French banana market

  • Published on 13/05/2016 - Published by LOEILLET Denis
  • FruiTrop n°240 , Page From 86 to 90
  • Free

Not exactly devastation, but no cause for celebration either

The French market is disappointing. While the product value is holding up, consumption has been coming undone for the past two years. Yet there is immense potential: average French banana consumption is 4 kg less than in Germany. Urgent action is required to revitalise the market, though not to the detriment of value.

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The French exception has struck again. In 2015, the market bucked the upward trend in European consumption, actually losing 200 grams, bringing the consumption per capita down to 8.6 kg/year. We are falling away from the 2013 historic peak of 9 kg, a level which itself was not such a great performance, bearing in mind the EU-28 average consumption of 11.5 kg (+300 grams on 2014).

To put our minds at ease, let’s take a look at our populous near-neighbours. They are no better off, except that they had a much higher starting point. Germany fell back to 12.5 kg/capita/year (-100 g), and has registered an annual growth rate since 2010 of 2 %, practically the same as France (+ 2.3 %). The United Kingdom also lost ground in 2015 (-200 g to 16.9 kg), and its annual growth rate has been just +1.7 % since 2010. Comparison does provide reassurance, but sometimes cheaply, since while France seems to be a mature market like Germany and the United Kingdom, these two countries nonetheless consume between 4 and 8 kg more banana per capita per year. If the French market really is mature, did it perhaps skip the final growth stage, remaining in a kind of stunted state? That would be a shame, since the French market enjoyed an excellent dynamic in 2011, 2012 and 2013, absorbing up to 586 000 tonnes (12-month total for April 2013 to March 2014), whereas consumption was just 470 000 tonnes in 2010.

banana - france - supply
banana - france - supply

In terms of value, the French market is very closely shadowing its neighbours. So we might believe that the sluggishness in terms of volumes is the price to pay to prevent loss of added value. So reducing the supply would appear to be the only way to avoid crisis. This mechanism works, clearly. As proof of this, the estimated import turnover (based on volumes consumed, i.e. minus re-shipments) was up by 12 million euros in 2015, nearing the 400 million-euro mark.

However there is a risk of dying in good health, i.e. managing to uphold product value but with lower and lower consumption. Then again not promoting consumption in a commercially auspicious period means risking not being able to do so when the market turns. Ultimately, this is not encouraging commitment to qualitative, marketing or service innovation, etc. Everyone is sticking to their positions, praying for market conditions to remain exactly as they are; which of course is never the case for very long.

banana - france - supply
banana - france - supply

However, cross-referencing the price and volumes data (2010 to 2015 series) reveals a completely counter-intuitive phenomenon of positive elasticity, wherein demand is increasing with price! The observation of course needs to be made over a longer period and deseasonalised: factoring in major disruptive events such as steep falls in banana supply or a bumper seasonal fruit campaign, etc. Yet it is an interesting subject. Positive elasticity is characteristic of two types of product: one a so-called Giffen product (after Robert Giffen) which is a staple item; and the other a Veblen product (after Thomas Veblen) which is a luxury item. I’m sure we will all readily agree that the banana is not a luxury item, or more generally one not offering enough innovations to enthral the consumer. It is very different from the avocado; it is a staple of the fruits section, which could easily tolerate a higher price without adversely affecting purchases, and above all without endangering household budgets. If in addition some work was done to boost product value (quality, service), we could finally see the start of a virtuous cycle.

Otherwise, the market is in for a slow death. That is why the initiative of professionals from across the industry (from producers to distributors), aimed at setting up a French banana interprofessional association (AIB) could change things. We can hope that the professionals teaming up in this association will take sound market management measures, such as refraining from trying to rekindle the market via destructive promotions, with no obligation to do so from the supply/demand balance. We can dream that these collective initiatives (generic promotions, better knowledge of consumption factors, technical improvements, etc.) bring the banana out of its ghetto as the cheapest calories in the fruits section. We can dream that supermarkets stop taking it hostage to attract customers with low prices. We can dream that the intermediary operators stop falling into line with the dogma of the distributors that “the banana is a low-price market”.

banana - france - consumption
banana - france - consumption
banana - france - net supply
banana - france - net supply
banana - france - re-exports
banana - france - re-exports
banana - france - supply
banana - france - supply

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