At the recent IFPA Southern Africa Conference (previously known as PMA’s Fresh Connections conference) in Cape Town, Dr. Johan van Deventer moderated a panel discussion on navigating the future of supply and demand during challenging times. Panelists included Brian Coppin, CEO of Food Lover’s Holdings, Prof. Philippe Burger from the University of the Free State, and Greg Abraham from Smollan.
The following is the highlights from Brian Choppin’s talk.
How did fresh produce fare over the last couple of years in retail?
“Food Lovers Market’s biggest product category is still fruit and veg with about 35 to 40% of the stores’ sales where other retailers are between 5 and 10% of sales with Woolworths most likely at a slightly higher rate.
“In 2020 the world changed forever, but if you were trading in fresh produce you were fortunate because demand was high and people were eating healthy and cooking at home. 2021 Was not a bad year either, we had a pretty good year because during the different stages of lockdown people were still concentrating on healthy eating, still eating at home, and it was only really at the back of 2021 when inflation kicked in, and the supply chain was badly disrupted, that the supply of fresh produce to the retail was domestically oversupplied.
“Then in this year Russia invaded Ukraine, the supply chain was disrupted once again, the oil price went up, and this all hurt the consumer with higher fuel cost, higher energy costs and higher bond costs. So demand was not keeping up with supply. In the last few months it has been picked up, and I think it’s turning around as inflation probably has just about peaked and may start coming down. Oil prices are coming down and there is no doubt that the supply chain must come right with demand will catchup.
Fresh produce is alive and well
“To get consumers into brick and mortar shops retailers need to be the best at fresh produce. You will see that a large section of store promotion flyers is given to fresh produce. Retailers are happy to sacrifice margin on fresh produce to bring people into their stores.
“The buyers of these retail chains are under pressure to increase their market share all the time. The negotiating table with suppliers, pack houses and growers are getting a little tough, but having said that, for all the farmers and growers that I know, they count just as much as the retailers, if not better. All of this demand can only be good for all the stakeholders.
Berries, apples and pears still growing strong
“Still trending the same as in the past is the big growth in the berry category. Apples and pears is growing like mad. Bananas are probably up double or triple in volume this year compared to last year, but that has everything to do with the higher quantity and the price at almost the half.
Mayor changes since the pandemic
“Since the pandemic, packaged products is outselling loose products by far. And the gap between the two is growing. The environmentalist would not like to hear this, but it’s real, and people are picking a packaged product far more than a loose product. As a industry we have some challenges laying ahead if we want to reduce packaging in our business.
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“From a vegetable category, the lower income families and the larger families are still buying a lot of bulk fruit and veg. Instead of the 7kg combo’s that was so popular three to four years ago, we are probably down to 5, 3 and 2kg combo’s.
Growth in the value added products
“There is a lot of growth in value added products, and everybody is getting on it, which is not great news. Where we used to sell butternut or sweet potatoes for example for R10 per kg, you would now get 1 sweet potatoe cut in half with a little bit of spice selling for R30. The problem is the farmer is not getting his part of the R30, the retailers are making a bit more margin, but there is more wastage. The problem is that the added value income is mostly getting taken up with all the packaging, labour and logistics. The grower is not getting this income, unless he is doing the added value himself.
trending in the USA
“What is trending in the USA is prepared meals. It’s massive in America. Take home meals are just getting bigger. There is also a massive drive towards big data and getting loyalty membership signups. A big, big drive towards online delivery as well.