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

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

22 July 2015

Here is the second part of our in-depth review of 10 edible crops that can be grown commercially in Wales. This section rounds off the analysis of the 10 crops, as well as highlighting some emerging trends. It also investigates retailer share in Wales…

News image (180px * 184px)Market Analysis For 10 Crops (Continued)

  • 7. Asbaragus:

Asparagus is a relatively small category with total value sales of £2.5 million and 356,000 kg as of 1 March 2015. Category sales in Wales are increasing in both volume and value terms, albeit at a slower rate than the Great Britain average. Volume sales of asparagus are also increasing at CAGR 4.8%. Asparagus is a low volume, high value market with strong future growth potential.

Average asparagus wholesale prices are volatile. Spring prices are particularly high (as much as +£10 per kg) as the early crop is particularly sought after.  However, prices fall to as low as c. £6 per kg for the remainder of the summer as demand slows and supply is more readily available.  Average retail sales prices are currently c. £7.37 per kg in Great Britain and slightly lower at £7.00 per kg in Wales.  Since 2013, average Great Britain prices have fallen at a CAGR of -3.2% and in Wales -2.9%. (NB: retail sales prices reflect imported as well as domestic asparagus). 

Average asparagus consumption is nearly 20% lower in Wales (0.12 kg per person p.a.) compared to Great Britain (0.14 kg per person p.a.).  In addition, average per capita spend on asparagus is 23% lower in Wales (£0.81 per person p.a.) compared to Great Britain (£1.05 per person p.a.).  If consumption in Wales were to match the national average, it would equate to an additional 84,600 kg increase in the volume of the market and an additional £759,000 in the value of the market.

The percentage spend on asparagus in one and two member households, with no children, in Wales was greater than that in Great Britain as a whole.  Spending on asparagus in Wales was over-represented by those in socio-economic groups C2, D and E.  However, spending by those aged under 28 years accounted for more than double the percentage spending by that category in Great Britain.  Those aged 28 to 44 years accounted for less percentage spend on asparagus in Wales than in Great Britain as a whole.  Pre-family households accounted for a greater percentage spend, but young families accounted for a lesser percentage spend, suggesting that when children come into the household, purchasing of asparagus decreases.

Spending on asparagus is over represented by socio-economic groups C2, D and E in Wales therefore there may be opportunities to develop the market in groups AB and C1.  The age group 28-35 years may also offer potential for development as purchasing by those under 28 represents almost twice that of Great Britain but this is not reflected by the subsequent age groups.  This pattern is mirrored when considering family age composition.

  • 8. Leafy Salads:

Leafy salads are also a low volume, high value market. Total volume sales, as of 1 March 2015, are equivalent to 2 million kg and in volume terms, the category is worth £14.6 million. Volume sales are falling by a CAGR of -2.3% but the value of the category is growing at a CAGR of 0.2% owing to rising retail sales prices. Within the category, bagged salads are outperforming whole-head salad products, such as Little Gem and Iceberg, which are susceptible to retail price promotions and everyday low pricing policies.   Average retail sales prices for salad leaves are £7.02 per kg in Wales and £7.59 per kg in Great Britain. Since 2013, there has been a steady increase in average prices.

Per capita consumption of leafy salads in Wales is 0.67 kg p.a., nearly 20% less than the Great Britain total of 0.83kg per person p.a.  Spend per capita is even lower. In Wales, the average spend is £4.73 per person p.a. which is 25% less than the national average of £6.31 per person p.a. 

Bagged salads are likely to drive higher value opportunities in the leafy salads market, much of which will depend on new product development to introduce differentiated varieties.  The major multiple supermarkets and premium supermarkets, such as M&S and Waitrose, will be key to introducing new products because of their wider range availability.   However, as discounters such as Aldi outperform the major supermarkets, price competitiveness will also remain extremely important in both bagged and whole-head salad leaves categories.

Purchasing of leafy salads was greater in two person households in Wales than in Great Britain and also in socio-economic groups C2, D, and E, but under-represented by spending in category C1.  Purchasing was greater in older age groups (55 years plus) but under-represented in the 35-44 year category and pre-family households.  There may be opportunities to develop this market in the under 45s as, across all age categories below 45 years, spending on leafy salads in Wales is underrepresented compared to Great Britain.

  • 9. Fresh Herbs:

The fresh herb category in Wales is growing in value sales, reaching £2.4 million as of 1 March 2015. However, volume sales are static at 282,000 kg.  Fresh herbs are a high value product. Average retail sales prices in Wales are £8.78 per kg, slightly lower than in Great Britain (£9.04 per kg).  Cut herbs tend to have a retail price point of c. £0.7 to £0.9 per unit, whereas potted herbs tend to have a price point of £1.50 per unit (but are often discounted to £1.00).  Since 2013, average prices have risen by 14% in Wales, but only by 4% in Great Britain.

Per capita consumption of fresh herbs in Wales is 0.09 kg per person p.a. which is less than the Great Britain average of 0.11 kg.  With volume growth of 2.2% in the Great Britain market but 0% in Wales, the gap in per capita consumption could be expected to continue to widen.  Similarly, fresh herb spend per capita is lower in Wales (£0.80 per person p.a. compared to £0.97 per person p.a.).  However, more recently, average retail sales prices in Great Britain and Wales have converged, so the gap in expenditure could be expected to decrease.  The main challenge for Wales appears to be encouraging consumers to consume more herbs per se, rather than pricing.

In general, the fresh herb market has performed extremely well in recent years, with consumption and prices both on the rise.  Fresh herbs are increasingly popular with consumers, as they add interest and flavour to dishes in a healthy way.  The use of herbs in the home has also been popularised by celebrity chefs, cookery programmes, and cookery books, many of which advocate the impact their flavour has on dishes commonly cooked in the home. The growth in popularity of ethnic foods (in particular south east Asian cuisines) also promotes the use of herbs.  The most popular herbs are coriander and parsley, which can be used in many types of dishes.  Whilst there has been some added-value innovation (e.g. pre-chopped herbs in squeezy bottles), fresh packets of herbs remain the most popular format.  Future growth is expected to come from new users and increased household penetration.  Some new product innovation is to be expected, particularly with the development of specific herb varieties (e.g. holy basil which is used in south east Asian-style cooking).

Households with no children accounted for a greater percentage of sales in this category than for Great Britain as a whole as did those in socio-economic category D.  Fresh herbs spend was higher amongst those over 55 years in Wales compared to Great Britain.  The middle age groups (35 – 54 years) accounted for less percentage spend in this category than in Great Britain (approximately -7%).  Retired households and households with older dependents accounted for greater percentage of spending on fresh herbs than in Great Britain. 

  • 10. Rhubarb:

The rhubarb category is small – as of 1 March 2015, total volume sales are equivalent to 43,000 kg, the value of the category is worth £211,000, and it is currently in decline (volume sales are decreasing at a CAGR of -8.4% and value sales -6.2%).  Demographic purchasing data for Wales was not available due to sample size reliability.

Since January 2013, forced rhubarb wholesale prices have averaged £3.35 per kg, 2.5 times higher than outdoor rhubarb, which averaged £1.34 per kg over the same period.  The forced rhubarb season runs from December to April with some overlap with outdoor rhubarb, which is available from March.  Average Great Britain retail sales prices have steadily increased since 2013 and are currently at c. £4.90 per kg. As is the case with other fresh produce categories, we would expect similar retail price levels in Wales.

In per capita terms, consumption and expenditure are very low at 0.01 kg per person p.a. and £0.07 per person p.a.  Average consumption and expenditure are low because rhubarb is a niche product with seasonal supply and demand patterns.

On the whole, fresh rhubarb is consumed in the home, as an ingredient in dishes such as crumbles and fools, but in general its culinary use in the home if fairly limited. As a result, consumption is low.
Very little of the rhubarb sold via retail sales channels is forced (Waitrose stock just a single forced rhubarb SKU – a 240g pack priced at £3 per pack (~£12.50 per kg)). Demand for forced rhubarb tends to be driven by food service channels (e.g. full-service restaurants) and artisanal food retail shops (e.g. delicatessens).  The majority of rhubarb available via retail sales channels is produced outdoors, hence the lower average retail price point of £4.90 per kg.

Key Trends

There are a number of key trends that are influencing the performance of the 10 fresh fruit and vegetable categories. These are:

  • Health: Although fruit and vegetables are generally perceived to be healthy, products that have greater perceived health benefits (e.g. kale, soft fruit) tend to perform better than products with relatively low perceived health benefits (e.g. cauliflower).
  • Premium products that are affordable to everyone: Premium fruits and vegetables, such as asparagus and raspberries, are growing at a faster rate than others. Within categories, such as leafy salads, it is the premium products (such as bagged salads) that are outperforming core lines (such as Little Gem, Iceberg), which are becoming increasingly commoditised.
  • Convenience: Although vegetables such as cauliflower are not necessarily difficult to prepare in the home, other vegetables that are easier to prepare, tend to perform better. This is because consumers look for ways to reduce meal preparation times. Bagged leafy salads and vegetables, such as asparagus, are good examples of easy to prepare products.
  • Differentiation and added value: Differentiated and added-value products are key in fresh produce. For example, the development of new strawberry varieties maintain consumer interest in the category, while fresh herbs add value to meal preparation by adding flavour. 

Wales Total Market Size And Growth

With the exception of strawberries, leeks and cauliflower, Wales’ share of the total Great Britain market (in volume terms) is less than 4.9%.  This analysis has been calculated using population statistics. The total population of Wales is 4.9% of the total Great Britain population. Therefore, a share of less than 4.9% indicates per capita consumption is relatively lower in Wales, compared to the wider country.

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In terms of overall value, strawberries represent the greatest value of sales in both Wales and Great Britain, followed by leafy salads.

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Retailer Share In Wales

There are some key differences in the retailer share of category sales between Great Britain and Wales.  Tesco captures the single biggest share of sales in Wales (30.8%), which is higher than Great Britain as a whole (27.2%).  Other retailer shares which are noticeably higher are Asda (15% share of sales in Wales, compared to 12.7% in Great Britain), Aldi (9.0% in Wales, compared to 6.4% in Great Britain) and Lidl (6.9% in Wales, compared to 5.0% in Great Britain).  Retailer shares that are noticeably lower in Wales compared to Great Britain are Waitrose (4.0% in Wales, compared to 6.7% in Great Britain) and Sainsbury’s (10.6% in Wales, compared to 17.4% in Great Britain).  To some extent, these figures will be influenced by the number of stores each retailer has across Wales.

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Since 2013, there has been a significant change in the share of retail sales.  The discounters, in particular Aldi, have made significant gains at the expense of the major multiple retailers. This is consistent across all of Great Britain and Wales.  Within Wales, Aldi has made the single biggest overall gain in share of retail sales (+5.2% since 2013). This is more pronounced than in Great Britain, where Aldi increased its share of retail sales by 2.3%.  In Wales and Great Britain, Tesco lost the largest share of retail sales since 2013 (-2.2% in Great Britain and -2.6% in Wales).

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Together, the major supermarkets account for the majority share of category sales.  Across all 10 categories, Tesco has the single biggest share of sales in Wales. However, over the last three years, and for each of the 10 categories in Wales, Tesco has lost market share - in some cases by as much as 14.5%.  The discounters have increased their share of sales the most. Aldi, in particular, has made the most significant gains, increasing its share of sales in all but three categories, and by 5.2% overall. Whilst the same is true across Great Britain as a whole, this trend is more significant in Wales.

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Away from the large supermarket retailers, certain crops feature more prominently among greengrocers and market stalls, notably cauliflower, leeks, asparagus, and strawberries.  Whereas the market share in volume sales for greengrocers and market stalls is proportionally higher for Great Britain compared to Wales, in Wales this share is stable or showing modest growth (for market stalls) whereas in Great Britain the share is falling.

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Click here to read the first part of the report…

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