Trends in the Global Fresh Produce Industry: Focus on Citrus DR. ROBERTA COOK Dept. of Ag and Resource Economics University of California Davis November 2005

World Area and Production of Fruits and Vegetables, Million Metric Tons and Hectares Source: FAO

Food Demand Trends Global per capita availability of fruits and vegetables grew from 155 kg in 1990 to 212 in 2004. Consumers in Latin American and Asia are registering the fastest growth in food demand in the world – in the face of slow growth mature food markets in the developed world. Growing global importance of supermarket chains plays a key role in stimulating fresh produce trade – shelf space needs to be full year-round. This is a positive factor for citrus demand.

Convergence…Supermarket Share of Grocery Sales, by Selected Country % France USA Brazil & Korea China Source: Tom Reardon

The 2004 World Fruit Pie, Share of Production Source: World Apple Review 2005

World Production of Citrus and Total Fruit, 1,000 Metric Tons 79-81 89-91 99-01 02-04 02-04 v. 89-91- % Total Citrus 59,321 77,073 103,620 106,274 +38% Oranges 38,751 53,578 63,433 61,808 +15% Other Citrus 20,570 23,495 40,187 44,466 +89% Total Fruit 275,663 311,642 440,242 458,736 +47% On this basis, Wal-Mart looks pretty strong relative to its grocery store peers.

This compares with 40% growth in population. Citrus production growth has lagged population as demand has diversified for other fruit. On the other hand, developing countries are increasing consumption of fresh produce, including citrus, as incomes improve. Developing countries also have higher rates of population growth. Trade liberalization through the WTO is opening markets and reducing tariffs. On this basis, Wal-Mart looks pretty strong relative to its grocery store peers.

Citrus markets and trade will continue to diversify: between 1990 and 2003 imports of oranges, tangerines and clementines into all countries grew by an average of 23%, v. 20% into developed countries and 39% into developing countries. between 1990 and 2003 imports of grapefruit and pomelos into all countries grew by 9%, v. 6% into developed countries and 63% into developing countries. The US and the EU dominate global horticultural trade. On this basis, Wal-Mart looks pretty strong relative to its grocery store peers. Source: World Apple Review 2005

U.S. Horticultural Imports and Exports by Key Product Category, $Billion Source: FAS/USDA, as compiled by Roberta Cook.

EU Exports of Horticultural Products by Category Billion Source: Global Trade Atlas, includes: Vegetables, Fruits, Nuts, Essential Oils, Nursery Products, Cut Flowers, Wine, and Beer.

Total Consumption of Fresh Oranges in Selected Countries, in 1000 Metric Tons (excludes processing) Source: FAS PSD Oct. 2005

Japan: Per Capita Consumption of Fresh Fruit in kg Source: World Apple Review 2005

United Kingdom: Per Capita Consumption of Fresh Fruit, in kg Source: World Apple Review 2005

United Kingdom: Per Capita Weekly Consumption of Fruits and Vegetables, by Age Group, 2002-03, grams Source: World Apple Review 2005

USA: Per Capita Consumption of Fresh Citrus in kilos, 1976-2004 Source: ERS/USDA

Per Capita Consumption of Oranges, Selected Countries, in kilos Sources: FAS/USDA PSD, Oct. 2005 and IDB demographic data, as compiled by Roberta Cook.

USA: Per Capita Consumption of Oranges, Fresh and Juice, kilos, 1976-2004 Source: ERS/USDA

Obesity Goes Global: Globesity! WHO estimates that obesity grew from 200 million people in 1995 to over 300 million in 2000. 115 million of the obese live in developing countries. Even in France, obese people are now 11% (vs. 8% in 2000) of the population and expected to reach 20% in 2020. The number of obese people in Britain almost tripled between 1980 and 2001; overweight or obese pre-school children doubled in the 90s.

Concern over Globesity Affects Public Policy Fresh produce is set to benefit. Competition from non-healthy snack foods is finally being challenged by health messages and changes in availability, such as in schools. Growing evidence on the health benefits of fresh citrus must be aggressively communicated and promoted, to all age groups. Citrus can be made more convenient to consume, witness the launching of Sunkist’s Fun Fruit program.

TOP GLOBAL GROCERY RETAILERS, 2004 Net Sales Grocery Net Grocery Company and Origin ($ billion) Sales ($ billion) Rank Wal-Mart U.S. 285.2 138.72 1 Carrefour/Promodès France 90.3 84.54 2 Ahold Holland 88.8 75.03 3 Germany/Switz 70.1 38.35 8 Tesco U.K. 62.2 50.45 4 U.S. 56.4 41.22 6 Germany 50.7 41.54 5 Costco U.S. 47.1 30.74 13 30 grocery retailers account for 29% of modern global grocery retail sales.

TOP GLOBAL GROCERY RETAILERS, 2004 Net Sales Grocery Net Grocery Company and Origin ($ billion) Sales ($ billion) Rank Target U.S. 46.9 17.15 26 Aldi Germany 43.0 38.75 12 Schwarz Germany 42.6 37.79 11 ITM France 42.3 32.47 18 U.S. 40.0 28.78 17 AEON UK 38.8 30.13 14 Walgreen’s U.S. 37.5 14.53 31 Auchan France 37.3 30.22 15 Source: PlanetRetail, June 2005

TOP GLOBAL GROCERY RETAILERS, 2004 Net Sales Grocery Net Grocery Company and Origin ($ billion) Sales ($ billion) Rank Safeway U.S. 35.8 29.54 16 Ito-Yokado Japan 39.5 37.52 9 France 32.8 22.72 19 Edeka Germany 32.5 33.11 7 CVS U.S. 30.6 10.16 38 Tengelmann Germany 29.8 21.73 20 Casino France 28.8 37.53 10 Sainsbury U.K. 28.2 23.02 21 Source: PlanetRetail, June 2005

TOP GLOBAL GROCERY RETAILERS, 2004 Net Sales Grocery Net Grocery Company and Origin ($ billion) Sales ($ billion) Rank Coles Myer Australia 23.7 14.37 30 Morrisons 25.5 20.06 24 Delhaize “Le Lion” Belgium 22.3 18.58 23 Woolworths Australia 20.7 16.46 22 Loblaw Canada 20.1 17.41 25 El Corte Ingles 19.2 5.44 62 Total Estimated Top 30 1,054.42 Others 2,610.33 Total Worldwide 3,664.75 Source: PlanetRetail, June 2005

TOP GROCERY RETAILERS IN MEXICO, 2004 Retail Banner Sales Grocery Company ($ billion) Sales ($ billion) Wal-Mart 13.2 5.9 Soriana 3.9 2.4 Gigante 2.9 2.0 Comercial Mexicana 2.6 1.8 OXXO 2.1 1.5 Costco 1.4 .81 Chedraui 1.2 .66 HEB .64 .58 Source: PlanetRetail as compiled by Roberta Cook.

TOP GROCERY RETAILERS IN MEXICO, 2004 Retail Banner Sales Grocery Company ($ billion) Sales ($ billion) Carrefour .72 .50 Calimax .31 .27 Subtotal Top 10 28.76 16.35 Other 54.41 49.71 Total 83.164 49.713 Top 10 grocery retailers account for 25% of modern grocery retail sales in Mexico. Much of food sales move through traditional channels. Source: PlanetRetail as compiled by Roberta Cook

Key Drivers global retail players global retail brands? growing role of private labels retailer–supplier contracts/partnerships, interest in large year-round suppliers declining role of spot market Suppliers all coming up to the same level