China's Grape Market - Challenging and Important2022-05-27
27 May 2022
The China grape season started more slowly for Australian growers with a late and sometimes challenging growing season, and significant problems securing vessel space. Over the past month, arrivals in China have increased significantly. Prices have been reasonable for quality Australian grapes during the season but are declining now as the market is oversupplied with Chilean grapes and local grapes hit the market. Despite COVID and supply chain challenges we believe China is still the best market for grapes.
Pictures: Left: Australian Ralli grapes on display at Jiaxing Market, near Shanghai 27 February Right: Close up of Ralli Grapes near Jiaxing Market.
Logistical Challenges affecting supply of shipping containers and container space have affected all supply countries including Australia, Peru, Chile and South Africa. Delays at Chinese ports because of COVID checks and staff shortages have sometimes added 2-3 weeks for grapes to reach customers with quality deteriorated in some shipments. Logistics costs have also increased massively - the freight cost for shipping a 40’ Reefer from Chile this year reached USD 14000 before Chinese New Year and is USD 10-12,000 currently, more than twice what it was 2 years ago. As of mid May, most ports are working reasonably well, including Shanghai.
Overall reponse from traders on Australian grape quality has been quite good but there is some comment about mixed colour of the crimson. The best fruit has been very well received.
Pictures: Stack of Chilean Sweet Globe at Jiangnan Market and on sale at a Guangzhou Supermarket on 25 February.
Other issues affecting demand this season have been:
Consumption Changes – Chinese consumers are spending less because of economic and job uncertainty and they are making less shopping trips because of COVID. They are buying more value for money and local fruit.
Risk Reduction by Importers – Importers have had a couple of poor years with losses being made on some different imported fruits (not just grapes). Some smaller importers are no longer in business. Even large importers have really cut back their imports; taking much less risk and being less willing to pay upfront for fruit.
Substitution – The trend to buying seedless varieties continues, especially Peruvian Sweet Globe which buyers see as sweet and crunchy and travelling well. Chile is also sending more seedless varieties to China such as Sweet Globe, Sweet Favours, Autumn Crisp and Sable. A trader in North east China said the trend was definately towards seedless varieties and some like Sable have good flavour. Consumers don’t much care what the variety is as long as it has good sweet flavour and is firm. He mentioned that sometimes these new varieties arrive on one shipment but not the next and sometimes they do not have as good shelf life as the older varieties like Red Globe. We believe that the market still loves Australian Crimson but some substitution is occurring to the new varities, especially in the Peruvian season. South African is feeling the competition with some of their older green varieties losing market share to Sweet Globe and Autumn Crisp. Peru shipments to China are up 38% year on year; South African shipments were down 10% and Chile is down 5% year-to-date.
Payment and buying terms – Established Chinese importers buying from Chile and Peru generally buy on flexible terms, say of 20-50% payment upfront and the balance of funds after fruit has been sold in the market. This tends to favour large importers and established suppliers. Smaller importers, with less resources to ride the bumps, are being squeezed; ultimately meaning there are less buyers to sell to. In these challenging times for importers the less risk the better. Over time the relationship between the larger exporters and larger buyers tends to get closer and cover a wider range of fruits.
Picture: Top left Australian Crimson at a fruit shop (RMB 38/500Gr (AUD 16.80/Kg) and Top Right at a Fruit Store Chain (RMB 39.5/500gr) in Nanjing, 14 April.
As at mid May a lot of Chinese grapes (from Yunnan) are beginning to hit the market.
Pictures: Fruit Shops in Nanjing 26 May. Left: Australian Crimson (RMB 25/500gr (AUD 11.00/Kg)) and Right: Chinese green seedless (RMB 20/500gr AUD 8.90/Kg)