The Global Berry Sector: Changes for the Better Beyond 2023
The international berry sector recently gathered at the Global Berry Congress. For the first time since the event was organized, sentiment among participants was mixed rather than just very optimistic. Inflationary pressures for growers and distributors are not expected to end anytime soon. On top of that, consumer demand is likely to be affected by the inflationary environment. These challenges are prompting the berry industry to make the necessary changes to future-proof the berry sector, focusing on quality rather than quantity going forward.
Growth, Growth, Growth
During previous editions of the Global Berry Congress, discussions mainly focused on the exploding berry market. But where in the past decade the question was how supply could keep up with demand, now the question is how to make demand keep up with supply. Supply of fresh berries on the global market again grew in 2022 (see Figures 1 and 2). Blueberry exports in particular show a steady increase that will continue in the coming years, driven by expanding production in countries such as Peru, Mexico, and Morocco. Global production and exports of raspberries and blackberries are less steady, but are also not yet showing signs of plateauing. The slightly more mature strawberry market has been more stable and is expected to remain so in the coming years.
Growing Concerns About Demand
The overall concern we sensed among congress participants was the declining demand for fresh berries in the coming year. Consumers around the world have begun to tighten the purse strings because disposable income is heavily impacted by the inflationary environment, particularly in Europe (see Figure 3). Based on both historical experience and recent consumer surveys, we expect consumers to begin downtrading. The first signs that consumers are looking for value are already visible. Discounters are gaining market share in various countries and overall fresh food purchases, including fresh fruit, have gone down in 2022. But how this will impact berries in the coming year is still difficult to estimate. During the 2008-2009 global financial and economic crisis, berries were still a niche category and their rapid growth started only a few years later. What we do know is that income clearly influences purchases of fresh berries. Therefore, a vast part of berry purchases will not be much impacted because the disposable income of the more affluent consumers that tend to buy berries is relatively less affected. What we also know is that berry purchases are quite responsive to price changes1. Consequently, other more inelastic fruit types could be more at an advantage. In the first half of 2022, strawberries were among the best performing fresh fruit categories in terms of sales volume in both the Netherlands and Germany (see Figure 4). This was mainly due to the relatively low price levels in 2022. At the same time, retail sales of apples dropped even despite lower price levels compared to the previous year. This could indicate that price is not the only decisive factor for shoppers, but that other factors including convenience, perceived health benefits, and flavor are also important. We expect these factors to continue to drive the berry market over the long term, even beyond the current cost of living crisis.
Changes for the Better Expected in 2023 and Beyond
No matter how challenging the current situation is, it can also be regarded as a timely wake-up call for the berry sector. The weakening market situation will prompt the berry sector to shift from a ‘focus on more’, to a ‘focus on more with less’, and eventually to a ‘focus on producing better with less’. That means a switch from producing higher volumes with correspondingly higher use of inputs, to producing better quality with fewer resources and less environmental impact.
At the Global Berry Congress, several participants showed examples of how they are already changing their business for the better. Growers around the world think twice before expanding their acreage and often prefer replacing old varieties with higher-quality new varieties. These new varieties can improve labor productivity or consumer experience, for example. In addition several South American berry players have started production in Europe, closer to consumers, often improving freshness and reducing transportation costs and climate impact. Supermarkets in Europe and the US are introducing top-tier berry lines with a (consistent) premium flavor experience. Larger pack sizes are being introduced to reduce the use of plastic. Also there is progress in the development of harvest automation solutions. And increasingly, companies are choosing to use detailed farm-to-fork chains to reduce food waste, exclude poor-quality suppliers, and better match supply and demand.
[1] Sobekova, Kristina, Thomsen, Michael, and Ahrendsen, Bruce. Market trends and consumer demand for fresh berries. Applied Studies In Agribusiness And Commerce 7 (2013): 11-14. 10.19041/Apstract/2013/2-3/1.
