Six Reasons For Chilean Blueberry Crisis

I attended the the Seminario Arandanos put on by ASOEX on May 26th and May 27th in Santiago, Chile. It was attended by over 750 people including growers, exporters, marketers and other blueberry industry stakeholders. I thought Juan Ignacio Allende, General Manager of Exporter Vital Berry Marketing, gave an insightful presentation on what caused, as he dubbed, the “blueberry crisis” in Chile this past season. Mr. Allende cited six main reasons that caused the blueberry crisis during the 2008-09 season. They are as follows:

1. Violent and Concentrated Growth of Blueberry Supply

Fresh blueberry supplies in Chile increased from 22 million pounds in 2004 to approximately 92 million pounds this past season, a 300% increase in the last five years. However, Mr. Allende noted it was the “violent” increase in supply during weeks 48 through week 4 that caused the major disruption. Also, 85% of the fresh fruit was sent to the U.S. versus only 78% the previous season. (see reason #6 below).

2. Limited Retail Promotions for Spike in Blueberry Production

Exporters, marketers and retailers were caught off guard by this significant increase in production and there were not enough retail promotions set up in the U.S. in order to move this amount of volume. However, you can’t blame U.S. retailers for this one, as they are only as good as the information they are given.

3. Poor Quality of Blueberries

This huge spike in production in a nine week period put pressure on the industry to harvest, pack and ship the fruit in a timely manner. Therefore, there was a lot of poor quality fruit that arrived in the U.S. market and this just exacerbated the problem.

4. Too Many Retail Blueberry Pack Sizes

In past seasons, most retailers, excluding club stores, sold 4.4 oz. and 6 oz. clamshells. However, due to the “violent” increase in volume, retailers sold 6 oz., 1 dry pints, 18 oz. and 2 lb. packs. There was not a standard retail pack, which created instability in the market. In addition, there were a significant amount of 6 oz. cases that were shipped to the market which drove down price.

5. High Retail Prices & Margins

Mr. Allende moved to California during the past season to analyze the market. What he observed was that retailers were charging too much money for Chilean blueberries, which curbed consumer demand. For example, according to his figures, retailers were purchasing cases of blueberries containing 4.5 lbs of fruit for $8-$10 per case and they were retailing them for between $24 and $48. More specifically, their cost was approximately $0.67 per retail (6 oz.) unit and selling them from $1.99 to $3.99. Retailers were able to get away with this when there was not as much volume, but not anymore.

6. World Currencies Dropped Versus the U.S. Dollar

The drop in Euros and the GBP versus the U.S. dollar severely impacted blueberry exports to the U.K. and countries in Europe. For example, in April of 2008 the British Pound was worth $2.00 to $1.00 U.S. But in April of 2009, the exchange rate was $1.50 GBP/$1.00 USD.

This 2009-10 season will be very important for the Chilean Blueberry industry. Blueberry growers, exporters, marketers and retailers will need to work together in order to move this crop. Mr. Allende recommends the following solutions:

1. Better retail prices and lower margins
2. Set up programs in advance
3. Improve fruit quality
4. Develop new markets

If the industry can accomplish these four things, they can turn this crisis into a "Blueberry Recovery."