Fresh produce remains one of the most profitable areas for supermarkets, according to the annual review of the fruit and veg market by Rabobank.
Globally, the sector contributes between 8% and 12% of the supermarkets' turnover and they operate on gross margins of between 30% and 40% Â higher margins than those for groceries.
In net terms this is estimated to be worth 5% when the average for other food lines vary between 1% and 4%. With the high profile that UK multiples enjoy as a result of their reputation for demonstrating the best in retailing, there is no reason to suppose that their figures are any different, said the Netherlands bank.
There are, however, major changes ahead that will affect the whole sector, Rabobank said. As European multiples grow bigger, they are switching from daily pricing policies to seasonal contracts for the 300-plus lines they sell. Growers and distributors will become enmeshed in these partnerships and, as a result, will have to provide more detailed information on costs, ideas for new products and find new varieties to provide points of difference.
Many fruits have become nothing more than basic commodities, pushed aside to give way to exotics and, more dangerously, are regarded by Western European consumers as supplementing a snack diet, the report stated.
Rabobank also claimed that moves by the trade and the government to promote healthy eating have had little effect in a static market .
The review sees growth in pre-cut, conveniently packaged products, where the vegetable and salad industries have taken the lead.
The report concluded that there would be increasing growth for both in the future but the industry must invest to allow suppliers to tap into underdeveloped foodservice and catering markets.
{{FRESH PRODUCE }}
Globally, the sector contributes between 8% and 12% of the supermarkets' turnover and they operate on gross margins of between 30% and 40% Â higher margins than those for groceries.
In net terms this is estimated to be worth 5% when the average for other food lines vary between 1% and 4%. With the high profile that UK multiples enjoy as a result of their reputation for demonstrating the best in retailing, there is no reason to suppose that their figures are any different, said the Netherlands bank.
There are, however, major changes ahead that will affect the whole sector, Rabobank said. As European multiples grow bigger, they are switching from daily pricing policies to seasonal contracts for the 300-plus lines they sell. Growers and distributors will become enmeshed in these partnerships and, as a result, will have to provide more detailed information on costs, ideas for new products and find new varieties to provide points of difference.
Many fruits have become nothing more than basic commodities, pushed aside to give way to exotics and, more dangerously, are regarded by Western European consumers as supplementing a snack diet, the report stated.
Rabobank also claimed that moves by the trade and the government to promote healthy eating have had little effect in a static market .
The review sees growth in pre-cut, conveniently packaged products, where the vegetable and salad industries have taken the lead.
The report concluded that there would be increasing growth for both in the future but the industry must invest to allow suppliers to tap into underdeveloped foodservice and catering markets.
{{FRESH PRODUCE }}
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