Updates about the Horticulture Wales project, along with industry news and opinion.

Market Analysis: Retail Analysis Of 10 Horticultural Crops (Part One)

22 July 2015

An in-depth retail analysis of 10 edible crops that can be grown commercially in Wales. The report covers sales statistics, highlights ongoing category trends, and compares consumer behaviour in Wales with the rest of Great Britain…

News image (180px * 184px)Introduction

Horticulture Wales has produced an online “Crop Calculator” to help growers assess the commercial potential of a range of crops that may be grown in Wales.  To add to this, Horticulture Wales has also undertaken market analysis for each of these crops to further add to the information available to potential and existing growers, which may aid their decision-making and business planning.  The following data has been supplied by Kantar Worldpanel with analysis from Promar International.  It should be noted that the retail prices used in the Crop Calculator have been specifically researched for Welsh growers looking to diversify, whereas prices used in this review reflect the dominance of large retailers.

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Fruit and vegetable consumption is slightly lower in Wales (3.9 portions per person per day), compared to Great Britain (4 portions per person per day). This trend is observable in almost all of the 10 fresh produce categories covered in this report. With the exception of leeks and cauliflower, per capita consumption in Wales is lower than in Great Britain. Per capita spend in Wales also tends to be lower.

Market Analysis For 10 Crops

  • 1. Strawberries:

In volume and value terms, the strawberry category is the largest. As of 1 March 2015, total volume sales are worth 5.4 million kg and the category is worth £24.9 million. The category is growing at CAGR (Compound Annual Growth Rate) 1.5% in volume terms and CAGR 3.8% in value terms.   Since 2013, retail sales prices have steadily increased by a CAGR of 2% and are currently c. £4.50 per kg.  Early season prices (i.e. March-April) tend to be higher as the early British-grown crop enters the market.  Strawberries are a core product line and therefore prices are more heavily influenced by retail promotions.  There is no difference in per capita consumption levels between Wales and Great Britain – both average 1.78 kg per person p.a.  There is only a slight difference in spend per capita, with consumers in Wales spending an average of £8.08 per kg per person p.a. compared to £8.02 kg per person p.a. in Great Britain.

Varietal development has added value to the premium end of the category by creating product differentiation.  Kantar cite an increase in shopper frequency as a key driver behind growth in the category. Since March 2014, Kantar recorded an increase in shopper frequency of +8.3%.  At home consumption occasions are expanding, especially as consumers eat more soft fruit such as strawberries at breakfast time, as well as consuming them as a snack or as a dessert.

In terms of household composition and age of purchaser, spending on strawberries is similar in Wales to that of the rest of Great Britain.  There is some difference between Wales and Great Britain by socio-economic category with 5% less spending by the AB group and 4% more by group D.  Pre-family households account for 4% more spending in Wales, but young family households account for 3% less than in Great Britain.

Spending patterns between Wales and Great Britain are similar, therefore opportunities reflect those of the rest of the wider country, with perhaps slightly greater opportunities in the ‘Family 10 years plus’ group who are underrepresented in spending in Wales.

  • 2. Apple Juice:

Apple juice is also a large category in Wales. In volume terms, the apple juice category is worth 5.4 million litres. However, the category is in decline, with apple juice sales falling, in volume terms, at CAGR -5.4%.  Consumer health concerns regarding sugar content is a key reason for this. There has been a blurring of category boundaries within the wider soft drinks category, with consumers moving away from single ingredient juice drinks to blended drinks (e.g. apple and raspberry), smoothies or mineral water flavoured with fresh fruit juice.  At the premium end of the market, there is a growing tendency for apple juice products to be marketed as natural, cold-pressed and single-variety products.

In Wales, the average unit retail sales price of apple juice is £0.87 per litre in 2015. This is unchanged compared to 2013.  Average retail sales prices are lower in Wales than in Great Britain, which are £0.93 per litre in 2015.  Average per capita consumption in Wales is 2.02 litres p.a. in 2015. This is only marginally less than the wider national average of 2.06.  However, average spend per capita in Wales is £1.75 p.a. which is £0.16 less than the average. This is because prices in Wales are lower than across Great Britain as a whole.

Apple juice sales in Wales generally follow the trend for Great Britain.  In Wales, households with no children accounted for a slightly greater percentage of spending in this category.  Sales of apple juice are slightly higher amongst households in C2 and D socio-economic categories in Wales compared to Great Britain, as is the percentage of sales to those in the 45 to 64 year age categories.  One of the biggest differences is for young families in Wales, who account for 13.5% of sales whereas in Great Britain they account for 21% of sales.  Opportunities may exist in the ‘Young Families’ market in Wales as this group accounts for the highest percentage spend in the category across Great Britain as a whole.

  • 3. Cauliflower:

Cauliflower (1000px * 750px)Cauliflower is another large category in Wales, however sales are falling, in volume terms, at a CAGR of -4.1%.  Cauliflower sales are in decline owing to a lack of consumer appeal with regards to health benefits (other brassicas such as broccoli are perceived to be healthier) and declining culinary use in the home.  In both volume and value terms, the cauliflower category is decreasing in Wales at a faster rate than the Great Britain average.  Retail sales prices average c. £1 per head with little difference in price between Wales and Britain as a whole.

Consumption of cauliflower is higher in Wales (1.95 kg per person p.a.) compared to Great Britain (1.76 kg per person p.a.).  Spend per capita is also higher in Wales (£1.99 per person p.a. compared to £1.84 per person p.a.).  As the market in Wales is declining at twice the rate of the wider market (in both volume and value terms), the gap in consumption and spend per capita between Wales and Great Britain is likely to narrow.

Purchasing of cauliflowers in Wales follows a similar pattern to that of Great Britain although socio-economic groups C2, D, and E account for a slightly great percentage of spending, as do older shoppers. 

  • 4. Kale:

The kale category is, by far, the fastest growing category with volume sales increasing at a CAGR 27.8% and value sales increasing at a CAGR of 27.6%. It is, however, a niche crop; as of 1 Mar 2015, total volume sales were equivalent to 169,000 kg and total value sales were worth £0.8 million. Average retail sales prices of kale are virtually identical in both Wales and Great Britain and have remained fairly constant since 2013 at c. £4.70 per kg.  Unit prices tend to average c. £1 for a 200g bag and £2 for a 500g bag of washed and sliced kale.  Average retail sales prices for kale are more or less comparable to other similar green vegetables, such as spinach, chard, and baby leaf greens.

Overall, per capita consumption is very low, at less than 1kg per person p.a. in both Wales and Great Britain. This highlights the potential for overall consumption to continue to significantly increase.  Consumption in Wales is 0.05 kg per person p.a. and less than the Great Britain average of 0.08 kg per person p.a.  Welsh consumers, on average, also spend 10p less per person, per year on kale, compared to the national average.  If consumption in Wales were simply to match that of the Great Britain average, the market could grow by c. 63,680 kg or £302,200.  However, given the recent growth in the market, low consumption levels and perceived health benefits, consumption is expected to increase above this level.

Described as a “superfood”, kale has a health halo, which has significant appeal with consumers.  Perceived health benefits are the primary reason behind the rapid growth in the market.  Kale tends to be sold either shredded or sliced, so ease of use and convenience during meal preparation is also a key to its popularity with consumers (e.g. in stir-fries).  However, for kale to continue to build on its recent successes, more category innovation will be necessary.  Kale crisps and fruit and vegetable-based smoothies are added-value examples of how kale is being used in different formats.  Other potential areas of innovation include baby kale, which can be eaten raw (e.g. in a salad) or cooked, which will help to increase its use in different meal occasions.

One and two member households account for more spending on Kale in Wales than in Great Britain and the vegetable appears to be more popular with households with one child.  Spending in socio-economic categories C2 and E is also greater than in Great Britain, with class E accounting for almost three times as much spending.  The “Under 28 year old” category accounted for more than double the percentage of spending on kale in Wales than in Great Britain but, by comparison, the 35-44 year age group category accounted for less than half the percentage spending by that category in Great Britain (Wales 35-44 = 7.5%; Great Britain 35-44 = 19.7%).  In Wales, families with children older than 10 years and retired households accounted for a greater proportion of spending than the same household categories in Great Britain.  There may be opportunities to develop sales in the class D socio-economic group which currently only account for 9% of spending, whereas C2 and E groups account for 28% and 26% respectively.

  • 5. Leeks:

Leeks1 (1000px * 658px)Leeks are a household staple, but prone to price pressure. In value terms, the leek category in Wales is worth £3.9 million; however, the value is in decline by a CAGR of -3.2%, despite growth in volume.  From 2014 to 2015, prices fell from an average of £2.50 per kg to £2.10 per kg – a drop of -16%.  Declining prices explain the fall in market value in both Wales and Great Britain.

Leeks are one of the few vegetables in which per capita consumption and spend is higher in Wales, than in Great Britain, but only marginally so.  Average per capita consumption in Wales is 0.61 kg p.a. whereas the average Great Britain per capita consumption is 0.59 kg p.a.  Consumers in Wales spend, on average, £1.26 per person p.a. which is £0.02 per person p.a. more than the Great Britain average.  Leeks are a household staple and consumption is high relative to other vegetables. It is therefore a core line for retailers and a key product against which retailers will benchmark prices and, as a result leeks have become a commoditised vegetable.

The pattern for leek purchasing in Wales is similar to that for Great Britain as a whole, however there are some small differences.  Socio-economic class E accounted for a higher proportion of spend than in Great Britain and percentage spend was higher in those aged 65 year plus and retired households.  There may be opportunities to develop this product in age groups 35-54 years, who represent a lesser percentage of spending than in Great Britain.

  • 6. Raspberries:

In value terms, the raspberry category in Wales is worth £7.6 million as of 1 March 2015. Since 2013, the value of the category has increased by CAGR 6.2% in Wales, slightly lower than the Great Britain average of CAGR 7.1%, but positive growth nonetheless. Volume sales of raspberries are also increasing at CAGR 6.5%.  In 2013 and 2014, average wholesale prices for raspberries fell from an early market high of +£8.00 per kg to between £5.00 and £7.50 per kg for the rest of the season.  High yields and high levels of production have helped to keep raspberry prices relatively low during the peak season.  Average retail sales prices have been stable and above £10 per kg over the last three years with very little difference between Wales and Great Britain overall.  This implies raspberries are a premium fruit, which are able to maintain their value in the market.

Per capita consumption levels are marginally lower in Wales (0.23 kg per person p.a.) than across Great Britain as a whole (0.25 kg per person p.a.).  Per capita spend on raspberries is £0.24 per person p.a. lower in Wales (£2.46 per person p.a.) compared to Great Britain (£2.70 per person p.a.).  Closing the gap in consumption between Wales and Great Britain would generate volume sales of +43,000 kg and value sales of +£729,000.

Raspberries (750px * 536px)In recent years, the marketing of specific raspberry varieties (with a retail sales price of up to £20.00 per kg) has helped to boost the premium appeal of the category even further.  However, the category is also subject to heavy retail promotion, especially during periods of robust supply, so pricing can be volatile.  As with all soft fruit, shelf-life and waste are key consumer concerns.  Going forward, the opportunity for raspberries is to build per capita consumption levels that start to bridge the gap with strawberries. Both share strong similarities in terms of seasonal availability and consumption usage/occasions.

One member households in Wales are considerably underrepresented in the percentage share of purchasing of raspberries (-10%) compared to Great Britain. The household category which spend the most on raspberries is two person households, however, purchasing by three person households in Wales is over double that of the group in Great Britain as a whole.  As in Great Britain, raspberries are most popular in socio-economic group AB, but this is followed by group D in Wales as opposed to C1 in Great Britain.  In Wales a greater proportion of spending on raspberries comes from those under 28 years and aged 55-64 years.  Households with older dependents accounted for almost three times the percentage spend on raspberries than this group in Great Britain. 

There could be opportunities to promote this fruit to age groups from 28 to 54 years as the proportion of spend accounted for by under 28s in Wales is almost three times that for Great Britain.  However, this decreases with subsequent age groups as does the proportion of spending accounted for by young families.

Click here to read the second part of the report…

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