Report: Grapes will weather COVID-19 storm

09:09AM Jul 23, 2020
grapes-red-web
( File photo )

California grape marketers will benefit from strong retail sales through the balance of the year and should weather the COVID-19 crisis in good shape.

That’s the conclusion of a new report focused on the U.S. and international table grape outlook from Rabobank

About 65% of California’s table grapes are marketed in the U.S,, and Rabobank expects strong retail sales will boost prospects in the months ahead, said David Magaña, Rabobank senior analyst for fresh produce. Foodservice sales typically represent about 20% of grape volume, Magaña said.

Over the past two months, retail grape prices have been trending slightly higher than year-ago levels. Season-to-date volume from Mexico, finishing in July, was about 10% below last year.

With harvest of grapes from California ramping up in July, Magaña said California marketers should expect a “typical” year. Table grape production is projected at 106.5 million boxes, slightly higher than last year’s crop but 8% below two years ago. While grape prices have averaged above year-ago levels to this point in the year, prices may drop slightly in the second half of the year compared with year-ago levels.

Challenges that confront the industry, he said, include rising labor costs, increasing competition, water availability and price volatility.

Premium and proprietary varieties have help growers increase returns per-box at the same time labor and other costs have increased, Magaña said. 

“The margins (have) been under pressure for traditional varieties,” he said, predicting the trend toward premium varieties will continue in the years ahead.

While per-capita consumption of grapes has held fairly steady over the past 15 years, at close to 8 pounds per person annually, the value of the crop has trended higher.

The supply of grapes has matched the growth rate of the population, but grapes are selling for more money, he said.

“When we look at the farm gate nominal value of production, it has increased at a compound annual growth rate of about 8% over the last decade,” Magaña said. “That is telling you that we are having a higher-value (crop) even when the volume has not increased,” he said.

 

Exports and imports

 

U.S. grape export sales have been trending higher in South Korea and Japan, growing at almost 20% per year over the past decade, Magaña said. Canada and Mexico are the export markets for U.S. grapes. 

There will be increasing competition from Peru late in the California season, but marketers will benefit from a consumer preference for domestically grown fruit, he said.

 

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