With shipping costs rising and currrency exchange rates unstable, DNE World Fruit Sales in Fort Pierce, FL, is getting an early jump on its summer citrus program, taking advantage of existing relationships with foreign producers to line up promotable volumes of Navels, tangerines, clementines and Minneolas throughout the summer months.
Fifteen years ago, “it was a tough sell to get a lot of takers for imported citrus during the summer,” said National Sales Manager Stu Monaghan. Now, “We’re looking at a situation where there may be a weaker market because of the heavy supply of Navels. Competition is fierce. It doesn’t take long for an item to get oversupplied. We find ourselves in a situation now where people from other countries are taking a hard look at exchange rates and overseas fuel costs and weighing them against what their expectations are for other markets, because we’re at that point here in the U.S. where being oversupplied during the summer is a reality [and] a distinct possibility.”
DNE relies on longstanding relationships with foreign growers to secure promotable volumes of summer citrus for domestic clients.
“DNE has the advantage of having very close relationships with our importers so we know in advance what we’re going to have and when, in terms of volume and sizing, so we can set our promotions in place far in advance and allow our buyers to really shape their whole produce lineup for promotions,” Mr. Monaghan said. “The relationships help greatly, because lets face it, the knowledge of what you’ve got coming and how much volume and sizing really allows you to have the critical mass you need to put retailers on ad and drive sales. When we look back at this summer with our retail partners, we want to say, ‘Wow, we did a great job lining up promotions because we had the volume and knew what was coming ahead of time.’ It’s the best way to keep partners happy, knowing that we’ve got programs in place.”
Being able to plan ahead “makes pricing a little more static and less reactive to gluts in the market,” Mr. Monaghan explained.
Mr. Monaghan expects pricing this summer to be roughly similar to 2010, although consumers may pay a little more at retail. While product price will be down due to supply, freight rates will almost certainly be higher because of increased oil prices.
In any event, “We know in advance, so the goal is to get our retailers to grow their sales and grow the category. As far as retail prices, you’ll more than likely see an increase if [product] prices are very similar to last year because freight rates alone will have prices up somewhat. That’s not just for citrus, that’s peaches, that’s grape, that’s apples, that’s melons,” Mr. Monaghan said.
This summer, he continued, “Having a plan to deal with potential oversupply is exactly the concern. There may not be an oversupply, but there very well could be. What’s at risk for the U.S. market is the exchange rate that other countries have to look at. How many U.S. dollars do they get back compared to sending the fruit to other markets? We need to be careful with f.o.b. prices that they don’t get so low exporters look towards other markets around the world and establish a point that will be attractive for retailers to run promotions and at the same time attractive for exporters to ship fruit to the U.S.”
Having relationships in place and planning ahead lets DNE assure “availability of fruit supplies during periods when our retailers want to promote. Where not all the marketers here in the U.S. are able to present a plan to their retailers guaranteeing enough volume efficiently to be able to put Minneolas or tangerines or clementines on ad,” Mr. Monaghan said.