Market environment
Market research data showed a stagnation in demand for fruit yoghurts in 2009. From the third calendar quarter of 2009, a general economic uptrend brought renewed modest growth. With continuous marketing activities by the brand name manufacturers, demand for fruit yoghurts strengthened in Europe. In the USA, it led to a small increase in per-capita consumption, although from a low base compared to that in Europe.
Amid the heightened price sensitivity of consumers, demand in 2009 shifted towards lower-priced products and sales promotions, both for traditional and store brands. However, this tendency was counteracted by the trend of upgrading in favour of higher-quality, more expensive products. In the brand mix, the consumer trend was towards higher-priced probiotic fruit yoghurts and organic products. In the dairy industry there is visible renewed interest in new developments and product innovation as a way of stimulating consumer demand.
In the concentrate business in some cases, market shifts were occurring from 100% fruit juice towards more fruit juice nectar, fruit juice drinks and flavoured water with a very low fruit content. The price pressure in the trading business increased further through market share gains of up to 2% made by discount grocery chains.
After the volatility in the prior year and at the beginning of 2009|10, the market prices for fruit juice concentrates stabilised at a low level towards the end of the first six months of 2009|10. Despite the low prices, consumer expenditure was shrinking. This led to very cautious purchasing behaviour on the part of the large bottlers and a sales volume decline in the CIS markets of between 15% and 20%. Owing to the low European prices for apple juice concentrate, imports from China fell significantly. Additionally, in spite of a good apple crop in China, the availability of apples for pressing was limited and Chinese raw material prices were in fact 10% higher on average over the season than the (albeit record low) European levels. As a result of the higher raw material costs and the duty on imports to the EU, Chinese apple juice concentrate was barely competitive in the European market from September 2009 to February 2010.
A slight recovery in the concentrate market is discernible since January 2010. The lower import volumes of Chinese apple juice concentrate could be beneficial for the price increase in European concentrate.
Production locations
AGRANA is the world-leading manufacturer of fruit preparations for the dairy, bakery and ice-cream industry, with a market share of about 37% across these industries.The Group has a total of 25 production sites for fruit preparations in 19 countries.
In the Middle East and Africa, adding to the existing production facilities in Turkey and South Africa, AGRANA will expand its presence by adding a plant in Egypt during the 2010|11 financial year. Together with an Egyptian company, Nile Fruit, the markets in the North African and the Middle East are to be developed through a joint venture in which AGRANA will hold a 51% ownership interest.
With ten European production sites, AGRANA is one of the leading producers of apple and berry juice concentrates in Europe. Through the strategic alliance established in 2006 with its Chinese partner, Yantai North Andre, AGRANA operates two 50% owned joint-venture plants in the world’s largest apple growing region. The two production sites in Xianyang (Shaanxi province) und Yongji (Shanxi province) were marked by a good raw material supply in the financial year.
The main target markets for “sweet” (low-acid) Chinese apple juice concentrate are the USA, Russia, Japan and Europe. Sweet concentrate is used as a base for other fruit juice beverages and is an ingredient in numerous recipes and blends. The European concentrate facilities produce mainly apple juice concentrate with a higher acid content, used to make pure apple juices and non-alcoholic apple spritzers. Besides apples, AGRANA also processes berries into berry juice concentrates for the European and international market.
