If 2016 is anything to go by, we won’t be short of surprises. Few predicted the outcome of the United Kingdom’s referendum on EU membership, which in turn has brought into sharper focus growing nationalist and populist sentiment in many European countries.
The impact of this on forthcoming elections in some other key EU countries remains to be seen, but could shape the future of the European Union and its internal and external relationships in the coming years. France, Germany, the Netherlands, Hungary, Slovakia and Slovenia all have general elections in 2017. Certainly, the political landscape within Europe is changing and the EU Commission will come under pressure to continue its program of ongoing reforms to convince the electorate of its relevance and benefits to the EU population. This is becoming increasingly polarized as seen in the chart below.
What this all means for the produce industry will be driven by a number of (largely uncontrollable) factors, many of which may remain, or become increasingly volatile: economic growth, consumer confidence and exchange rates. There will be ongoing fallout from the U.K.’s decision to leave the EU and also the outcome of other ongoing or new trade negotiations, notably the Transatlantic Trade and Investment Partnership (TTIP) between the European Union and the United States.
We have seen in the EU-Canadian trade deal signed in 2016 — the so-called CETA (Comprehensive Economic and Trade Agreement) — how finely balanced such negotiations can be. The deal was close to being brought down by objections from a single region of Belgium, Wallonia, due to concerns from agricultural producers. Interestingly, farmers in both Europe and Canada have expressed opposition to CETA, with neither side feeling they have anything to gain, but risk losing out to their respective competitor, although objections are principally from the dairy and livestock sectors, as opposed to produce. While agricultural trade makes up only a relatively small part of this treaty, the Wallonia example illustrates the significance and sensitivity of the primary agricultural sector in such negotiations.
In the United States there are new uncertainties. The Trans Pacific Partnership was finally signed in 2016, and is awaiting ratification by individual governments. However, president-elect Trump has stated that on reaching office he will abandon the agreement. Whether a similar stance will be taken on TTIP is yet unknown.
CETA and TTIP will, in time, open up opportunities for export-oriented fresh produce companies in Europe to exploit in Canada and the United States, and vice versa. However, inevitably this comes with an element of risk to increased competition. In many ways, this isn’t new as fresh produce companies will continue to align themselves strongly with their customers — wherever they are in the world.
Europe remains one of the world’s largest consumer markets, with a well-developed retail infrastructure. Particularly in Northern European markets, trends toward health, convenience and value continue to drive markets, and retailers continue to evolve their proposition to meet these needs. For example, U.K. data shows consumers are shopping more frequently, and at a wider range of stores, which in turn increases retailer focus on “top-up shopping” and “meal solutions” providing quick, healthy food for that day. This has evolved beyond “ready meals” to healthier solutions that consumers can easily and quickly assemble and cook themselves, without too much time spent on preparation. The fresh produce sector has opportunities here to capitalize on this trend with added-value products, such as partially prepared foods, meal deals and inspiring shoppers with new menu ideas.
The growth of online shopping continues, with increasing focus on “click and collect” as a more cost-effective and convenient way to deliver shopping to customers, with supermarket stores acting as hubs for distribution. New entrants to the sector are also starting to emerge, with the likes of Amazon Fresh becoming more established, and other home delivery models providing convenient meal solutions delivered to the door. To counter this, some players are trialing services, such as 60-minute grocery delivery. Meanwhile, physical stores are emphasizing differentiation, improved service and an enhanced shopping experience. The fresh produce category is seen as key to these.
These trends will continue to develop in 2017, and as customers and consumers continue to evolve, progressive fresh produce companies can play a key role in meeting changing needs and motivations.
While 2017 will not be without its challenges and uncertainties, opportunities will continue to present themselves to go ahead with fresh produce businesses.
Rebecca Lewis is a principal consultant with Promar International, the value chain consulting arm of Genus plc, and has worked on a number of fresh produce assignments in the United Kingdom, the European Union, as well as in Chile, South Africa and India. She is based in Shrewsbury, U.K., can be contacted at [email protected].