The German Market for Fresh Eggplants
Target Market Confirmation Study
Conducted by The Republican Union “UniAgroProtect” for USAID/CNFA’s Agribusiness Development Project
March –April 2006
The German Market for Fresh Eggplants, TMCS
Content
Key observations and recommendations 2
Background 3
Information on companies interviewed 6
Sources of supply and import seasonality 6
Major clients and markets 8
Product requirements, grades and standards, packaging 9
Varieties and varietal market trends 10
Price data and analysis 10
Competitors 10
Buyers’ perception of Moldovan produce and suppliers 11
Recommendations to Moldovan exporters of eggplants wishing to enter the target market 11
Key observations and recommendations
The key observations resulting from this study are that:
· The German market for imported eggplants is very large (the largest in the EU)
· The market is well developed, importing more than 27,000 MT annually
· The market has strict requirements on the quality of products delivered and on reliability of partnerships.
The study revealed the following main obstacles for Moldovan exporters who want to penetrate the German eggplant market:
· Strict European quality requirements.
· Strong competition within the common market with high quality products grown in greenhouses.
· Traditional patterns of German trade.
· German businesses lack knowledge about Moldova or Moldovan products, which creates a mistrust of Moldovan partnerships and the quality of supplied products.
· Unsatisfactory standards/quality of exported Moldovan products (poor post-harvest handling, cooling facilities, packaging etc.), which means that Moldovan products do not currently meeting International/EU standards.
· The short Moldovan supply season (from August to September) which has to compete with long term suppliers, e.g. suppliers in Holland and Spain, harvesting and selling good quality products for five or six consecutive month, or more.
Germany does remain a potential market for Moldovan eggplants, but to enter the German market will require additional efforts and investment by Moldovan exporters compared to exporting to other markets, for example the Baltic countries or Byelorussia.
Using current eggplant production methods, Moldovan exporters can only supply the German market during the summer-fall season. However, during this period there is strong competition from the Netherlands which supplies a major part of Germany eggplant imports – and The Netherlands has a number of marketing advantages:
· full compliance with European Marketing (Quality) standards,
· proximity to Germany (which implies lower transportation costs),
· the recognition of Dutch products by German consumers.
· supply of competitively priced eggplant over 20 – 24 weeks during the summer/season, and during the remainder of the year at higher winter/off-season prices.
By comparison Moldova has few advantages, mainly a relatively cheap labor force. Under the GSP+ scheme, there are no tariffs for eggplants exported to EU countries from Moldova, which offers Moldova a competitive advantage compared to non GSP+ participants, for whom tariffs on exports of eggplants to the EU are compulsory.
In order to enter the German market, Moldovan exporters of fresh eggplants need to increase the competitiveness of their produce, eg. by making considerable improvements to their produce quality and packaging, and improving handling and transportation to meet European legislation for produce market standards and food safety regulations.
Germany has the largest market for organically produced fruits and vegetables in Europe, and exporting eggplants grown to the standards/protocol of a German approved organic certification scheme, may be a way to enter the German eggplant market, if other requirements (quality, packaging etc.) are also applied.
It is important for growers to:
· have the necessary technical know-how in the field of modern production technologies, including protected cropping
· know which varieties to grow (eg Dutch seedless varieties, with good dark/black skin color, that produce fruits of the size buyers require).
· have good post-harvest handling, cooling facilities, packaging, and a fast and reliable chilled distribution chain
· look for an importing partner and develop a good strong, long term trading relationship.
Background
Production trends. The eggplant is the sixth most widely grown vegetable in the world after tomatoes, watermelons, cabbages, onions, and cucumbers. In the last 15 years, the world production of eggplants has increased threefold, with a steady annual growth of 1.36 million metric tons, reaching 30.5 million metric tones (MT) in 2005 (source: FAOSTAT Agriculture Database). The top four producers of eggplants are China, India, Egypt, and Turkey. They account for approximately 89% of the world production; China’s share alone is as much as 55% of the total.
Import trends. Only 1% of world eggplant production enters the international fresh eggplant market; the top four leading producers of eggplants consume internally almost their entire eggplant production. In 2004, 313,723 MT of fresh eggplants were exported worldwide, which is 43% more than in 2000 (source: FAOSTAT Agriculture Database). In 2000-2004, the average annual volume growth was almost 13%, the highest annual increase of 23% being registered in 2004.
The average annual value growth during the same period was also about 13%, the highest increase of 23% being registered in 2003. Because of a slight drop in prices in 2004, the annual value growth was less significant (only 18%) compared to 2003.
On the whole, over the last ten years the price of fresh eggplants has registered a general decline from 1996 to 2002, followed by a slight upward tendency from 2002 – 2004, to prices closer to those of the mid 1990’s. See Figure 1 below.
Figure 1. Evolution of Fresh Eggplant Prices on the World and EU Markets (1993-2004)
Source: FAOSTAT Agriculture Database
Major world import markets for fresh eggplants (in terms of volume) are: Syria (17%), the USA (15.9%), France (12%), Germany (8.8%), Canada (4.7%), Russia (4.5%) and the UK (3.9%). Together, these seven countries consume 67% of the total volume of the world eggplant imports. Germany is the forth largest importer.
Germany is the largest import market for fresh fruit and vegetables in the European Union (and one of the largest in the world). In 2003, total imports of fresh fruit and vegetables to Germany amounted to 6.2 billion Euros or 7.3 million MT. Forty-five percent of all fruit and vegetables sold in Germany were imported. However, only 7% of the total imported value of fresh vegetables originated outside the European Union. Developing countries supplied only 1% of the produce. The primary reason for this is the fact that fresh vegetable imports consist of traditional products like tomatoes, capsicum, cucumbers, lettuce, onions and carrots, which are almost entirely supplied by other EU member countries, mainly by the Netherlands (40% of imported value in 2003) and Spain (28%).
The German market for fresh eggplants has been growing steadily in volume since 1990, with a total growth from 15730MT (in 1990) to 27891MT in 2004. Import values have fluctuated widely during the same period, but have risen overall from US$24million in 1990 to US$39.5million in 2004. (Figure 2).
Figure 2. German Imports of Fresh Eggplants (1990-2004)
Source: FAOSTAT Agriculture Database
Figure 3 shows that in terms of prices, even though German import prices have fallen and risen (1990-2004), they follow fresh eggplant prices on the EU market, but are around 20% higher than average EU prices.
Figure 3. German Average Import Eggplant Prices per MT (1990-2004)
Source: FAOSTAT Agriculture Database
As with other vegetables, the overwhelming majority of eggplants imported into Germany are imported from within the EU. In 2005 a total of 27564 MT of eggplants were imported into Germany, of which 27265 MT were from within the EU and around 300 MT from extra-EU countries. From EU countries, Holland supplied 15232 MT, Spain 8814 MT, Austria 1112MT and Italy 728 MT. Non-EU suppliers included Turkey 106 MT, and Jordon 61 MT.
Figure 4 shows volumes (MT) of eggplant supplied to the German market, by different exporting markets. Together The Netherlands and Spain share around 85% of the total import market for eggplants.
Figure 4. The Volume of Eggplant Suppliers’ Imports to Germany, 2002 - 2004
Source: FAOSTAT Agriculture Database
Dutch eggplant import values in Germany are lower during the summer. In the winter/off-season, Dutch volumes are lower, and values per tone are generally higher; at this time less expensive Spanish eggplants dominate the import market. In 2005, the price of Spanish eggplants during the winter/off season varied from EUR600 to EUR2000/MT, whereas the Dutch eggplants cost from EUR1200 to EUR1900/MT. See Table 1.
Table1: Import from Spain and Netherlands by month for 2005
Jan / Feb / Mar / Apr / May / Jun / Jul / Aug / Sept / Oct / Nov / Dec / Total2005
Spain / MT / 1142 / 663 / 663.1 / 946 / 931 / 390 / 134 / 176 / 219 / 820 / 1264 / 1467 / 8814
EUR'000 / 1691 / 1329 / 1181 / 1040 / 877 / 346 / 93 / 157 / 220 / 688 / 809 / 1167 / 9598
EUR/MT / 1.5 / 2.0 / 1.8 / 1.1 / 0.9 / 0.9 / 0.7 / 0.9 / 1.0 / 0.8 / 0.6 / 0.8 / 1.1
Holland / MT / 269 / 346 / 636 / 897 / 1600 / 1908 / 2997 / 2310 / 1869 / 1202 / 603 / 596 / 15232
EUR'000 / 431 / 654 / 1122 / 1301 / 1849 / 2080 / 3172 / 2762 / 2541 / 1573 / 713 / 788 / 18987
EUR/MT / 1.6 / 1.9 / 1.8 / 1.5 / 1.2 / 1.1 / 1.1 / 1.2 / 1.4 / 1.3 / 1.2 / 1.3 / 1.2
Source: EUROSTAT External Trade Database
Market access. As an EU member, Germany applies European regulations covering marketing (quality) standards, packaging regulations, and social/environmental/consumer health and safety requirements. All of these standards must be adhered to by exporters wishing to supply the German market.
Under the EU Generalized System of Preferences (GSP+) that started in January 1, 2006, Moldova benefits free access to the EU market for eggplants, i.e. there are no tariffs on eggplants exported from Moldova to the EU, which gives Moldova a competitive advantage compared to non GSP+ countries.
A big obstacle for Moldovan exporters, who want to penetrate the German market, is the importers’ lack of knowledge about Moldova in general and specifically its products.
Information on companies interviewed[1]
Telephone interviews were carried out with two types of respondents:
· large importers / wholesalers, and
· super / hypermarkets.
The telephone interviews were aimed at revealing essential first-hand information on the German market for fresh eggplants, such as specific produce requirements and consumers’ preferences, eggplant varieties currently demanded on the market, the sources of produce supply, and sales statistics.
An important objective of the phone survey was to learn about the German importers’ experiences dealing with Moldovan exporters, as well as to get recommendations from large German importers, addressed to Moldovan eggplant exporters, who wish to enter the German market. This primary research supplemented the information gathered through the secondary macro-level research.
Targeted companies were identified through various sources, the main being KOMPASS Database (www.kompass.md), the Chamber of Commerce web page, Internet sources (http://www.foodsfortrade.com/importers,
http://www.fao.org/documents/show_cdr.asp?url_file=/DOCREP/004/Y1669E/y1669e09.htm, http://www.freshplaza.com/retailers.htm), and search engines (Google etc).
Several significant players on the German market for fresh vegetables, with large operations and well developed retailer networks, were selected as target interviewees for the phone survey. A total of six companies were interviewed, of which two were large importers and four were[2]. The analysis and conclusions below are based on the information collected from the interviews. The focus on the large market players was determined by the necessity to identify produce requirements and consumers’ preferences on the high-end German market for fresh eggplants. Although the sample size of the survey is relatively small, gathered information is considered representative and valuable.
The largest interviewed importer indicated an average fresh eggplant turnover of about 220-240MT per year with a value of about € 550,000-840,000. Smaller importers indicated an average annual turnover of fresh eggplants from 12 to 15 MT (or approximately €30,000-€40,000). Fresh eggplants constitute from 0.5% to 3% in most respondents’ total sales. One importer, who wasn’t able to provide data on his eggplant turnover, reported a 10% share of eggplants in the company’s total turnover.
Sources of supply and import seasonality
Main suppliers
The respondents to the telephone survey revealed that they prefer to deal directly with exporters in the country of export, rather than buying from other German importers (see Table 1 below). Only one respondent, representing a small supermarket[3], reported that he was dealing only with local importers of eggplant.
Table 2: The Share of Fresh Eggplants Volume by Country of Supply
Buyer:See the key below / SM / SM / SM / SM / IMP / IMP
Local importers / 12MT
Netherlands / 110MT / 120MT / 70% / 7,5MT
Spain / 110MT / 120MT / 30% / 7,5MT
Italy / 70%
France / 20%
Austria / 8%
United Kingdom / 2%
TOTAL / 220MT / 240MT / CSI / 12MT / 15MT / CSI
Key: SM – supermarket; IMP – importer;
“CSI” – commercially sensitive information (no details on volumes provided)
The table above shows that, for the importers contacted, the Netherlands and Spain are the leading suppliers of fresh eggplants. FAOSTAT statistics confirm the information obtained through the phone survey. According to FAOSTAT, in 2004 the Netherlands provided 51% of Germany’s eggplant imports (in terms of volume), while Spain supplied 35%. Other small suppliers with a volume share of 3%-4% were Austria, Italy, and Belgium.
Import seasonality
The analysis of the information provided by the interviewees emphasizes that during the summer season the market of fresh eggplants in Germany is dominated by Spanish eggplants[4], followed by Austrian and Italian ones, due to lower prices (1300$/MT in Spain, 1250$/MT in Italy and 875$/MT in Austria) as compared to the Netherlands (1550$/MT).
Table 3: Import Seasonality by Country of Supply based on the respondents’ answers
J / F / M / A / M / J / J / A / S / O / N / DNetherlands
Spain
Italy
France
Austria
United Kingdom
Intensive supply / Smaller supply / No supply
According to the information provided by the interviewed importers, The Netherlands appears to be a supplier mainly during the off-season period. [Note: This is again counter to EUROSTAT data, which indicates that The Netherlands supply eggplants year-round, and - mainly in the summer season. (see Table 1].