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South Korean chestnuts offer opportunities for California firm

by Tim Linden | January 13, 2010
Titan Foods Inc., a Los Angeles-based food distribution company, has begun shipping South Korean chestnuts into the United States and has found great success largely because of their competitive price advantage.

Raj Makkad, the firm's vice president, said that Italy is the leading exporter of chestnuts to the United States, but South Korean chestnuts are typically about 40 percent less in price at the wholesale level.

Chestnuts are a fairly expensive item, with Mr. Makkad stating that they retail for $1.50 to $4.50 per pound depending upon the point of origin and most important, the size of the nuts themselves.

Titan Foods began importing the South Korean chestnuts through the port of Los Angeles in October. "The harvesting season [in South Korea] is from October through January, but if you hold them at the right temperature, you can sell them all year long," he said. "We hold them at 32 degrees."

The Titan Foods executive said that there is very little difference in quality between the South Korean and Italian chestnuts, although he indicated that it is a bit more difficult to cleanly de-shell the South Korean variety.

Mr. Makkad said that the South Korean price difference is due largely to the currency exchange advantage that the U.S. dollar enjoys with the South Korean won. In early January, 1,000 South Korean won were worth about 88 cents. Italy is on the euro, which has been very strong against the dollar for the past several years. As of Jan. 8, a dollar was worth only about 0.69 of a Euro. While that is off the low-water mark hit in October and November, it still represents a very weak dollar.

U.S. importers suffer financially when buying Italian chestnuts, according to Mr. Makkad, who added that the freight rate advantage is also significant. While it is logical that South Korean chestnuts can be shipped to the West Coast for less than Italian chestnuts, Mr. Makkad said that the South Korean product also competes favorably with regard to freight rates with Italian chestnuts on the East Coast.

Titan Foods brings the chestnuts into the United States in 55-pound cartons and sells most of the product bulk to wholesalers and some retailers across the country.

"We usually sell through wholesalers," he said. "In fact, we are looking for more distributors because a distributor can mark up the chestnuts and still make a good profit because of the inexpensive wholesale price."

Titans Foods has experimented with some two-pound clamshells as consumer packs, but Mr. Makkad said that the majority of the chestnuts is sold by the pound at retail.

The company does have some competition selling South Korean chestnuts, but Mr. Makkad said that Titan has grower deals with two different South Korean cooperatives that have given it steady, consistent supplies.

Aside from chestnuts, Titan sells many other products from South Korea, including Shingo pears. Although both items have the same country of origin, Mr. Makkad said that this is where the similarities end. They are grown by different growers, and the customer base in the United States also tends to be different.