A Look on the Productive Reality

Apple Brazilian Scenario

Pierre Nicolas PérèsAssociação Brasileira de Produtores de Maçã

ABPM

Madrid 21st. October 2011

About ABPM

ABPM – Associação Brasileira de Produtores de Maçã

•Non-profit association with a permanent secretariat based in Fraiburgo•Created in 1978 to set up a national forum of discussion for issues affecting apple production, regulation, research and trade•Incorporate the 3 states Association, Cooperatives and apple Producers, representing 90% of the volume produced .•President elected

ABPM’s objective

• Mission– Facilitate to the associate access to private and publics

means financial and scientific for production of high quality fruits, using technology respecting the environment and consumer health.

• Vision– To be the reference in the brazilian fruit sector,

contribute to the economy of the apple regions, looking for the engagement of federal, state and municipal authorities

• Principles

• Principles– Ethic and integration of the producers, social

responsibility, respect of environment, respect of individual value, equilibrium between the fruit growing segments and client’s satisfaction.

BRAZILIAN DATA

PRODUCTION SURFACE

ANDVARIETIES

Source: IBGE, ABPM, AGAPOMI, EPAGRI, DEROL

PRODUCTION (t)

STATE Production (t) (%)

Santa Catarina 689.876 51%

R. Grande do Sul 605.177 45%

Paraná 56.000 4%

Others (BA, MG,SP) 1.851 0%

Total 1.355.904 100%

APPLE PRODUCTION PER STATE 2010-11 (VOLUME – T)

Source: IBGE/ABPM/AGAPOMI/FRUTIPAR

APPLE SURFACE (ha)

Source: ABPM, AGAPOMI, EPAGRI, DEROL, IBGE

Fuji's 35%

Gala's 60%

Others 5%

APPLES VARIETIES ( %)

Source: ABPM, AGAPOMI

State PH AC AN TOTAL

SANTA CATARINA 90 242.726

136.152

378.878

RIO GRANDE DO SUL 110 207.880

107.670

315.550

PARANA 19

-

11.172

11.172

BRASIL 220 450.606 254.994 705.600

Cold Capacity (T) and Packings

Source: ABPM

EXPORTand

IMPORT

APPLE EXPORT (T)

Fonte: ABPM, SECEX

Source: SECEX

EXPORT PRICE FOB ($/kg)

EXPORT PRICE FOB (R$/kg)

Holland 32%

UK 16%Portugal 5%

Sweeden 5%

Spain 5%

Germany 5%

Bangladesh 4%

Finland 4%

Other 19%

France 6%

Fonte: ABPM, SECEX

DESTINATION (2008 in %)

Holland 31%

Bangladesh 13%Spain 9%

Ireland 8%

UK 5%

Finland 4%Denmark 3%

Other 11%

Germany 6%

Portugal 9%

Fonte: ABPM, SECEX

DESTINATION (2011 in %)

20.000

40.000

60.000

80.000

100.000

120.000

2007 2008 2009 2010 2011 f

Source: ABPM, SECEX

IMPORTAÇÃO DE MAÇÃS 2010 (T)

Argentina 63%

Chile 30%

Others 1%Italy 2%Spain 1%

France 4%

ORIGIN 2010 (%)

Source: ABPM, SECEX

TRADE

POSITIVES ASPECTS

•According to the POF-IBGE, brazilian apple was the 4th. fruit most consume in 2008.•In 2011, CNA realize a study regarding fruit consumption, apple became the 2nd. fruit most remembered by the public.•In the same CNA’s study apple became the 2nd. Fruit most consumed and the brazilian’s preferred fruit.•Apples do have an appeal for health and good taste.•Wholesalers and retailers do recognize the importance to have apples in their mix and in the shelves.

Actual situationApples is the second fruit most consumed in important

cities like São Paulo and Belo Horizonte:

46

24

13

6

2

3

3

3

Banana

Maçã

Laranja

Mamão

Abacaxi

Pera

Mexirica

Outras

48

31

14

4

2

1

Banana

Maçã

Laranja

Mamão

Abacaxi

Outras

São Paulo Belo Horizonte

Source: Connection Pesquisa e Análise de Mercado, 2004 25

Wealth Distribution

Source: Centro de Polliticas Sociais FGV

Demography

Source: Mundo Corporativo n. 28 - Deloitte

Source: Mundo Corporativo n. 28 - Deloitte

DEMOGRAPY BONUS• Unique moment in the brazilian history and will

not repeat.• During the next 3 decades the economically active

population (PEA) will be more important than the other kinds, non working, kids and elderly.

• => More saving• => More Job• => More investment and consumption• More GROWTH

Fonte: ABPM, SECEX

  2007 2008 2009 2010 2011 *

Production 993.227 983.240 1.052.514 1.226.338 1.200.000

Domestic offer in Natura 632.728 731.032 765.825 906.536 966.378

Export 112.073 112.250 98.203 90.839 48.622

Domestic Production in Natura 564.154 675.990 704.482 829.657 851.378

Import 68.574 55.042 61.343 76.879 115.000

Industry 317.000 195.000 249.829 305.842 300.000

Brazilian Population – IBGE in (000) 187.796 189.736 191.592 193.224 194.933

Consumption in natura kg/hab 3,37 3,85 4.00 4.69 4.96

Brazilian Apple Market

Source: ABPM; CEAGESP; IEA – Instituto de Economia Agrícola - 2011: up to May

YEARLY AVERAGE SALES OF PACKED APPLES

Cat 1, 2 e 3 Gala R$/kg Fuji R$/kg INPC IGPM

2003 1,127 1,292 10,38% 8,69%

2004 0,874 1,195 6,13% 12,42%

2005 1,196 1,477 5,05% 1,20%

2006 1,428 1,579 2,81% 3,84%

2007 1.105 1,490 5,16% 7,74%

2008 1,338 1,615 6,48% 9,81%

2009 1,184 1,343 4,114% -1,712%

Variation 2003/2009 5,058% 3,947% 47,50% 49,31%

Supermarkets: 2003 a 2009 +45%

Source: ABPM

SUPERMARKETS STRUCTURE 2009 (R$177bi, +11,7%)

17 Seguintes 14,08%

3 Maiores Supermercados

40,44%

77,811 Outros Supermercados

32%

480 Seguintes 14,39%

Source: NIELSEN 2009

Increased role of exchange rate on trade

OUTLOOK 2012

• Very good winter• Climate condition during blooming good• No frost• No hail so far• Thinning under way• May be a bumper crop

2012 CROP

FINAL COMMENTS

Review of concernsSustainability• Increased costs for supply ( food safety, logistics, packaging,

actives substances, labor, ...) • Return often below cost of production for many growers• Supply fragmentation v. retail concentration• Emergence of discounter and impact for suppliers• Multiplication /proliferation of requirements • Consequences on demand of changing consumer behavior • Improved postharvest techniques making a flat price along

the year

Review of concernsConsumption

• Stagnating consumption and increased competition from other products

• Limited initiatives on promotion, need to enhance marketing campaign, how? Financing of marketing - growers, state, both?

• Role of innovation and varietal or club development • How to benefit from healthy assets of apples, • consumer purchasing patterns and dietary behaviors will

influence demand for apples? • Quality, how to cope with fruits under standard

– Rito Sumario

Review of concernsMarket

• Concentration of buyers versus pulverization of growers/packers– Consortium– Growers Concentration

• Promoting Consumption– Government?– Fruits in the school– Army– Global marketing project

Review of concerns

Emerging issues

• Role of unexpected climatic conditions on production and trade ( snow, frost, drought, flood,..) and also on consumption

• Role of currency fluctuation ( € ; £, $, zl, Ruble, SH currencies, … )

• Future impact of the climate change debate ( environment, water, waste, packaging , logistics,..)

• Coping with NGO negative campaign in Europe affecting image of produce and consumer confidence

Review of concernsCLIMATE• Mainly Hail

– Insurance– Netting

• Lower taxes on investment against hail• Subsidy of interest rates• Long term loan

MECANIZATION• Orchard and Packing

FINANCIAL DEBTS• Retruscturation

CONCLUSION

• Brazilian Government through law n. 4504 – 30/11/64, is encouraging the producers to create a consortium to get back power of negotiation to the growers, allowing to form one legal entity for sales and for buying.

• Boost Internal market – Project: More fruits at school– Project: Healthy Tourism – Project: Bella

• Fruits presentation in supermarket• Degustation• Communication• Merchandising• Reinforcement Action in the press• Web Marketing

• To increase consumption we must offer improved quality, have a better divulgation throughout the media,

• we do have an asset, our apple is recognized for its flavor that is nationally recognized.

• Apple cannot missed at home and in the supermarket, according to consumer

• It is an item of the shopping list

Consumers want to buy good quality apples.

• Strengthening Farmers organization – Association– Cooperative– Consortium• Qualify the offer• Marketing, communication, promotional events,

listening to the consumer’s wishes• Give value to our products• Invest in fundamental research, biotechnology• Better clones, productivity, mechanization, orchard

conduction

GRACIAS

WWW.ABPM.ORG.BR