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Weather hampers grocers

 

fruitOperators in the fruit and vegetable retailing industry have weathered difficult trading conditions over the five years through 2013-14, with revenue expected to post annualised growth of 0.8 per cent, according to IbisWorld.

Industry revenue is expected to rise by 1.6 per cent to $13.4 billion in 2013-14.

Despite growth in fruit and vegetable consumption expenditure, revenue has been constrained due to unseasonal weather patterns. Events such as the prolonged drought, floods, and cyclones have caused considerable fluctuations in the supply and price of fruit and vegetables during this period.

IbisWorld industry analyst, Claudia Burgio-Ficca, says retail demand has also been affected by fluctuations in real household disposable incomes and volatility in consumer sentiment following the onset of the global financial crisis.

Industry retailers have faced a difficult operating landscape over the past five years. Rising industry competition and price discounting by supermarkets have eroded revenue from an already fickle industry. As a result, sales and market share for smaller specialty retailers have declined as larger supermarkets have expanded their product lines to incorporate more exotic fruit and vegetables.

“While growth in disposable incomes has boosted the spending power of consumers, demand for fruit and vegetables has been affected by fluctuations in consumer sentiment,” says Burgio-Ficca.

The industry is characterised by a medium level of concentration. Major players Woolworths and Coles each wield a considerable amount of market share.

Demand and supply trends will remain vulnerable to seasonal weather patterns and industry operators are expected to source produce from different suppliers in a bid to meet constant consumer demand for quality and affordable goods.

Heightened competition from supermarkets and other grocery stores seeking a larger share of the market is likely to squeeze smaller players out of fruit and vegetables, however, rising social awareness about the importance of incorporating the recommended number of fruit and vegetable serves as part of a healthy diet is likely to drive demand and consumption over the next five years.

For more information, visit IbisWorld’s Fruit and Vegetable Retailing report.

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