A large supply of clementines this summer from multiple points of origin has created a very difficult and different marketing situation for the commodity this year.
Chile, Peru and South Africa each sent more fruit to the U.S. East Coast this summer, with a great deal of it bunching up during June and July.
Mayda Sotomayor, chief executive officer of Seald Sweet International in Vero Beach, FL, said that the increased volume tells part of the story.
Crunching the numbers, she said that from the start of the Chilean deal in early May through calendar week 30 (near the end of July), exporters from that South American country sent about 25 percent more cartons of clementines to the United States than they did the year before — and about 45 percent more to the East Coast.
Mark Hanks, vice president of sales and marketing for North America for DNE World Fruit Sales in Fort Pierce, FL, said that his contacts have told him that combined there have been about 650,000 more cartons of clemetines from Chile, South Africa and Peru shipped to the East Coast this summer than last year.
“Last summer the market was very strong here, but we’ve obviously reached that tipping point on supply and demand,” Mr. Hanks said.
Agreeing with him was Rick Carroll, a partner in Royal Marketing LLC, a brokerage specializing in clementines operating out of Scotch Plains, NJ. “It’s just a matter of oversupply,” he said. “The volume all hit at one time and importers have pallets of the fruit sitting in their warehouses.”
Mr. Carroll has been buying clementines from importers for the past 15 years and he said 2012 was a rarity.
“In the past, we’ve been lined up at the dock waiting for the fruit to be released, but not this year,” he said.
While in good times those cartons of 10 three-pound bags will bring $30-$40 each, Mr. Carroll said Aug. 8 that the market was under $20 “and with an order in hand, I think I could probably shave another dollar or two off that price.”
Ms. Sotomayor is not so certain that the supply situation should get 100 percent of the blame. She believes that the timing of the fruit hitting the U.S. East Coast market and the reluctance to lower the price initially played major roles in the challenging marketing situation.
When all is said and done, she expects that the amount of extra cartons of clementines marketed in the United States this year will be in the range of 10-20 percent. She said that the clementine is a great piece of fruit and the industry can absorb that volume, but it has to do a better job of marketing and promoting the crop.
“Everyone has to get realistic about the pricing level at retail to move this amount of volume,” she said. “A three-pound bag is not going to move at $6.99, but it will move at $3.99 or $4.29.”
Mr. Hanks made the same point, saying, “Obviously, we’ve seen a limit to the price elasticity on clementines and we’ve all gotten a wake-up call on that point. Consumers don’t want to pay more than $3.99-$4.99 for (three pounds of) clementines, so the product doesn’t move off the shelves until it reaches those price levels. I’d love to see retailers point out to the consumers that at these price levels they’re only paying $1.39-$1.69 per pound, which is in line with other fruit items.”
He added that consumers are changing their buying habits with many moving away from the formerly popular five-pound cartons to smaller units. “Consumers are changing their buying patterns and shopping more frequently and buying smaller quantities of each item to reduce their shrink at home just like the retailers are reducing warehouse inventories and shrink due to product not turning.”
Mr. Hanks added that two- and three-pound bags lend themselves to more aggressive price points. Moving forward, he said that it might be wise to offer bulk sales on clementines, thus allowing smaller households and singles to only buy the quantity they want by the pound.
But there is light at the end of the tunnel.
On Aug. 7, Ms. Sotomayor said that the downward pressure on the price had let up and she was seeing some stability in the pricing of the larger fruit at the $22-$24 level. She said that shipments of clementines from South Africa were completed and the supply-and-demand situation was in better shape.
Mr. Hanks agreed. “South African and Chilean arrivals are now on the decline and it seems that the market is firming quickly on the larger-sized fruit as supplies tighten,” he said. “Chile did seem to have an excessive amount of smaller sizes, which were consumed in the market last summer but met resistance this year. Fortunately, the quality from both countries this year has been good and we’re working through the last of the fruit now.”
He also credited retailers with doing their part. “Many retailers have jumped in a big way over the last few weeks and helped move through the volumes and we’ve seen some very aggressive retail price points.”
Mr. Carroll wasn’t so certain that August would bring a vastly improved situation. “Once the kids get back to school, it will get better, but that’s five to six weeks away,” he said in early August.
He added that clementines used to be a great item at specific times of the year, but they have now turned into a 365-day-a-year commodity and he is not that is sustainable. But he did agree with the others as to the value of the product. “It’s a great-eating piece of fruit.”
Both Mr. Hanks and Ms. Sotomayor were not as quick to let this year be a harbinger of things to come.
“The only thing I know for sure this summer is the fact that no two seasons are ever alike,” Mr. Hanks said.
And Ms. Sotomayor reiterated that the clementine is a fabulous product with a great following. She believes that the United States can absorb increased volume in the future.