KN15234

KEY NOTE REPORT : Fruit and Vegetables : May 2004

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This report covers: fruit and vegetables, fresh green vegetables, fresh potatoes, other fresh vegetables, fresh fruit, market trends, new strains and colours, healthy eating concerns increase sales of fresh fruit, snacking, all-year-round availability, organics, bananas, apples, other fresh fruit, imports, exports, retailing, wholesaling, supermarket price wars threaten farmers, pesticides,

Companies covered include: Sainsbury's Labels Fruit and Vegetables, ASDA Capespan International Holdings, Del Monte Fresh Packaged Produce, Fyffes Group, Geest, Greenvale AP, G's Marketing, MBM Produce, Sayabest, Chiquita Brands International, Dole Food Company, Hitchen Foods, Orchard House Foods, Poupart, Fishwicks, Saybest,

TABLE OF CONTENTS

EXECUTIVE SUMMARY

In 2003, the fresh fruit and vegetables market was valued at £7.6bn at current prices, having increased by just 3.9% since 1999. Marginal growth in the green vegetables and potatoes sectors is largely responsible for the limited growth of the market. The fresh fruit sector accounts for 38.1% of the overall market and is gaining share. This is probably explained by the continuing trend towards convenience eating as fruit generally requires little or no preparation, while vegetables usually require preparation and cooking. Meanwhile, both the fruit and vegetables sectors have benefited from widespread publicity about the positive impact on health of consuming fruit and vegetables regularly.

Indeed, the scientific evidence that fruit and vegetable consumption can protect against cancer and other illnesses now appears overwhelming, with studies from around the world highlighting the benefits of eating even small amounts. In the UK, a government drive to encourage people to eat more fruit and vegetables may be having a positive effect on the market. The Department of Health's Five-a-Day Programme, for example, is designed to encourage consumers to eat five 80 gram portions of fresh fruit and vegetables a day.

Most consumers now buy their fresh vegetables and fruit from the grocery multiples, rather than specialist fruit and vegetable stores. The multiples tend to display fruit and vegetables at the entrance to their store in the belief that a display of bright colours presents an attractive and healthy image of their store to consumers. The supermarkets have also helped to increase the variety of fruit and vegetables available to the consumer and have exploited growing demand for convenience products by introducing an ever-growing range of prepared fruit and vegetables.

These include prepacked fruit and vegetable mixes, with the fruit and vegetables peeled and ready to cook. A wide variety of fresh salad mixes is available. Brands have never had the same impact in the fresh fruit and vegetables sector as in other areas of the food market. However, the main suppliers say that this is now changing and the major retailers are increasingly willing to carry brands alongside their own products. Key Note expects fruit consumption to continue to increase over the next few years, as the trends of growing demand for convenience foods and concerns over health continue to influence consumers.

In addition, the growing presence of brands in the fruit sector should also drive demand. However, consumption of potatoes and other vegetables is likely to continue its downward trend. Potatoes are losing out as British people switch from their once staple food item to more convenient alternatives, such as pasta and rice. Meanwhile, frozen vegetables are likely to continue to win market share at the expense of fresh produce, such as beans and peas. Some sectors, such as prepared vegetables and salads should continue to grow rapidly. Intensifying competition among retailers is likely to undermine value growth with the market expanding by just 3% in value terms between 2004 and 2008.

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Text © 2004Key Note

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Last updated by Amanda Porteous June 2004