Presentation on theme: ""OPPORTUNITIES TO INCREASE TROPICAL FRUITS EXPORTS IN EUROPE""— Presentation transcript:
1"OPPORTUNITIES TO INCREASE TROPICAL FRUITS EXPORTS IN EUROPE" SEMINAR ON"OPPORTUNITIES TO INCREASE TROPICAL FRUITSEXPORTS IN EUROPE"13 AUGUST 2008ForMalaysian Agricultural Horticultural and Agrotourism (MAHA) 2008, MAEPS SerdangExploring the Market Potential of Fruits in Europe:Key Lessons for Malaysian Tropical Fruits Exporters.Excerpt fromA FAMA-UKM research consultancy project entitled“An Assessment of Market Potential of Selected Tropical Fruits in the Netherlands”By Research Team from UKMProf. Dr. Mohd. Fauzi bin Mohd. Jani, Prof. Dr. Aliah Hanim bt Mohd. Salleh,Dr. Tih Sio Hong, Dr. Azhar Hj Ahmad, Dr. Norjaya bt Mohd. Yasin,En. Mhd. Suhaimi Ahmad, En. Ahmad Khairy bin Mohd. Domil(Marketing & Service Management Research Group UKM)
2OBJECTIVE OF STUDYTo identify importers, distributors and retailers in the Netherlands that market tropical fruits.To identify the types of tropical fruits distributed and the preferred characteristics of these fruits among the channel members.To identify facilities in fruits distribution used by the channel members in distributing tropical fruits.To suggest a strategic action plan in order to increase the tropical fruits export to the Netherlands.
3SCOPE OF STUDY Geographical scope: The Netherlands as the gateway to the European fruit market.This study focuses on the market potential of ten tropical fruits as listed below:StarfruitDragon fruitPineappleRambutanDurianPomeloPapayaMangoMangosteenJack Fruit
4RESEARCH ACTIVITIES CONDUCTED 1.Focus Group Discussion2.Interviews (n = 100) with industry players:Local exporters and producersForeign importers, wholesalers, and retailers3.Observation of open markets in the Netherlands.4.Participation of 26th Fresh Produce Forum, 7th Feb 2007, Berlin.5.Interviews with Fruit Logistica tradefair participants, 8-10 Feb 2007.6.Warehouse site visits in the Netherlands, Nov/Dec 2006, Feb 2007.7.Feedback from local industrial experts
5Discussion during FAMA-UKM workshop Hilton Hotel, Petaling Jaya, November 27, 2006Interview sessions with the representatives of Solfruit (Fruit Logistica tradefair participant)Berlin, February 7, 2007
7Various Tropical Fruit Uses In Europe EatingGiftsGarnishingTable Deco
8KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS 1.Demand for fruits in Europe is “pushed down” through the marketing channels by large-scale importers as the primary tier, with wholesalers, large-scale and small-scale retailers and open markets as secondary and subsequent tiers in the channel system.Implication:Vital for exporters to identify which importer to target, and establish and sustain a mutually-beneficial long-term relationship with this (these) large buyer(s). Equally vital for exporters to be able to supply conforming to the large quantity and export quality of fruits expected by these large-scale buyers who value order consistency, regularity of supply and appropriate timing to meet shortfalls of supply in Europe.
9An Overview of the Marketing Distribution Channels for Tropical Fruits in the Netherlands Large ScaleImporter/Wholesaler/ExporterExporters(Retailer)RetailerSupermarketRetailer/WholesalerEndConsumersDistributionCenter /WarehouseOpen marketRe-exportCross-SupplyIndicator:
10KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS 2.Consumer demand for fresh tropical fruits in Europe is also “pulled” up through the channels by large-scale and small retailers such as the supermarket chains.Implication:If targeting for the potentially large consumer market in Europe, the fruit (e.g. Carambola, pineapple, mango, pomelo, watermelon, jackfruit) can be ‘positioned’ to be eaten fresh, and must be matched with the needs and tastes of the supermarket shopper ( value-for-money positioning). This will generate thin margins to be spread over large turnover.
11KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS 2.If targeting for specific niche market segments, as decoration (for buffet tables/decorate drinks, as garnishing), or for fresh juicing, a premium strategy will give the marketeer the advantage of premium pricing with higher margins over small quantities of selected fruits (e.g. starfruit, pittaya, pineapple’ mangoes)To be studied:Potential of fruits to be positioned as “gifts” (such as in Japan)Producing fruit species with attractive colour and longer shelf lifeExporting sweeter varieties for fresh juicing and targeting special buyers (airlines, hotel and restaurant chains)
12KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS 3.There is a growing trend among European consumers to prefer “health and beauty” attributes in their preferences of what fruit to choose to eat and for what occasion.Implication:If exporters want to capitalize on the “exotic” fruit image, its quality is of the essence in order to enjoy the benefits of premium pricing.But if “a critical mass” is needed to harness orders from supermarkets, consumer awareness of the nutritional benefits through extensive consumer promotional campaigns (at supermarkets, fruit fairs, specialty stores, educational media, etc.). FAMA can play a leading role in promotion.Effective grading and labeling with nutritional information for consumers are vital, to signal quality and the health benefits they promise.
16KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS 4.The ten tropical fruits from Malaysia are still generally perceived by consumers in Europe as “exotic” fruits and not (commercial) fruit “commodities” such as bananas (predominantly from Central America), apples, oranges, pears, grapes and pineapples (predominantly from Costa Rica) to be eaten daily as a quick snack/refreshment.Implication:To compete with the Euro spent on fruits with other freshly eaten fruits such as apples, oranges, pears, bananas, our fruits have to be ‘eating-friendly’, ‘snack-friendly’ – pre-packaged (e.g. in individual portions) and pre-cut, with assortments in ‘fruit boxes’.
18KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS 5.Malaysia carambola (starfruit) has the largest export potential to Europe; relative to the 3 other tropical fruit clusters under study.Cluster 2 (Mango, Papaya, Pineapple) has very high market demand, but the European market is very competitive with so many suppliers already dominating the market.Cluster 3 (Pummelo, Dragon fruit) has medium market demand with moderate level of competition.Cluster 4 (Rambutan, Durian, Jackfruit, Mangosteen) has few suppliers and presently low market demand.
19Rambutan, Durian, Jackfruit, Mangoesteen Positioning Map for Selected Tropical Fruits in European MarketMarket DemandMarket CompetitionLowHighMango, Papaya,PineapplePummelo,Dragon FruitRambutan, Durian, Jackfruit, MangoesteenStar fruitPotentialMarket Competition refers to number of competitors in market/intensity of competitionMarket Demand is the estimated level of demand by importersPositioning map is based on researchers observation of the market, interviews with industry players
20KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS 5.Implication:Each cluster open possibilities for different marketing strategies.Star fruitInvest in market positioning & generate higher demand from importersConcentrate effort on maintaining its current strength especially the positive association of star fruit and source from MalaysiaLeverage the familiarity of the fruit to create market niche among high-end marketPromote more usage of fruit. Not just for garnishing but promote it for daily consumptionExpand supply to meet the EU critical demand (timing & quantity)
21KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS MangoConcentrate investments in positioning our mangoes for profitable segments (probably specialty stores, airlines, hotels, banquets e.g. by promoting Malaysian mangoes as tastier and tender).Promote Malaysian mangoes for high-end market. (Avoid competing head-on in supermarket shelves based on price, e.g. with Indian mangoes)
22KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS Pineapple and PapayaChallenge for market leadership by emphasizing the fruit qualityBuild selectively on strengths. For example, Josephine for the sweeter tasteReinforce vulnerable areas especially for papaya. Invest on R&D to improve the quality of fruit
23KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS Pummelo and Dragon fruitInvest heavily in most attractive segmentsBuild-up ability to counter competition. Fruit size for pomelo need to be reduced as preferred by EuropeansEducate the target market to try dragon fruit
24KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS Durian and RambutanCan invest in pre-packed frozen durian for carefully targeted segments (e.g. via Oriental Market stores)Promote rambutans in fresh fruit assortment ready to eat. Possible consideration in processed e.g. canned with syrup.
25KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS Jackfruit and MangosteenIncrease awareness since they are presently seen as ‘exotic’ fruitsInvest in educating the consumers (converting non-users to users)Jackfruit: pre-packed in ready-to-eat formMangosteen: fresh & potential processed food due to high perish abilityGood packaging to enhance their shelf lifePosition the fruits for eating (emphasize the unique taste)
26KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS 6.Fruit importers’ main concern in selecting suppliers (Malaysian exporters) are conformance to:EUREPGAP, HACCP, ISO certificationGuaranteed uninterrupted supplyAbility to fulfill order quantitiesAbility to meet timing of demand.Implication:(a)Ensure effective supply chain management system in local Malaysian market by:Enhancing vertical cooperation: Farmers, Distributors and Exporters Alliances.Enhancing horizontal cooperation between industry players.
27KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS Further development of EUREPGAP compliance working team,farmer groupsEncourage more Commercial-based farming and infrastructureTransportation cost subsidization-Double tax deduction forcarriers (e.g. airline service providers)(b) Ensure the effectiveness of market makers in the Malaysianmarket.Enhancement/increase effectiveness & efficiency of marketmakers institution.Setting up an independent (non-profit) research unit at IPTAto develop market intelligence and coordinate the European
28KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS Enhancement of integrated tropical fruit facilities andprocessing Integrated Fruits-based Central-Kitchen (IFCK): thisCentral Kitchen acts as a planning and processing centre offresh fruitsTo reduce fruit wastageProduce high value-added processed fruitsOvercome the short shelf-life of fresh fruits(c) Enhancement of strategic alliances with key foreign channelmembers.Enhancement of Strategic alliances with foreign importers andwholesalersStrategic partnership with importers because importers are the first-tier market player that control the distribution network and market creator that pushes the demand down the channels to end users via retailers.
29Conduct large scale consumer marketing campaign KEY LESSONS FOR MALAYSIAN TROPICAL FRUITS EXPORTERS AND IMPLICATIONS(d) Large scale consumer awareness marketing campaign.Conduct large scale consumer marketing campaignCollaboration with foreign universities to promote Malaysian tropical fruitsYoung generation: develop positive perception towards tropical fruits consumptionPeriodical In-store promotion
30SUGGESTION FOR FUTURE RESEARCH Consumer awareness of tropical fruits value and consumptionStudy on close competitors’ marketing practices (e.g. packaging, branding, quality assurance, pricing)Specific study on value-added tropical fruit products, for example processed fruits, pre-packed ready-to-eat fruits.