Increased competition on European fruit and vegetable market

Export of fruits and vegetables is important for Dutch horticulture. The majority of the Dutch production is sold on foreign markets. Holland is one of the largest exporters of vegetables in the world, while belonging to the top 10 countries exporting fruit. Demand on the European vegetables market is increasing, while consumption shows a slight decrease. The EU market in particular exhibits signs of saturation. Growth potential is mainly extant in countries outside the EU, such as Russia.

Dutch export of fruits and vegetables has declined by 6% in the first nine months of 2013 compared to the same period last year. The decline can be explained by a number of factors. Less favourable weather conditions in the spring have slowed down production in the beginning of the year, resulting in fewer products available for export. In addition, domestic production in a number of important countries rose sharply, causing increased self-sufficiency. There was also more competition from the Spanish. The quality of Spanish vegetables is increasing, while its export sector is also improving logistical efficiency. Export of fruits and vegetables is shown in the following table.

The EU Member States are the main export destinations of Dutch products. Approximately 90% of exports are sold in these markets. Export to EU countries dropped with more than 4% in the first nine months of 2013, compared to the same period in 2012. Especially Germany, Sweden and Italy took in less Dutch produce. Export to France on the other hand, increased substantially (+11%). Export to countries outside the EU declined in the first nine months by almost 20%. This decrease is largely borne by Russia (-27%).

Through the years, export to Russia has been subject to strong fluctuations. The borders are regularly closed due to alleged quality issues. In the longer term export to Russia is growing, partly because the major Russian retailers are increasingly aware of Dutch entrepreneurs. The country has over the years risen to the top 4 of Dutch export destinations. Diplomatic disputes between the Netherlands and Russia and the closure of wholesale market Stupinsky in Moscow is currently putting pressure on exports. 

Export tomatoes back on track
The exports of the main types of vegetables declined in 2012. Not only tomato and pepper showed a decline, but also the outward trade of mushrooms and the main fruit products (pear and apple) have dropped. Positive exceptions are cucumber and carrot. The growth of cucumber exports can mainly be attributed to the recovery in our major export markets after the EHEC crisis in 2011.

The tomato export was able to recover in the first three quarters of 2013. The low prices of tomatoes have contributed to this. The export of pepper has seen a downward trend since 2010. Dutch peppers experience increasing competition in European markets, mainly from peppers from Spain and locally grown peppers. 

De champignonmarkt heeft aanvankelijk te lijden gehad onder het faillissement van een grote producent, die een marktaandeel had van circa 25%. Hierdoor viel een belangrijke leverancier weg. De bedrijfsactiviteiten zijn inmiddels door een ander bedrijf voortgezet. 

The mushroom market has suffered under the bankruptcy of a major producer, which had a market share of approximately 25%. This led to a major supplier falling away. The operations have been continued by another company.

The European fruit market is marred by strong competition these days. Supply is increasing, while consumption shows a slight decrease. Sales take place largely through supermarket channels. There are still growth opportunities for export to countries outside the EU and in particular to Russia. 

The fruit and vegetable sector has also seen a movement towards closed chains with vertical chain transparency, primarily caused by the substantial impact of food scandals. All parties in the chain will gain insight into product information, sales, margins and profit. The potential of this development is large: more sales, higher margins and lower costs for all links in the chain. It is important to increase the distinctiveness of the product in the long term and to develop market orientation. Deliver quality at a good price is not sufficient in the current international market, the product must stand out among all other products.

There is room in the middle segment of the market with higher positioned retail formulas. Investments in new products, sales concepts, packaging, service, online services and social media enhance the sales proposition. This way, the sector can make optimal use of the strengths of the Dutch top product, such as freshness, taste, durability, quality, broad and deep range, great attention to food safety, the lack of pesticide residues and efficient logistics.

Source: ABN Amro

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