The European Federation of Wooden Pallet and Packaging Manufacturers (FEFPEB) in a recent address expressed its support to the people of Ukraine and stated that there could well be a shortage of wooden pallets and packaging on the European market in the coming weeks, EastFruit reports citing EuroFruit.

Ukraine exported over 2.7 million m³ of lumber last year, a significant part of which was used for the production of wooden pallets and packaging in France, Germany, Italy, the Netherlands and Poland. Ukraine also independently produced and exported to European states about 15 million of its own pallets.

The war in Ukraine and the shutdown of sawnwood production will soon have the most serious consequences for pallet manufacturers in Hungary, Italy and Germany (the Top-3 countries importing sawnwood from Ukraine), FEFPEB notes. Moreover, there will be an indirect negative effect on the whole Europe, as the market will unbalance and packaging prices will go up.

In addition to stopping deliveries from Ukraine, the EU wooden pallet and packaging market will also face difficulties with imports from the Russian Federation and Belarus, which annually supplied about 7.6 million m³ of lumber to the EU (mainly to Estonia, Germany and Finland).

However, FEFPEB said it supported the imposition of trade sanctions on Russia and Belarus, although some EU countries are almost a quarter dependent on the supply of materials for the production of pallets from Russian, Belarusian and Ukrainian suppliers. Alternative suppliers from Scandinavia, Germany and the Baltic countries are currently not yet able to fully cover the possible shortage.

The energy crisis also stirs the pot. It has already caused the price of fuel in Europe to rise by almost a third, and the cost of a barrel of oil has reached $110. This is all added to long-standing problems in the industry and the economy, such as the global transport crisis, shortages of labor and commodities, and the destruction of established logistics routes.

Сообщение The war between Russia and Ukraine will cause a shortage of pallets in Europe появились сначала на EastFruit.

The entry of the German retail network Lidl into the Ukrainian market was reported last week in the Ukrainian media, referring to the leak of an internal letter published by Lebensmittel Zeitung. Despite the information not being official yet, EastFruit experts analyzed what this could mean for the Ukrainian retail trade in fruits and vegetables, for Ukrainian farmers and vegetable growers, and for the retail business in general.

If the Lidl chain enters the retail market of Ukraine, it could become the largest event in the history of the country’s retail. Therefore, we advise you to read this material to the end.

Since EastFruit has been conducting retail audits of fruit and vegetable departments of supermarkets around the world for many years proving that the fresh vegetable and fruit department is the key to overall success in the retail business, we have full information on the positioning of Ukrainian supermarket chains and their ratings by assortment, prices, quality of products, department and service. We’ve also learned a lot about the Lidl model, which is unique in many ways.

An even more detailed and unique analysis of fruit and vegetable retail can also be obtained at the “Retail Forum – 2021” by the APK-Inform project: vegetables and fruits in Kyiv on December 2, 2021.

To begin with, what is Lidl and why should other networks fear such a competitor?

1. The largest food retailer in Europe and the fifth largest in the world, after four US chains. The Schwarz Group, which owns the Lidl supermarket chain and Kaufland hypermarkets with an annual turnover of 125 billion EUR ($145 billion) and almost 12.9 thousand stores in 33 countries, is the most important player in the market. The turnover of the Schwarz Group supermarket chains almost corresponds to the GDP of Ukraine ($156 billion in 2020)!
2. In terms of turnover, Schwarz Group is several times superior to international supermarket chains operating in Ukraine. For example, Metro AG, which owns the Metro Cash & Carry supermarket chain in Ukraine, has approximately 3 times less turnover than Schwarz Group, and Auchan almost 4 times less.
3. The fastest growing supermarket chain in Europe – Lidl was not the leader in food retail in Europe 8 years ago, giving place to Carrefour, Tesco and Aldi. Considering the current huge gap with competitors – 50% larger turnover than Aldi, the second in the ranking, one can understand how impressive growth rates Lidl has had in recent years!
4. Ukraine is the first former CIS country where Lidl enters, but not the first where Schwarz Group operates. The Kaufland supermarket chain shortly after entering the Moldovan retail market took the lead in the comprehensive assessment of fruit and vegetable departments and greatly raised the bar for the quality and range of fruit and vegetables.
5. The business model is a tough discounter. Kaufland is usually a premium supermarket, but Lidl is the opposite. We can say that Lidl is a trendsetter in this segment. It is distinguished by extremely low, sometimes incredibly low prices, a minimum of staff, placement of goods on shelves in original packaging from the supplier in order to save the consumer’s money, a limited assortment, an emphasis on its own network brands (Private Label), but the presence of leading independent brands, unlike other discounters.
6. Private Label – Lidl has an extensive system of partners-producers of goods for the chain under its own (chain) trademarks in different countries. In addition, the company has its own powerful production facility, Schwarz Produktion. These products are the most affordable in each category, as a rule.
7. In Poland, Lidl operates a chain of more than 700 stores with a turnover of over $6 billion, being the leader in food retail in Poland. For comparison, the turnover of ATB, the leader of the Ukrainian retail, is approximately the same in 2020 as the turnover of Lidl in Poland. At the same time, ATB has much more stores – about 1200. However, the average size of a Lidl store in Poland, according to our estimates, is 35-50% larger than that of ATB in Ukraine.
8. Lidl officially announced its entry into the markets of Bosnia and Herzegovina and Estonia in 2022. Let us remind you that entering the Ukrainian market has not yet been officially announced.
9. Lidl Plus is an interesting and effective loyalty system that goes far beyond traditional discounts and cashbacks. Consumers can use the smartphone app around the world.
10. The scandals and litigation involving Lidl mainly concerned complaints about working conditions and low wages at Lidl’s suppliers and in the stores of the chain.

How does Lidl sell fresh vegetables and fruits?

As in any other segment, Lidl focuses on ultra-low prices for vegetables and fruits. The challenge for a retailer is always to be the first in fruit and vegetable prices.

Nonetheless, the requirements for the quality and safety of fruits and vegetables in Lidl are very high. The chain may not offer premium-quality products, but it inspects the suppliers of fruits and vegetables very rigidly in terms of complying with the safety and quality requirements. The supplier, on the other hand, knows that if Lidl’s requirements are met, the chain will be able to offer huge development prospects and large volumes of product sales.

Lidl’s range of vegetables and fruits is limited, but the chain has recently regularly prioritized this segment of goods, given the global trend towards healthy food choice. For example, in the UK, the chain plans to increase the share of healthy foods to 85% of total sales and increase sales of fruits and vegetables by 35% by 2026, Fruitnet reported.

The focus on local vegetables and fruits is also an important element of the fruit and vegetable trading strategy for Lidl. Trade in local products, as we regularly emphasize in the fruit and vegetable audits of EastFruit retail chains, is beneficial for any chain. This allows to offer fresher, and therefore tastier fruit and vegetables, reduce transport costs, emphasizing the concern for the environment, and, at the same time, get a higher price, since consumers in most countries prefer local products to imports.

However, the availability of high-quality and safe products in the country at a competitive price should be taken into account. Otherwise, Lidl’s global direct procurement and direct import system will find alternatives.

The quality of the produce department and the quality of services in Lidl supermarket chains usually correspond to the discounter format. The chain is trying to minimize staff costs, so you shouldn’t expect a lot of workers in the store. Lidl supermarkets are also unlikely to amaze by merchandising and beautiful display, as products are usually sold in the same packaging they were supplied by producers or wholesalers of fruits and vegetables. Nevertheless, Lidl’s information content, as a rule, is at a fairly high level, as well as the convenience of shopping.

Lidl stores normally have an area of ​​about 1 thousand square meters, but there are also stores of ​​about 2 thousand square meters.

Lidl, taking into account the general trend towards a healthy diet, also pays great attention to the sale of organic vegetables and fruits and has its own line of organic products. This, undoubtedly, can attract not only economy-oriented shoppers to the store, but also the premium segment.

Since Lidl was a large wholesale company for a long time before entering the retail segment of the business, it knows well how to minimize the logistics costs for the purchase of fruits and vegetables. Accordingly, the supermarket chain is likely to launch a distribution center (DC) at the earliest stage of market entry. Without this, it will not be possible to implement the strategy of ultra-low prices. Naturally, the chain will strive to work directly with producers who have the necessary capabilities to ensure year-round supplies of fruits and vegetables.

As Lidl is trying not to hire many employees in sales areas, the chain will most likely require suppliers of fruits and vegetables to supply products with the maximum level of “packaging”. In other words, you probably won’t find bulk potatoes, carrots or other root vegetables in Lidl.

What does the possible entry of Lidl into the market mean for Ukrainian farmers, vegetable and potato growers?

First of all, these are new opportunities. Competition is always good, and Lidl will become a new powerful distribution channel. The partnership with Lidl will help producers create long-term business development strategies, taking into account the best international practices. After all, if you can meet the requirements of Lidl in Ukraine, you will most likely be able to supply products to any supermarket in the world.

Here is the second advantage – the opportunity to enter the international market, as well as through Lidl. Lidl’s global procurement strategy provides this opportunity for the most efficient and competitive suppliers. Therefore, the network can become a gateway to the markets of the EU and other countries in the world.

The third advantage is the general increase in the quality and safety of fruits and vegetables, which usually takes place after such a powerful international player enters the market. For instance, Lidl in Poland requires mandatory GlobalGAP certification from all vegetable and fruit suppliers, and the requirements for pesticide residues in the chain are much stricter than the EU standards.

While producers dislike and actively oppose increased requirements to their products, improved quality always leads to higher sales and revenue. Of course, this will require investment in the infrastructure for refinement, and many will even have to change approaches to production and crop protection, if they want to take advantage of the opportunities provided by Lidl.

The fourth advantage is the reduction of the risk of non-payment by the chain. Unfortunately, many suppliers of vegetables and fruits in Ukraine have not been able to receive payments for the supplied products due to bankruptcies of chains, or they often received payments delayed up to six months or more. In the case of the leader of European retail, such risk will be minor.

In general, any opportunity will require improvements from producers. Without a doubt, these are changes for the better and producers need to start preparing for them now.

What does Lidl’s possible entry into the market mean for fruit and vegetable consumers?

It is quite clear – competition means lower prices. An average Ukrainian consumer is not among the richest in the world, so he will only be glad to save money.

The second important advantage for the Ukrainian consumer is Lidl’s increased requirements for residues of plant protection products in vegetables and fruits, which we mentioned above. This will provide additional safety guarantees to Ukrainian consumers, and the chain will benefit from a high level of loyalty.

The third advantage is higher requirements for the quality of fruit and vegetable products. This can be very important for those who are tired of dirty potatoes, onions, carrots, beets in supermarket stores.

The fourth is the availability of organic products in the chain’s stores. However, it is not yet entirely clear how widely the organic segment will be represented in the fruit and vegetable department of Lidl in Ukraine.

The fifth is the promotion of local products that are tastier and fresher. Lidl will create opportunities to develop fruit and vegetable production in Ukraine and promote local products as they do in other countries.

Perhaps, a reduced assortment can be a potential drawback of the chain. However, the “reduced assortment” in the EU market may be quite sufficient for the Ukrainian market, as the average supermarket chain in Kyiv has about 100-120 positions of vegetables and fruits, the leaders – 200-260 positions, and ATB – about 50 positions.

What does Lidl’s entry into the market mean for the retail business, and how will it take place?

Since the former manager of the chain in Poland has been appointed as the head of the Lidl chain in Ukraine, it is obvious that Ukrainian chains should study the experience of the neighboring country.

Will Lidl buy any of the Ukrainian supermarket chains or will it create its own supermarket chain in Ukraine from scratch? It would be logical to assume that the ATB supermarket chain is the most suitable for the Lidl chain in terms of its format, and its purchase can provide the rapid gaining of leadership.

However, the experience of other countries shows that Lidl prefers to create its own chain, rather than enter the market through the purchase of competitors. Perhaps this is due to the format of the chain and high requirements for efficiency created by standardizing stores. Nevertheless, it is this option of entering the Ukrainian market that seems very likely. This will become a significant impetus to the development of the commercial real estate market in Ukraine, as experience has proven that the chain will strive to take the leading positions in the country within 3-5 years.

Where will Lidl find its Ukrainian competitors, where will it be inferior to them, and what position would the chain take in our audit today if it had already operated on the market?

As a rule, Lidl is a leader in terms of prices, but it will not be easy to do this in Ukraine. Particularly, it will be more difficult than in Poland. This is due to the fact that, according to EastFruit estimates, only 26% of all vegetables and fruits are sold through supermarket chains, and 74% of trade turnover is sales in markets, stands and street trading. If we take into account the consumption of self-grown vegetables and fruits in value terms, the chains control only 16.5% of the consumption of vegetables and fruits in value terms.

Obviously, the Lidl chain will be able to count on leadership in prices in the segment of imported vegetables and fruits at the first stage. It may take some time to become the leader in local products.

In terms of assortment, the chain is most likely to be somewhere in the middle, but it is likely to take leading positions in terms of quality. As for the quality of the department, we expect the chain to have the same positions as in the assortment – in the upper middle of the rating of the country’s supermarkets.

Thus, we assume that Lidl, according to a comprehensive assessment of the fruit and vegetable departments, will enter the top 3 of Ukraine. The chain will most likely offer the greatest competition to such supermarket chains in Ukraine as ATB, Novus, Silpo and Auchan.

Of course, only the ATB chain can be considered a direct competitor of Lidl, however, the German retailer will put pressure on Auchan and all other chains in terms of prices. In terms of product quality, Lidl will compete directly with Novus, especially Novus Express, offering significantly lower prices. Silpo, on the other hand, has multi-format stores, and their large part are very similar in format to discounters. It is this segment of the chain that will suffer the most from the potential expansion of Lidl in the Ukrainian market.

Given the long stagnation at the very end of the EastFruit rating of the Ecomarket and Velyka Kishenya chains, Lidl’s entry into the Ukrainian market may accelerate their exit from the retail business, because their formats will directly intersect with a more powerful international competitor.

Conclusions

Lidl’s entry into the Ukrainian market may not take place, since the chain has long had offices in some countries with no Lidl stores. However, these are usually countries with large orders for the production of goods for sale in this supermarket chain, and Ukraine hardly fits this criterion.

Most likely, Lidl’s entry into the Ukrainian market will take a lot of time. Therefore, we cannot say for sure that there will be at least one store of the chain in the country by the end of 2022.

Lidl’s entry into the Ukrainian market will have a powerful impact on both the retail market and the fruit and vegetable market. The impact will be predominantly positive, as it will open up new opportunities for business development and even export expansion for the most progressive producers and provide access to better and safer products at a fair competitive price for consumers.

The entry of such a powerful player into the country’s market is also positive for the image and investment attractiveness of Ukraine, as Lidl will create new investment opportunities in other sectors of the country’s food and non-food businesses.

“The EastFruit team is looking forward to including Lidl in our periodic retail audits of supermarket horticultural departments, which we have been doing for nearly 15 years. We see how the development of modern fruit and vegetable retail is changing the fruit and vegetable business of the countries of our region, creating new opportunities for all market participants ready to face the challenges of modern times and develop,” says Andriy Yarmak, Economist at the Investment Centre of the Food and Agriculture Organization of the United Nations (FAO), managing a joint FAO/EBRD project to develop the fruit and vegetable trade in Ukraine, Moldova, Georgia, Uzbekistan and Tajikistan.

We invite everyone to the first international conference “Retail Forum – 2021” on December 2, 2021 in Kyiv. As part of the event, EastFruit experts and representatives of the Ukrainian Horticultural Association will present a unique study of the country’s fruit and vegetable retail. The study includes the top 20 best-selling vegetables and fruits, seasonality of sales, specific weight of vegetables and fruits in the turnover of chains, current turnovers of fruits and vegetables in Ukrainian retail, and, of course, opportunities for the development of this segment.

Registration of participants will soon be available on the FruitInform website. For participation you can contact the project staff:
+380 96 5836323 – Yevhen Kuzin, eugenekuzin@gmail.com

+380 96 4337857 – Olexandr Khorev, halex.khorev@gmail.com

+380 96 1319287 – Olexandra Manko, sashchaa@gmail.com

Сообщение Lidl to make a revolution in Ukraine’s retail and produce sectors: detailed analysis by EastFruit появились сначала на EastFruit.

According to EastFruit, Ukraine is one of the leading global exporters of the wild blueberries – Ukrainian king of antioxidants. Organically certified low bush blueberries could boost the health of consumers’ heart and overall immune system, it is also an excellent source of dietary fibre, vitamin C and vitamin K and contains a large number of antioxidants. Consequently, Ukrainian wild blueberries considered a “superfood” and the Amethyst Ole company supplies local and international buyers with it.

The European Bank for Reconstruction and Development (EBRD) and the European Union (EU) have helped the company to upgrade its production and boost exports. Amethyst Ole is located in the village of Rudnya Bystra in northern Ukraine. It procures and processes wild berries – blueberries in particular. Local businesses and micro-farmers in the Zhytomyr, Khmelnytsk, Rivne and Volyn regions harvest wild berries and bring them to designated collection points scattered around various villages. By midnight, Ole picks up the berries and takes them to the production site. Every batch is processed within four hours of arrival. This ensures that the berries remain fresh and retain their healthy properties.

“When we started in 2011, we already had extensive experience of retailing berries, but with Ole we wanted to concentrate on quality over quantity and, even more importantly, create jobs for locals and give farmers an opportunity to have their goods sold outside Ukraine. With blueberry exports on the rise, we ship to Poland, Italy, France, the Netherlands, Germany, Austria, Belgium and many other countries,” says Vasyl Chamor, Ole’s Chief Operating Officer.

Freshly picked berries are unloaded in a cooling corridor at -5℃ and then stored in a freezer room at -22 to -25℃ before reaching the processing line.

First, a spiral conveyor fans the berries and separates off the leaves, gravel and any other waste. The blueberries are then automatically sorted according to size before reaching the electronic cleaning machine. This state-of-the-art machine, is a custom-built photographic berry separator, has 16-colour video cameras that allow a 360-degree view of the processed berries.

“This machine is necessary to ensure that only top-quality berries reach the final physical quality check and inspection line before being packed and shipped,” Vasyl explains.

After a final quality check, the blueberries are electronically weighed and packed. Every package goes through a metal detector and is checked for radiation levels. In addition, every batch of berries undergoes regular spot checks for harmful particles.

“We take consumer safety very seriously. Our goal is to ensure that our processing machinery and methods meet the high standards set by the EU. That is why we have all our equipment and processes certified. This includes all relevant certifications for ISO, organic and natural product processing and hazard analysis standards,” Vasyl adds.

Lastly, the company stores the packed blueberries in freezing chambers at approximately -35℃ until they are shipped to customers.

The EU4Business-EBRD credit line helped the berry processor to upgrade machinery and purchase crate-washing equipment, as the company was able to take out a loan through local partner institution Bank Lviv. Amethyst Ole is just one of the 470 Ukrainian businesses that have benefited from EBRD-EU4Business credit line funds.

Small and medium-sized businesses are vital for sustainable economic development in any country. For agriculturally focused countries like Ukraine, it remains challenging to access technologies and meet industry standards, especially for businesses that are located outside big cities and regional centres.

Through partner banks, the EBRD and the EU support firms in Ukraine and other Eastern Partnership countries with finance and grant incentives to meet international standards and regulations. This unlocks new opportunities and markets for SMEs, boosts export volumes and builds better economies in the long run.

Сообщение EBRD provides credit to a Ukrainian exporter of frozen berries появились сначала на EastFruit.

The end of last week on the Ukrainian market was marked by several messages from cherry producers about low prices and problems with sales, and some media and social networks exaggerated them.

EastFruit suggests finding out whether the cherry market in Ukraine is that close to a catastrophic state, how low the prices are now, and whether exports can help the country.

The current cherries season in Ukraine started late, at the beginning of June, due to the cold spring, but the average price corresponded to that of the last year. However, prices went down then, disappointing producers that had hoped last year’s scenario would repeat this season. Most farms have been affected by heavy rains, and the implications will affect the cherry market throughout the season.

As the season progressed, the price difference was increasing in comparison with 2020. The situation leveled off only in the beginning of July, when the average price stopped at around UAH 40/kg ($ 1.50/kg), which corresponded to the price on the same date last year.

Due to rainy weather, the market shows a significant variation in the quality of cherries and, accordingly, a variation in prices. In the southern regions, wholesale prices for low quality cherries may go down to 15 UAH/kg ($ 0.55/kg). Nevertheless, the demand for high-quality cherries is high, and the price reaches UAH 50/kg ($ 1.80/kg) in wholesale. This is about late varieties of cherries that suffered the least from the rains.

Moreover, if we compare prices to those in the previous years, it turns out that cherries in 2021 are not so cheap. Over the past five years, they were more expensive only last year, and four previous years much lower prices were recorded. This is relevant even on the eve of the season for the latest varieties that usually cost more than early and middle varieties of cherries.

Are cherries in Ukraine cheaper than in other neighboring countries? This can be verified with EastFruit’s wholesale price monitoring in eight countries in the region.

Of these eight countries (Poland, Moldova, Ukraine, Belarus, Russia, Georgia, Uzbekistan and Tajikistan), only in Georgia, cherries are now more expensive than in 2019-2020. In Moldova, a competitor to Ukraine, prices are lower than on the Ukrainian market and cherries are cheaper than two years earlier. And this is despite the fact that Moldova exports 6-12 thousand tons of cherries annually, while Ukraine in its most record season exported only 3.7 thousand tons, of which 500-600 tons were sent to the Moldova, apparently, for re-export to the Russian Federation.

The current wholesale price for cherries in Poland is one third higher than in Ukraine, but the annual export from Ukraine to Poland barely exceeded 100 tons over the past three years, and this season even this volume is questioned due to poor quality of Ukrainian cherries. In addition, prices in Poland decreased compared to last year amid recovery in production after frosts in the 2020 season.

Many Ukrainian farmers believe that access to the Russian market would help them, as “the European Union and other countries do not need Ukrainian cherries”. However, cherry prices fell more sharply on the Russian market this year than in Ukraine, and the price levels in Ukraine and Russia are almost equal. In other words, it is Russia that doesn’t need Ukrainian cherries. Therefore, even if there was access to this market, the difference in prices would not even cover the delivery costs.

The quality of local cherries in Russia is also problematic, but their supply has increased significantly. Moreover, imported cherries in the Russian Federation are a little more expensive than high-quality local ones. Thus, local cherries are sold at maximum $ 2.10/kg, while wholesale prices for those imported from Central Asia and Turkey vary between $ 2.30-2.60/kg.

Additionally, the quality of cherries is also becoming decisive for the successful sale on the Russian market. For instance, given the damage to the cherry harvest from frosts, selling them to Russia was a major concern for Uzbekistan in 2021 because Uzbek fruits began to seriously lag in quality behind fruits imported from Turkey. Most of the producers here use traditional approaches to growing, harvesting and sorting cherries, as they do in Ukraine.

Let us recall that in recent years Russia has remained a key export destination for cherries from Ukraine by means of re-export through Belarus. By the way, the average price in the Belarusian market is similar to the price for imported cherries in Russia, and this level is now the maximum (excluding logistics) that a Ukrainian producer can get when exporting his cherries. But the export to Belarus is up in the air now in view of the latest decisions of its leadership.

In terms of its need to develop exports, Ukraine is a hostage to one export sales market – Russia through Belarus and, to a lesser extent, Moldova. Moreover, export is now more a forced measure to relieve tension on the domestic market, and not a sales strategy. Thus, Ukrainian exports reached their peak during the period of relatively low prices in 2017-2018.

Even more threatening for Ukrainian producers and exporters is the constantly growing competition on the Russian market with other suppliers, despite the continuing growth in cherries imports in the Russian Federation. So, three countries of the post-Soviet space are among the ten largest world exporters of cherries and they aim primarily at the Russian market.

Thus, in order to successfully develop exports, Ukraine will need to explore different directions, as the Russian market, previously opened by Belarus, may become completely closed. Belarus itself consumed some cherries imported from Ukraine, but these volumes were small, and given the current developments there, demand for imported fruits is unlikely to increase.

In the meantime, record volumes from Ukraine not to Belarus or Moldova were sent back in 2017 to Poland (860 tons), Hong Kong (103 tons), Germany (70 tons), Great Britain (34 tons) and the Netherlands (19 tons). In subsequent years, Ukraine lost these export directions, switching to Belarus and, as a result, it now risks losing this sales market as well.

Are Ukrainian cherries needed in other countries and what markets might be of interest to Ukrainian suppliers? Several years ago, the team of the Food and Agriculture Organization of the United Nations (FAO) and the European Bank for Reconstruction and Development (EBRD), together with the Ukrainian Horticultural Association (UHA), found answers to these questions and found buyers willing to buy Ukrainian cherries. However, for this a number of requirements must be fulfilled.

“First of all, a study of the global and regional cherry markets shows that a real niche for Ukraine is the development of production and export of late cherry varieties. It is important for us to enter the market when the largest regional player, Turkey, has left it. In July, there are no longer supplies from Turkey on the market of cherries in the Middle East, but expensive cherries from the United States become available and prices on the market are increasing. In the market of the EU countries, competition also sharply decreases in the second half of July and prices for cherries grow, but demand remains high, as most of the EU citizens go on vacation. In Ukraine and other countries of the region there are no more cherries from the countries of Central Asia and Turkey at this time,” Andriy Yarmak, economist at the Investments Centre at FAO explains.

“The question is the selection of varieties and optimization of the entire cycle of cultivation, harvesting, cooling, sorting and packaging. Ukrainian producers need to focus on obtaining large-caliber cherries, using hydrocooling  technology, optical sorting and packing cherries in bags with MAP technology. This will allow to export cherries anywhere in the world. Apart from the EU and the Middle East, Ukrainian cherries may well be demanded in the countries of Southeast Asia during this period. Interestingly, the weather risks when growing cherries of late varieties in Ukraine are also lower – later flowering reduces the threat of loss from spring frosts, and later ripening reduces the risk of cracking from rain,” Andriy Yarmak said.

However, this does not mean that high-quality cherries of early varieties will not be in demand in foreign and domestic markets. For example, wholesale prices for cherries in the EU this year were significantly higher than last year. Importers from Italy, France, Germany were interested in purchasing cherries even from Ukraine, but there were almost no quality products. At the peak of early cherries harvesting in Melitopol, high-quality cherries could be exported to the Italy at up to 4 euros per kg. By the way, such deliveries have already been carried out quite successfully. However, the majority of Ukrainian farmers are more used to work the old-fashioned way, not putting effort to product refinement.

At the same time, the EU countries and even China are switching to the cultivation of cherries under protected culture with anti-rain systems protecting both from rain and birds. In the last two years, frost protection systems became intensively purchased – to buy this technology for a cherry orchard, a payment should be made a year in advance, since demand significantly exceeds the supply.

Therefore, we draw a few conclusions from this material:

• Average wholesale prices for cherries this year are lower than in 2020, but higher than usual;
• There are very few high-quality cherries in Ukraine and their average wholesale prices are very high this year;
• Export to the Russian market, if it was possible, would not help the Ukrainian market. The problems Ukraine faces resulted from the lack of qualitative changes in the technologies of growing and processing cherries;
• The global cherry market is growing rapidly and there will be niches for Ukraine, if we focus on the production of high-quality cherries;
• Late varieties of cherries may be more profitable for Ukrainian farmers than early ones, however, there are many niches for early varieties for a profitable business, provided investments are made in the quality.

Сообщение Cherries in Ukraine are not that cheap. Would exports to Russia have supported the prices? появились сначала на EastFruit.

The “Organic D” farm from Vinnytsia region (Ukraine) plans to export onions to Saudi Arabia, AgroTimes reports based on Vinnitsa.Info.

“We cooperate with various companies that help us access markets, with the European funds aid. We had several negotiations with large buyers from Saudi Arabia who are interested in Ukrainian products, – the head of the farm Vadim Krychkovsky said. “After assessing our potential and the requirements of global legislation, we decided to export onions. Other crops that we grow – potatoes, carrots may spoil if sent washed.”

According to the head, there were certain conditions for packaging. Onions should be in a three-kilogram package, branded. There are also conditions for a minimum batch.

“We have already passed all the stages. We have a company in Vinnytsia that plans to build a platform to load containers directly in Vinnytsia, and they will be sent to Saudi Arabia. They provide logistics,” Vadim Krichkovsky said.

The farm has a Global G.A.P certificate. Last year, the company produced 600 tons of onions, 3 thousand tons of carrots, 500 tons of beets and 400 tons of potatoes.

Сообщение Farmers from Vinnytsia region in Ukraine will export onions to Saudi Arabia появились сначала на EastFruit.

The season of greenhouse and imported tomatoes in Georgia is coming to an end. For now supply of seasonal tomatoes grown in high polyethylene tunnels has increased, soon open ground tomatoes will appear on the market and accordingly, prices will decrease further.

How do greenhouse producers assess the past season and what are the expectations of the producers of open field in the upcoming season?

Source: east-fruit.com

The local tomatoes in Georgia are available almost all year round, however, the largest amount of local production appears on the market in June, when the season kicks off in high tunnels, and then proceeds with open field tomatoes.

In winter and early spring, Turkish tomatoes dominate the market. Accordingly, prices reach a maximum in January-February and a minimum in August and September. This trend in price change is typical for both red and pink tomatoes, although the price of pink tomatoes exceeds the price of red ones all year round. According to EastFruit monitoring, wholesale prices for pink tomatoes in 2019-2020 were about 50% higher than prices for red tomatoes. Last year, the minimum price for both pink and red tomatoes was set in September, with an average wholesale price of 0.7 GEL/kg ($0.22) for red tomatoes and 1.37 GEL/kg ($0.43) for pink tomatoes.

The largest greenhouse complex in Georgia belongs to Georgian Agro House Ltd., whose products are known to customers under the brand name Planta.

Planta grows red, pink and cherry tomatoes in the greenhouses. The harvest begins in September and continues until June. From September 2020 to the present day, the company has sold 1,500 tons of tomatoes, which is almost equal in quantity to the 2019-2020 yield, although due to the pandemic there have been changes in sales of packaged vs unpacked (wholesale) products. According to company representative Luka Sturua, sales of packaged vegetables including tomatoes have grown by about 20% this season, while sales of unpackaged ones have declined. Planta’s unpackaged products are mainly sold in agrarian markets.

Sturua notes that demand for their products, including tomatoes, has declined this year on agricultural markets due to the pandemic, as their main wholesale buyer is the HoReCa sector.

Tomato production in greenhouses will be finished at the end of June and will resume in September, although in July-August the company plans to purchase tomatoes from local farmers and thus not stop supplying packaged tomatoes to the market. Sturua notes that in the summer season, the company buys from the population only pink tomatoes that meet the company’s quality requirements, but high-quality red tomatoes and cherry tomatoes are rare.

High tunnel tomatoes are mainly produced in regions Kvemo Kartli, Samegrelo and Imereti and are available on the market from April to late autumn. Now the market sells mainly tomatoes produced in Kvemo Kartli and Samegrelo, season soon starts in Imereti too. In the western regions, mainly pink tomatoes are produced, and in Kvemo Kartli both pink and red varieties. One of the largest tomato growers in Kvemo Kartli is Abaz Musaev, who owns 4 hectares of greenhouses where he grows pink tomatoes and works only with large buyers. Musaev started harvesting in April. Now Musayev sells pink tomatoes at 3 GEL / kg, ($0.92) noting that this year prices are about one GEL lower than last year. Musaev attributes the low price to lower demand due to the pandemic and a possible increase in supply this year. Although it is worth noting that due to the high quality that can be achieved through the advice of a specialist invited from Turkey, the price of tomatoes from this manufacturer is usually higher than the market.

The planting of mostly red tomato seedlings in open field in Shida Kartli began in May, and the first harvest is expected in August. Farmers assess the last season negatively, claiming that local prices fell to 0.4–0.7 GEL / kg, ($0.13-$0.22) which made it unprofitable to harvest tomatoes.

Levan Guraspashvili is one of those who decided to plant fewer tomatoes this year. Last year, the farmer had 23 hectares of tomatoes, and this year he only cultivates 8 hectares. Considering the high production costs (8-10 thousand GEL per hectare) and the unsuccessful last year’s season, the farmer no longer dared to produce large quantities of tomatoes, although, in his opinion, prices could be better this year, as other farmers around him have also reduced the area under the tomatoes.

Сообщение Georgia prepares for open field tomato season появились сначала на EastFruit.

Georgian producer of freeze-dried fruits and vegetables Gemuani has completed its rebranding process. After a break of several months, the company will return to the Georgian market with products in new retail packaging by the end of January. Meanwhile, the company did not interrupt export deliveries during the rebranding period and their volume increased significantly over the past year. EastFruit spoke with Gemuani’s founder Nonu Tordia about the reasons for the company’s decision to replace the packaging, what 2020 was like for the company, and what are its plans in the near future.

– What packaging will Gemuani use from now on and what was the reason for the change?

We are switching to new packaging both in terms of material and design. From now on, we will use special aluminized, not vacuum, sealed food bags. First of all, this decision was made based on food safety considerations. The fact is that if the storage conditions are not met, the plastic jars that we used earlier began to breathe so products became exposed to the environment and as a result, the crunchiness of freeze-dried fruits can disappear, etc. Today’s realities show there are no guarantees that during transport and at all warehouses and supermarkets, especially during the summer heat, that the proper temperature (below 22 degrees) will be constantly maintained for our products. With our new packaging, this concern is now irrelevant. Its design also changed and each fruit will have its own character.

As part of our rebranding efforts, we also changed the logo. The first samples of our bagged products will be ready in a few days. As part of our rebranding process last autumn, we suspended supplies to the Georgian market, but we plan to resume them by the end of this month. Naturally, we are talking only about retail (no changes were made to the B2B direction) and so far only for supermarket chains since the HoReCa sector is still on hold from the pandemic. At the first stage, our products will be presented in single-portion sachets at 10-15 grams each. After a few months, 25-40 gram packs will be added to our product line.

– Did the company also suspended export deliveries during the rebranding period?

No, we worked in accordance with long-term agreements. However, we did warn our foreign partners about our change in packaging. Going forward, they will also receive our fruits in bags unless, of course, one of them insists on the previous packaging.

– In general, what were the export trends for your products in 2020?

I can say that over the past year, our product exports have increased by about 30%. We mainly attribute this to the fact that the company has built stable relationships with its partners. During the first two years of our work (Gemuani started selling its products in 2018), there were certification processes to go through and establishing relations with partners. Now, we are at the stage of stable supplies. Our export markets include Europe, the Baltic States, and Russia. I would also like to note that today a large share of our exports is supplying ingredients to the B2B sector, although growth has also been observed in the direction of retail sales to Europe.

Read also: Georgian producer Gemuani: freeze-dried fruits from cinemas to the EU market

– How do you think 2020 was for the company?

I cannot say that we are unhappy with 2020. Of course, in the context of the COVID-19 pandemic, we, like many other manufacturers, had to face certain difficulties such as inviting foreign specialists to repair equipment, sending product samples, audit visits to the enterprise by large companies and partners, and some other questions. Throughout the previous period, we went forward and if I may say so at a frantic pace. This year gave us the opportunity to sit down, think, and stabilize everything.

– Tell us more about Gemuani’s current range of products and prices.

We did not expand the range in 2020. Of the fruits, we still offer freeze-dried apples, peaches, cherries, raspberries, strawberries, gooseberries, currants, feijoa, kiwi, tangerines, and so on. We produced freeze-dried vegetables and herbs only for the HoReCa sector during the periods when it was functioning. We do not carry out retail deliveries of vegetables yet. As for prices, we, as a new enterprise, focused on marketing throughout the past period and did not chase after profits but maintained their stability. Now, we will have to slightly raise prices since many types of raw materials, packaging, logistics services, and electricity charges have risen in price.

– Does the company, in conjunction with the enterprise, have any new projects for this year?

We have many new projects planned, but we have suspended them due to the pandemic. We are waiting for it to end, but we are negotiating with potential partners. I think we will start implementing these projects from 2021.

Gemuani also has extensive agricultural land. Are you happy with its 2020 harvests?

– Our hazelnut orchards are relatively new, but we plan to get the first commercial harvest from them in 2021. We have not yet completed the modernization of our tea plantation. We did get a pretty good kiwi harvest and we used part of the crop as raw material for our company then sold the rest.

***
Sublimation, or freeze-drying, technology means freezing and drying a product such as fruits and vegetables in a vacuum, which retains up to 98% of a product’s vitamins and other nutrients. Gemuani’s high-tech enterprise was built in the Zugdidi municipality of the Samegrelo region in Western Georgia in 2017. Its first products entered the market in 2018. In 2019, Gemuani received the IFS certificate for its enterprise. The company also owns 100 hectares of agricultural land of which 80 hectares are allocated for tea plantations, 10 hectares for hazelnut orchards and 10 hectares for kiwi.

Сообщение Gemuani: New packaging and export growth for its freeze-dried products from Georgia появились сначала на EastFruit.

The well-known group of Georgian apple-producing companies Tiriphoni Gardens, Kvarkhiti Agro, and AgroGori, did not start exporting their products this season despite good harvests in their orchards. The main reason for this, as in the previous few years, was the difficulty in packaging fresh fruit. However, this is not the only problem faced by the group. EastFruit spoke with Zurab Gojiashvili, a representative of Tiriphoni Gardens, Kvarkhiti Agro, and AgroGori, about the current apple season for the group, what influence did the COVID-19 pandemic have, and what are their plans for the future.

– What was the harvest like this season in your apple orchards?

We got an apple harvest that exceeded expectations. From the orchards already bearing fruit, we harvested 1160 tons of quality apples of the Gala, Golden Delicious, Red Delicious, Pinova, and Red Johnaprince varieties. Next year, Fuji will be added to them. However, I can’t say that we were happy with the season as there were certain problems.

– Are these problems related to the sale of apples?

Yes, and not only sales. This season, despite the demand for our products from abroad, we were unable to start exporting again because of a problem with the packaging. We received offers from the Middle East, India, Indonesia, Thailand, Colombia, and Russia. However, we were unable to send consignments of apples to any of these countries since neither we nor our potential partners were able to purchase boxes required for sea container transportation of fruits on favourable terms. We needed 18-kg corrugated cardboard boxes with a waterproof layer, etc., including alveolar inserts between the layers so that possible damage to one of the apples did not lead to damage in the whole box. In Georgia, such boxes are still not produced although there is information that an enterprise is in the process of adjusting for the appropriate capacities and this issue may be resolved as early as the next spring. To buy these boxes from abroad at an affordable price, they can only be bought in large wholesale. In Turkey, one of our potential partners was offered at least 500,000 of such boxes which equals an amount calculated for 9,000 tons, but he needed ten times less.

The packaging problem prevented our group from properly presenting its products on the domestic market. In the spring of 2020, we registered our brand “Gorge” and now it is the first season when we started selling branded products. However, for its recognition in the market, we would like to apply appropriate stickers both to the boxes and to each apple. Meanwhile, the boxes that we managed to get were made of plastic and not suitable for international transport. The plastic boxes were also undesirable for domestic transport, but in the absence of a choice, we had to go with them and we were physically unable to apply our stickers. In addition, it is impossible to place apples in them in even layers, so we had to abandon the use of stickers for each fruit. As a result, at present, our apples in bulk packages are without identification marks and this does not contribute to the establishment of our brand on the market in order to occupy our own niche there.

To date, the brand name “Gorge” can be seen only on retail packages of apples produced by Georgian Agro House. This company buys apples from us in bulk and then prepares and distributes them itself, but the label contains an indication of a specific manufacturer, which is us.

– Did branding not really help the group in selling products?

The branding of products in itself is very profitable and it will certainly bear fruit for us, but only after we settle the issue with the packaging. We would like to be recognized both abroad and in Georgia.

– What are the sales channels for your products today?

Our regular partners, in addition to Georgian Agro House, are the Nikora and Agrohab supermarket chains as well as several other companies, which then carry out distribution themselves. We have long-term obligations with them and schedule of deliveries and prices depending on time.

Read also: Georgia demonstrates 14-fold increase of fresh apple exports in the current season!

– How do you assess the demand and prices for apples from your orchards this season?

Demand, in general, is not bad and accordingly sales of apples are going at a good pace. Today, only about 350 tons remain in our cold storage. As for the wholesale prices now, depending on the size and variety of apples, they are in the range of 1.9-2.3 lari ($0.58 – $0.70), which is slightly lower than in the previous season.

– Do you plan to keep some of the apples in storage until the very end of the season?

This year, definitely not. We have a very good refrigeration unit that allows us to store apples for the maximum period. However, due to the COVID-19 pandemic, the premises were built and equipped with a delay. We had commissioned our cold storage only on October 10th after the beginning of this season. Because of this, we had to urgently sell the first 400 tons of the harvest and part of the rest was harvested after the end of the optimal period for apples. Therefore, we do not know exactly how long our apples will retain their presentation. For next season, we will no longer have this problem; therefore, we will be able to better plan sales.

– What else is included in your plans for the next season?

Our main task is to arrange sorting, packaging, and promotion of our product both in the domestic and export markets.

* Tiriphoni Gardens, Kvarkhiti Agro, and AgroGori currently own, in aggregate, 31 hectares of intensive apple orchards – 11, 10, and 10 hectares respectively. They are located in the Gori municipality of the Shida Kartli region in Eastern Georgia. The arrangement of the orchards was started several years ago and the first harvest was in 2018. The apples from the group’s land are GLOBALG.A.P. certified. The group also has a refrigeration facility designed to store 1,000 tons of apples at a time.

Сообщение Packaging issues prevented well-known Georgian apple producer group from starting exports появились сначала на EastFruit.

According to EastFruit Georgia is the largest exporter of mandins among the former Soviet Republics. Traditionally, before and during the New Years’ holiday, the consumption of Georgian mandarins increases dramatically.

EastFruit provides an inside look at how mandarins from Georgia travel from farm-to-table to reach consumers in time for the New Year.

1. Mandarins from small farmers are received by the warehouse facility through the help of procurers.

2. Upon receipt at the facility, mandarins are disinfected and sent for storage.

3. Mandarins are kept in refrigeration until an order arrives. They are usually stored for up to two months.

4. As soon as the order is received, the mandarins are calibrated into 5 sizes: 45×50, 50×54, 54×58, 58×63, and 63+.

5. To extend the shelf life and for better transport, mandarins are treated with paraffin.

6. Before packing, mandarins are sorted by hand.

7. Substandard mandarins are sent for processing to make mandarin concentrate, which is added to orange juice.

8. As a rule, mandarins are packed in plastic boxes, which are produced directly at the factory. However, at a buyer’s request, mandarins can be packed in cardboard boxes as well.

9. In Georgia, the leading variety of mandarins is called “Satsuma” (also known as “Unshiu”). It tastes very good and is easily peeled by hand, but its disadvantage includes a relatively short storage period.

10. Mandarins are then packed in 900kg pallets and ready for export. They are transported by road then ferry to Russia, Ukraine, and other CIS countries, which make up 99% of Georgia’s exports.

Сообщение Follow Georgian mandarins from farm-to-table (Photos) появились сначала на EastFruit.

This year, the Ionex-Trans family fruit-growing enterprise from the village of Costesti in the Ialoveni District was the first Moldovan agricultural enterprise to acquire and use a line for filling its own products into flow packs, which are plastic trays in an airtight transparent bag. Until now, only a few of the largest trading companies that did not possess agricultural land had such equipment in Moldova.

The line’s capacity is 60 flow packs per minute. This autumn, Ionex-Trans began to package plums and they were sold to supermarket chains in Chisinau. Its plum supply season will finish by the end of November. Next week, the company will start packing table grapes to sell on the domestic market.

Read also (in Russian): In autumn, sales of vegetables and fruits in supermarket chains in Moldova increased sharply

According to Ion Ionas, administrator of Ionex-Trans, their company’s main tasks this season are to iron out the details in their production and commercial logistics. For example, they will identify the optimal tray sizes/shapes and bag film types, finalize the branding on packaging and containers, and determine the most effective distribution channels. In the next marketing year, Ionex-Trans will start exporting fruits and grapes in flow packs. The approximate volume will be over 100 tons.

Experts from USAID’s Efficient Agriculture in Moldova (APM) project believe that the use of flow packs provides a bonus to consumers, merchants and producers of dessert fruits. Such packaging is more hygienic, which is important in a pandemic situation because it increases the shelf life and reduces product loss in standard market conditions, which also rationally justifies the premium price.

Ionex-Trans has 92 hectares of perennial crop plantations (more than half of which are plum orchards), 9 hectares (Pergola type) of table vineyards, a refrigerator with 250 tons of storage capacity, and a sorting and packaging line. The enterprise is certified according to GlobalG.A.P. and GRASP standards (certification and purchase of the flow pack line were possible thanks to financial support from USAID/APM). This year, the company exported 1,100 tons of plums (more than 90% to the European Union) and plans to export to the EU and Russia approximately 1,000 tons of grapes.

Сообщение In Moldova, first agricultural enterprise installed flow pack line for fruit появились сначала на EastFruit.