17 agosto 2022

The Fresh Fruit Industry in Indonesia – An Interview with Asia Fruit Magazine

The Fresh Fruit Industry in Indonesia – An Interview with Asia Fruit Magazine

We turn our global attention to Indonesia to explore how the region and industry is progressing in this post peak COVID world. Here is the conversation our Vanguard team recently had with Asia Fruit Magazine.

Q: Is there any recent news or developments within your company you would like to share?

An early look at the Peruvian grape season indicates high-quality fruit will be coming again this season. “Things are looking great at our ranches in Ica, Peru. Our executive team just returned from Peru and their report indicates the vineyards are progressing as planned,” says Vanguard CEO Craig Stauffer. “Weather in our growing region has been ideal for this stage of the growth cycle, with no adverse effects indicated so far. In comparison to last year currently, the vines appear to be following a very similar pattern. This is good news, as last year delivered some of the best quality grapes, we have ever harvested off our Peruvian ranches.”

Q: Indonesian fresh fruit imports bounced back in 2021 after struggling in the first year of the COVID-19 pandemic. How are things looking in 2022?

While life is progressing back to normal, Indonesian fresh fruit imports are unfortunately not following the trend. Instead of seeing continued growth after bouncing back in 2021, this year is showing a decline due to COVID-related issues coupled with the ongoing unrest in Russia. These include:

  • Ongoing logistical constraints:  lack of equipment and vessel delays have been disrupting sales programs and inventory management. We all know timing is crucial in the fresh fruit business. As demonstrated during Ramadan this year, many shipments scheduled to arrive before or during Ramadan arrived after the Eid Al-Fitr festival when the market had slowed down. Ramadan this year resulted in the lowest holiday sales in the last ten years, which typically is Indonesia’s strongest selling period of the year.
  • Increased freight rates, coupled with rising production costs, have inflated imported fruit prices.  Importers, retailers, and consumers alike cannot afford these high prices.
  • The loosening of travel regulations after two years of tight restrictions led to many people leaving for vacation when the protocols were relaxed.  This created reduced demand for fruits and vegetables at the grocery store since people were traveling.
  • Increased inflation has made consumers more conservative with their spending due to weakening purchasing power.

Q: How is the Covid situation and how is it affecting the market?

The Indonesia government has implemented good measures to control COVID-19, and people are returning to ‘normal’ life. The government continues to remind the public to stay alert.  Wearing a mask is still required for many indoor activities. Our industry is now navigating the post-COVID economic impact.

Q: Do you see the fruit import market returning to or even passing pre-Covid levels in the next few years?

The import fruit market will return to or surpass pre-COVID levels provided importers can get the right quality fruits at the right time. This year, the supply chain disruptions have been one of the greatest challenges we have ever experienced. If the supply chain clears, we should see the expected market recovery and hopefully quickly.

We will have a presidential election in 2024. A peaceful election process will hopefully start next year.  A smooth transition and market acceptance of the new government will also help to boost the market.

Q: What factors are going to play a role in the growth of Indonesian fruit imports going forward? What categories have the potential to grow and why?

We are seeing an increase in demand for fruits that offer more freshness and health benefits as consumers are more health conscious since the start of the pandemic. Prepacked fruits should no longer be simply in nice packaging. The guaranteed freshness and safety need to be the selling point.

How soon and how well the supporting industries recover, such as logistics to include sea freight services, will also play an important role in the growth of Indonesian fruit imports. Managing rising costs, while consumers are being more price sensitive is important. Another factor is how much Indonesia will be impacted by global inflation and maintaining economic stability.

Categories that have the potential to grow, in terms of dollar value, will very much depend on market demand vs permits (quota) availability during the season. In terms of volume growth, produce such as mandarins and grapes have better opportunities, due to the extension of China’s mandarin season and more seedless varieties of grapes being introduced to consumers globally.

Q: What other trends are you seeing in Indonesia’s fresh produce trade now? Are there any consumer trends that are standing out?

Online purchasing will keep growing with more players involved in the market. Community group buying via social media, mainly WhatsApp and Instagram, is another trend that emerged during the pandemic that is likely to endure.