guatemala agritrade presentation
TRANSCRIPT
© Bios Partners 2008
European Market Trends & Opportunities for Guatemalan fresh produce
Steve Homer
© Bios Partners 2008
• $500M turnover from– 1.5M packs of vegetables per
week– 1.5M bouquets of flowers per
week
• The Group has been built on– Excellence in growing, marketing
and supply chain management.
– Supported by leading standards of GAP, GMP, Environmental protection and social and ethical welfare
30 second profile....
• Former Ethical Trading Initiative Board Member
• Former GlobalGap Board of Directors and technical committee chair
• GlobalGap Africa Observer Project
• NSF- CMI Agri-Certification Governing Board Member
• Board member NPTC vocational qualifications for the UK land based sector
DFID/Chatham House Procurement Forum
IIED/NRI Trends in private Agri-food standards
IIED Gates Foundation New Business Models
Unilever standards benchmarking consultancy
UNIDO Trade Standards Compliance Report
Institute Of Development Studies Trade Credit report
WTO STDF Private standards briefing
© Bios Partners 2008
Content
•A look at the EU27•Who are the healthy eaters•Who are the couch potatoes
Eu Consumption trends 2007/8
•What is driving public opinion•How that translates into market entry standards•What that looks like in reality
Certification & market access
• How does this affect consumer shopping patterns• What are the retailers doing about itThe global credit crunch
•A look at opportunities for Guatemala in a dynamic EU market during difficult times
Summary & opportunities
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CONSUMPTION TRENDSDEVELOPED FROM THE FRESHFEL CONSUMPTION MONITOR 2008
© Bios Partners 2008
EU-27 Gross per capita fruit consumption (in kg)/year - 2007
5%
Population in the EU-27, grew from 484.6 M in 2002 to 495.1 M in 2007
Source 2009 Freshfel Europe
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EU-27 Gross per capita veg consumption (in kg)/year - 2007
16.5%
Population in the EU-27, grew from 484.6 M in 2002 to 495.1 M in 2007
Source 2009 Freshfel Europe
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Total supply of fruit and vegetables (G/Capita/Day)
WHO/FAO minimum intake recommendation
Source 2009 Freshfel Europe
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Fruit consumption increase (G/Capita/Day)
• The eastern European countries that joined the EU in 2004 show the best per capita consumption growth in 2007 in fruit and vegetables
Rank Country2007 Average Fruit
Consumption (G/Capita/Day) Fruit imports % increase 2007 EU membership
1 Hungary 301.15 35 20042 Poland 133.25 26 20043 Slovakia 126.22 20 20044 Lithuania 73.59 17 20045 Portugal 333.03 176 Greece 556.16 177 Bulgaria 149.11 14 20078 Spain 308.17 149 Netherlands 239.87 14
10 Slovenia 239 14 200411 Cyprus 524.33 12 200412 Latvia 166.87 12 200413 Ireland 114.06 10
Source Freshfel Europe
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Vegetable consumption increase (G/Capita/Day)
• The eastern European countries that joined the EU in 2004 show the best per capita consumption growth in 2007 in fruit and vegetables
Rank Country2007 Average Vegetable
Consumption (G/Capita/Day) Veg % imports increase 2007 EU membership
1 Estonia 163.16 230 20042 Bulgaria 203.9 80 20073 Poland 316.22 55 20044 Spain 333.92 525 Cyprus 303.98 34 20046 Lithuania 141.62 28 20047 Malta 350.35 22 20048 Ireland 164.95 219 Netherlands 177.94 18
10 Slovakia 151.33 10 200411 Latvia 192.13 10 2004
Source 2009 Freshfel Europe
© Bios Partners 2008
EU tries to boost consumption
• Rising obesity and falling consumption
• EU recommendations are being developed for fruit and vegetable producers by a EUR13.8m (US$17.8m) EU research project aiming to increase produce consumption in Europe
• The ISAFRUIT scheme wants more Europeans to eat their recommended minimum five portions of fresh fruits and vegetables. It cites data saying that consumers in Greece, Spain, Italy and the Netherlands, eat the most fruit in Europe (70 to 100 kg per person), followed by Germany, Poland and the UK at 40 to 60 kg, but that consumption generally is not rising.
. www.isafruit.org
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STANDARDS & MARKET ACCESS TRENDS
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Drivers - Campaigns & media
• After testing 576 conventionally grown fruits and vegetables
• Greenpeace Germany found that :
• 84% of goods sold in the country’s leading supermarkets were contaminated with toxic pesticides.
• In fact, 12% of the produce tested had residue levels actually at or exceeding legal pesticide limits.
© Bios Partners 2008
Drivers - Campaigns & media
• “Tesco can say all good things, but the truth is the people are not being treated well here.”
• ‘Tesco is known to squeeze suppliers and these pressures are passed on in the form of low wages and precarious employment’ Report exposes: low wages, exposure to pesticides, poor housing and discrimination
• Action Aid report April 2005
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Drivers - Campaigns & media…
• “To you it is a bag of salad, dropped into the supermarket trolley with the weekly groceries”
• “The world is running out of water and British supermarket shoppers are contributing to global drought”
• The Independent May 2006
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Lifecycle of compliance drivers…
Drivers develop faster than most standards and decay over time
PVS PVS PVS PVS PVSPVSPVSPVS
Drivers
Niche Response
Model developed with David Richardson NSF-CMi
Multi stakeholder voluntary standards & consumer labels emerge
Farmers and growers do not have enough time to finish one before the next one emerges !
© Bios Partners 2008
Lifecycle of compliance drivers…
Drivers develop faster than most standards and decay over time
PVS PVS PVS PVS PVSPVSPVSPVS
Slow to respond creating ‘assurance lag’
Drivers
Niche Response
Public Response
Industry Response Expands behind drivers & specialist standards
Model developed with David Richardson NSF-CMi
© Bios Partners 2008
Lifecycle of compliance drivers…
Drivers develop faster than most standards and decay over time
PVS PVS PVS PVS PVSPVSPVSPVS
Slow to respond creating ‘assurance lag’
Drivers
Niche Response
Public Response
Industry Response Expands behind drivers & specialist standards
Legal ComplianceSPS
Market CompliancePrivate Standard
Industry LeaderNiche Standard
Corporate Response
Model developed with David Richardson NSF-CMi
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Good Agricultural
Practice
Eurepgap
Good Manufacturing
Practice
BRC
ISO 22000
IntegrityB2B
Social & Ethical
ETISA8000
Environmental
ISO 14001CarbonWaterEnergy
Business Equity
Fair Trade
ProvenanceB2C
Ten years of standards...
2003 2008
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The combination private standard – The future ?
• Environmental and Pesticides – Our unique approach with 'Nurture'
offers us the fantastic opportunity to pioneer standards around the use of pesticides, reducing energy usage and allows us to break new ground improving and enhancing the local environment.
• Social and Ethical– Working in partnership with the ETI we
ensure our suppliers are annually risk assessed on ethical standards and worker welfare to ensure that all standards are achieved. Our dedicated technical team also visit suppliers to ensure continuous conformance. This is evaluated and monitored using SEDEX, the Supplier Ethical Data Exchange.
How does Nurture work?Each grower is audited on an annual basis to ensure they meet the required high standard Tesco has set. No matter where in the world we source our fruit and vegetables from and who we work in partnership with we use one standard this is Nurture.
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M&S Plan ‘A’
• Field to fork
• Climate Change
• Waste
• Sustainability
• Fair Partner
• Health
• Partnership with Oxfam
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EU: Food industry opposes quality label
• 16 March 2009 | Source: Keith Nuthall
• Strong opposition has been lodged to the idea of an EU-wide food quality label based on EU production standards.
• CIAA said existing EU laws mandating food/feed safety, environment and animal welfare standards were sufficient. … too much information could distract…consumers from essential information on safety," CIAA said.
• COPA-COGECA opposed the idea of allowing non-EU food producers and manufacturers to use such a logo, this could confuse consumers about the origin of such foods, it warned.
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THE CREDIT CRUNCH
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Which? report angers industry
• The research from consumer group Which?, entitled Hungry For Change?, reported that around 28 million UK adults say that price has become more important when choosing foods since the financial downturn.
• Nearly three in five agreed that they would buy more fruit and vegetables if they were cheaper.
• Almost a quarter said that the economic crisis had made healthier eating less of a priority.
“Fresh produce is the main focus of promotions as retailers battle it out to offer customers the best possible value.“
BRC food policy director Andrew OpieFPJ – 16/03/09
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Tough times ahead ....
• Sir Terry Leahy has told suppliers that they will have to bring down prices to help cash-strapped consumers.
• Leahy has made it clear that he believes supplier prices would have to come down on the back of falling commodity prices. “These lower prices need to be fed into the supply chain and passed on to consumers who are under growing financial pressure,”
• Waitrose has written to 1,000 of its suppliers to request a two per cent cut in its prices.
• Mark Price, Waitrose's managing director, said that a fall in commodity prices meant that suppliers' raw material costs are cheaper and the supermarket saw this as an opportunity. – Fresh info news 12 Mar 09
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Shopper Anticipated Responses to Household Budget SqueezeResponse PercentIncrease spend on budget brands 33Cut back on treats 26Shop around for offers 25Cut back on convenience food 22Switch from brands to own labels 21Change to discount retailer 13Cut back on ethical buying 6Spend same on food, cut back elsewhere 15
Source, IGD, UK, 2008
© Bios Partners 2008
IGD - Reasons for paying more for food and drink
41%
36%
27%
25%
22%
21%
14%
10%
9%
7%
6%
4%
3%
2%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
They Are Better Quality
Healthier
They Are A Treat
I Can Afford Them
They Are For Special Occasions
I Know I Will Like Them
Organic/ Natural Ingredients
More Ethically Produced
They Are Better For The Environment
I Will Spend More On Food For My Children
Special Dietary Needs E.G Gluten Free
Endorsed By A Brand Or An Organisation I Like And Trust
Religious Beliefs Eg Halal, Kosher
I Want To Impress My Friends
Thinking about food and drink that you are willing to pay more for, what are the most important reasons for doing so?
Source, IGD, UK, 2007
© Bios Partners 2008
Drivers – credit crunch…
• Further research from sector specialist IGD showed that organic sales have been the only ethical food sector to fall in 2008, according to their survey of 1,000 consumers the % buying organic has dropped from 24% to 19%.
• At the beginning of October, it emerged that sales of Tesco's Finest and Organics ranges had stopped growing as shoppers rein in their spending. Chief executive Sir Terry Leahy said that while customers still wanted to buy the products,
"they don't feel they can with the economic pressures".
Source Retail Week, & IGD UK, 2008
© Bios Partners 2008
Drivers - campaigns & media…
Steve Homer – Brighton Feb 09
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Own brands and budget lines
• Supermarkets bring in simple budget lines.
“WAITROSE is launching a budget range aimed at shoppers who are seeking cheaper alternatives in the recession. More than 1,400 items, including fruit and vegetables” - 9 Mar 2009 Daily Mail UK
• Claims of same product – no reduction in quality
• Deeper cut and more frequent promotions
• Consumers are trading down to heavy discounter supermarkets, Lidl, Aldi, Netto.
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Own brands and budget lines
• Aldi, Lidl the discount supermarkets, are forecast to increase their share of Britain's grocery market by 60 per cent over the next four years as the middle classes trade down because of the credit crunch.
• A new report claims that the discount chains will generate nearly £7.5billion of sales in 2012, compared with £4.5 billion last year
• The IGD forecasts that Aldi will have at least 530 stores in the UK by 2012, compared with 373 today, while Lidl will have 610.
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Eating out at home ...
• Restaurant eating out has fallen. A survey of 500 families, by media agency MPG, found that 64% are dining out less frequently, while 46% have cut back on the amount they tip when eating out
• Retailers creating combination meals for home consumption
• MPG’s research also found that more than two-thirds (67%) of families are now spending more nights at home, with 63% saying they favour a night at home to spending on leisure activity, such as eating out or the cinema.
• Opportunities for premium fruit and vegetables may increase or be protected from any downturn if this is true.
Steve Homer – UNCTAD April 2008
© Bios Partners 2008
THE OPPORTUNITIES
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Eastern Europe Vs Western Europe
• Western Europe– Fruit and vegetable consumption is static or slightly declining– EU and trade organisations trying to improve consumption– Market access is highly regulated by PVS– Retailers have a strong market share– Prices are being forced down by the credit crunch
• Eastern Europe– Consumption rising since EU accession– Aspirational consumers – many young people working in the west– Comparatively light market regulation – SPS / EU– Still wholesale based – but changing as retailers arrive– Fruits and roots are the big consumption items – can you change this– Finance and local transparency is a challenge
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Celebrity Chefs
• Latvia - Elmars Tannis • Latvia - Martin Blunos • Estonia - Imre Kose
• Jamie Oliver has inspired a new campaign to promote the 2008 British Asparagus season among young men aged between 25 and 40.
• The British Asparagus Growers Association, are investing £35,000 to increase sales of the vegetable, which have been on an upward trend for the last three years. They have seen penetration rise from 2.7% to 14.3% during the British season while volume sales increased by 25% last year and double the number of households bought asparagus in 2007 versus 2004.
Who is this man ?Elmars Tannis
Who is this man ?Jamie Oliver
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Make a story – tick the boxes
• Retailers need great stories
– Why Guatemala ?
– ECO ?
– SOCIAL ?
– SUSTAINABLE ?
– You must tick the boxes and tell your story ......
© Bios Partners 2008
THANK YOU