The nut and dried fruit market is currently under strong pressure due to falling raw material prices. This drop in prices is having a marked impact on the European market. Globally, yields have been quite abundant and so the availability of goods has increased, says Mario Ebel, nut expert and managing director of the Mekka Dattel and Dreimal-F companies. "The nut market needs to reinvent itself, in my opinion. Price increases in a globally shrinking market are de facto impossible."
Suppliers are currently suffering from high inventory pressure from the old crop that was built up due to the Ukraine conflict; people were fearful of possible supply problems. "Due to rising costs, demand has plummeted massively, leaving suppliers with their built-up inventories, while volumes from new harvest are already pressing on the market. Large inventories have led to less demand for newer goods globally. This in turn means that raw commodities are up to 40% cheaper than before the Ukraine conflict."
Mario Ebel is managing director of the two companies Fit4Fun Ltd and Mekka Dattel Ltd.
Private label vs. premium
Accordingly, he says, retailers are under pressure. Ebel: "Long-term contracts are concluded at a high price, while shelf prices between brand and private label continue to diverge. In the end, the private labels are now winning. At the same time, however, this leads to the fact that in the brand or premium sector, there is no need for all the various packaging sizes - 100g, 150g, 200g, 500g, 1kg in 2-packs and sometimes even in 3-packs. In the case of walnuts and dates, for example, the same raw material is offered in different grammages. It would be better to sell the private label brand more widely, because these are ultimately considerably cheaper than the premium brands. Lidl has recognized the yield opportunities in nuts and dried fruit and is currently building its own plant. More efficient direct sourcing of raw materials at the point of origin, as well as a uniform European packaging solution, will deliver massive returns for Lidl."
The nut expert adds: "I'm glad Lidl is going down this path. Because this will mean the market will have to adapt and change the mentality of buyers in the classic supermarket. Extreme lead times for suppliers are becoming a thing of the past. With diminishing returns, you have to be fast and flexible. Different packaging and format concepts are actually the reason for these lead times. Today, suppliers should be classified according to their packaging formats. This would save time and it would increase gross profit in a shrinking raw material procurement market."
Packaging formats have historically been created by suppliers, he said. Retailers need to take it over, defining formats for the entire category, he said. According to Ebel, the future of the nut market lies not with traditional re-packers, but with packaging service providers.
"Because the large food retail chains always base their bag formats on which supplier is delivering at that moment. For the retailers, it is therefore more of a shrinking market, because they naturally lack the flexibility to replace their technology from one day to the next, as the lead time for such processes is about 6 months. This means that new suppliers would not be able to deliver quickly. If retailers procure the raw materials themselves and then send them to service providers, they have a format, the tools and they can react incredibly quickly. These are things that Lidl has recognized, which I admire very much."
For more information:
Mario Ebel
+49 15234195461
m.ebel@dreimal-f.com
https://www.dreimal-f.com/
https://www.mekka-dates.com/