tradition in buying most produce loose. Packaged alternatives have been growing each year, and the pandemic has really fostered this development, as people would rather choose produce that has not been touched by others at the store. Buying pre-packed also makes shopping a little faster and, in many cases, gives the fresh items a little more shelf life at home.
Secondly, more than before, domestic origin and local producers are key for consumers these days. On one hand, domestic/local origin feels like a safe-and-sound option in the midst of these bizarre times, and on the other, many are concerned about the economic situation of local businesses, as well as the whole country, so they might prefer to spend their euros accordingly.
Are there any new-product innovations of note that you have brought to the market?
I have to admit that we have been in more of a survival mode than innovation mode, but there is one success story that I could humbly share – a private-label product line called Kotimaista, which only comprises domestic products. We renewed the rather standard-feeling product line and increased the quality and brand appeal with a major package design renewal. We also started to market the product line and expanded it systematically, and the results have been amazing – we even received a marketing award: Gold Effie Finland.
What do you see as the outlook for the fresh-produce sector over the coming year?
At-home cooking and local sourcing will remain key drivers over the coming 12 months. People want change and to add variety to their cooking, so tips and inspiration – as well as the rise of new seasonal products – are very welcome. Seasonality has been a growing trend, and I believe it will only grow faster now, as people look for new experiences and variety in grocery shopping.
In Finland, for example, we are happy to see a comeback for the potato. I believe that this comeback will continue, even after the pandemic.
In the latter part of the year, we all hope that life will be a little more normal than during the last 12 months. People will be more on the move, and time will be scarcer again, so takeaway and ready-to-use products will gradually revive. Furthermore, as people are now accustomed to cooking more at home, this will open possibilities for new-product solutions that provide a cooking experience, but help save time and effort at the same time.
Auchan Retail (France)
Nicolas Bonnetot, Vice-President, Fresh Food
Do you think that the COVID-19 pandemic has increased consumer demand for fresh produce?
With the closing of restaurants, the demand has increased in the global retail market, but the impact has been very different, depending on the area. Supermarkets and online channels, including click-and-collect and home delivery, have strongly increased, whereas the big hypermarkets have decreased. One main trend was the shift toward local and French products.
What challenges did you face as a result of the pandemic, and how did you overcome them?
The first priority was to manage the shortage and to deliver the products to the stores. The second priority was to ensure excellence in services and operations, and the third was to increase the online offer.
Have you brought any new fresh-produce innovations to the market?
Recently, we announced the switch from plastic trays to compostable materials for the meat and the fish. It is a major step in our packaging strategy, included in the Auchan 2022 business plan – redefinition of the offer, to be the benchmark player for what is good, healthy and local through the selection, and the development of a unique, fair and responsible offering.
Continente (Portugal)
Ondina Afonso, President of Continente’s Producers’ Club
Do you think that the COVID-19 pandemic has increased consumer demand for fresh produce?
The consumption profile has changed during lockdown. Sales of fresh produce have increased, and cooking at home has gained greater expression.
In general, Portuguese families started to consume more fruit and vegetables than before – because they have had more time to cook and explore some new flavours and recipes, as well as a general tendency to take this opportunity to invest in healthier and more conscious diets, using national and seasonal products, for example.
What challenges did you face as a result of the pandemic, and how did you overcome them?
So far, we haven’t seen any disruption in the supply chain of imported products, and our suppliers are operating normally. Only fruits that are supplied by air, such as mangos or papayas, suffered some disturbance, due to the smaller number of flights from Brazil to Europe. However, it is important to underline that most of our fruits and vegetables are from national production, and therefore our producers were very aligned with us, so there was never a lack of fresh produce on our shelves.
Even though the year was atypical and presented some challenges, namely due to the exponential increase in demand in the first months of lockdown, the reality is that this moment has proved that we have a well-oiled supply chain, prepared to react with agility and speed to change.
How has the Clube de Produtores Continente (CPC) helped you maintain and develop your supply levels?
Continente has always preferred the acquisition of fruits and vegetables from Portuguese producers. It isn’t a preference motivated by this particular situation, but an old determination that reflects a long-lasting and beneficial relationship with the national food/agricultural sector.
In 2020, Continente reinforced the purchase of national fruits and vegetables by more than 3,200 tonnes, compared to the same period the previous year. This growth was possible due to the close and collaborative relationship with national producers, who have managed to respond, effectively, to this increase in demand. In total, we bought over €28 million worth of fruit and vegetables from Portuguese producers.
Have you noticed any interesting trends in recent months? For example, are sales of particular fruit or vegetable variants growing fast?
The biggest highlight would be the oranges from Algarve and all other citrus fruits, which have seen market growth of over 60%, according to Nielsen. There was also a substantial increase in the volumes sold of the national kiwi, as well as apples – from Alcobaça or Beira Alta – and Rocha-type pears, from the west region of the country.
In vegetables, there was a significant increase in soup ingredient produce sales, with an emphasis on courgette, potatoes and cabbages, and also in products for culinary use, such as onions and garlic.
What do you see as the outlook for the fresh-produce sector over the coming 12 months?
Taking into account a scenario of financial crisis, combined with the health crisis, we implemented a support programme for smaller producers with a short-term periodic payment plan, with a view to improving the financial health of these small companies. This initiative was very well received by the producers.
In addition to the challenges of the pandemic, Clube de Produtores Continente – CPC – is working with its producers on a set of initiatives aligned with the ‘Farm to Fork’ strategy, so that, together, we have a more sustainable agri-food production.
BWG Foods (Ireland)
Jamie Tevlin, Head of Fresh Trading
Do you think that the COVID-19 pandemic has increased consumer demand for fresh produce at your business?
Absolutely. Food plays such an important part in health and well-being and fresh produce is a key focus. In partnership with our independent retailers, we ensure that the varying nutritional needs of their customers are met, while guaranteeing that only the freshest and highest quality foods are on offer.
Over the last 12 months, with people largely confined to their homes and their dining options limited through the various phases of lockdowns and restrictions, we have seen a huge increase in people cooking at home. With this has come a move towards more healthy dinners, with fresh produce being a key staple of people’s diets and meal plans.
One of our greatest strengths is that BWG Foods does more than simply provide them with produce. We take a more holistic view at all elements of the business and advise accordingly. Our dedicated fruit and veg expert team, in concert with our very experienced trading team, is constantly seeking new solutions in response to what is an increasing demand for innovation in the array of fresh and natural food solutions in stores.
With regard to fresh produce, what challenges did you face as a result of the pandemic, and how did you overcome them?
Surety of supply, particularly on imported produce, has been a challenge across the industry, especially with transport links and changing work practices on farms and in pack houses, leading to some adjustments in our supply chain.
Thankfully, BWG Foods is extremely well positioned to meet those challenges. Since the pandemic began, our supply partners have been very effective in working with us to shield our retailers from disruption.
In addition, we have invested significantly in our warehouse and distribution facilities in recent years and our distribution operations, which includes our 240,000 square foot National Distribution Centre in Dublin along with 22 Cash and Carry Branches across the country, means we are strongly positioned to continue meeting consumer demands into the future. Our investment in recent years in this sophisticated supply chain has been a game changer during this crisis.
Have you noticed any interesting trends in recent months – for example, are sales of particular fruit or vegetable variants growing fast?
During the first lockdown, horticulture was a huge growth area for us. With the global pandemic confining Irish people to their homes and their gardens, Irish growers and nurseries were desperate for a new sales outlet in the retail grocery sector. This new market trend offered a vital lifeline to the army of Irish growers who were at risk of having to watch their crops go to waste and their livelihoods too, potentially.
Another noticeable increase was in ingredients for home cooking, Bramley apples, rhubarb, potatoes and salad lines all saw positive growth. The was also a noticeable shift to pre-packaged produce like bananas, tomatoes, apples and carrots, as consumers avoided loose products that required handling in stores.
What do you see as the outlook for the fresh produce sector over the coming 12 months?
I think the pandemic has provided a new opportunity for our retailers to highlight our vast and varied product portfolio to a new audience and interrupt their historical shopping habits with no compromise on specification or quality, all with a view to retaining any new business. I think the outlook is positive as a result.
Sales of fresh produce will remain in demand, as home cooking will continue. The popularity of alternative lifestyle diets, such as veganism, will keep produce at the heart of this movement.
Value and choice will continue to be important to consumers, as will having in season fresh produce available. Finally, sustainability around packaging and how we display fresh produce will be an area that will be important to consumers, striking the balance between hygiene and handling, while the impact plastic is having will be a key challenge facing the market.
[Main picture: Silpo, Ukraine]
© 2021 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
