Tuesday, March 8th marked the last day of the Vanguard Peru grape harvest. The harvest may be complete, but there is still one-third of the product from the season still to arrive in the markets as our global team continues to navigate a challenging supply chain.
Up to week 8, Peru has shipped 61.5M boxes of grapes, this is 10% more than last season year to date when Peru had shipped 55.7M boxes. The Peru season this year will very likely hit 64M equivalent boxes, an increase over the initial forecast of 62.5M at the beginning of the season.
We saw one of the best performing product seasons to date, in large part to the advancements that our team undertook at the ranch, we will share more details below. Color, size, crunch, and flavor were all on the premium level and our customers took notice. Weather conditions were excellent, and the start of the harvest was as expected in early November and ended as planned in mid-March. Quality and harvest conditions were very good. All things we had within our control in Peru have been on target with our plans. Moreover, California finished their 2021 season early and Chile started later, which created an excellent window globally.
We are still seeing good demand for our grapes in North America, but the markets have weakened substantially over the past two weeks in all markets, especially on red seedless and black seedless into North America. Fortunately, we have a good portion of our later arrivals in program business that weathers the market with less volatility gyrations. Green seedless, specifically the new IP varieties continue to earn good demand and are less susceptible to dramatic drops in pricing.
Supply Chain Challenges
Despite so many positive returns to the vine, this has been the most challenging season ever faced by our industry in general from an export global market perspective. We along with the rest of the Peruvian industry have been plagued by numerous logistical challenges and ever-increasing costs. The issues list is long: a lack of containers at critical moments during the harvest, delays in vessel departures, extended transit times, port congestion, delayed releases, container discharges, lack of chassis and drivers to get containers to customers. We have heard stories from others who have had their shipments sit for 17 days on a vessel, that is on top of the 21-day transit time.
Crisis does force improvement, and the pandemic and resulting supply chain challenges have led our team to making significant advancements that set us up to be able to meet the expected delays strategically. Starting at the field level there was a new horticultural approach, especially with our green varieties on how we manage the placement of the bunches. This was overhauled to ensure quality canopy coverage on bunches to avoid amber spots or sunburn. We picked at a peak point to optimize shelf life and our picking process was much faster.
We engineered changes at the packinghouse to ensure that time in the storage and dispatch areas were reduced by 5-7 days to get ahead of the lag time we knew the supply chain clog would impose.
Everything we did this past year we did with clear anticipation of logistical export challenges. If we ever return to a “normal” supply chain process, then these revised processes in place will remain and position us even stronger in the grape market.
A Place in Peru
The other key takeaway from this season is the improved relationship made with our local Peru community. We lead with transparency first from labor structure, how we pay, when we pay and follow in step with the appropriate local government laws. The position we have taken with the community is to give an alternative voice to handle labor the right way. Our key management team has been very involved with local labor leaders and authorities to address concerns and make improvements. We took an active role in local community relationships in general. From supporting a local school being developed, as well a soccer training camp for kids, we enrolled the Vanguard team as stewards in the Peru community.
It’s an understatement to say our team went above and beyond to make this one of our strongest seasons on record despite the global challenges. Our final note is one of gratitude and thanks to every member on our growing team, packinghouse, customers, drivers, and community member that was involved in the 2021-2022 Peru grape season.
Every day is different at Vanguard; with new growers joining our community, new crops and fresh varieties being introduced, and new markets opening. Keep up to date with what’s happening in our expanding world.