Prunes Magazine nº 6 (english version)

magazine Santiago, Chile - January 2019

ExpoCiruelas Tackles Trends that Impact Chile and World Trade

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Editorial

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hile was the world’s number one producer and exporter of prunes in 2018.

With this prominence and commitment towards this healthy product in mind, we held our latest version of Expo Ciruelas Secas, which drew a noteworthy local and international audience.

With each presentation – where eCommerce and the digital age were matters of special interest to the growers and exporters in attendance – we verified that we are living in a swiftly dynamic, fascinating world that can change overnight, which means we have to keep our eyes peeled and our senses keen to pick up on new trends that can arise in all sorts of arenas, not just the food industry.

The challenges and opportunities for our industry are limitless. New markets are opening up, while other ones are closing, which doesn’t mean we can’t conquer them again. New technologies and ways to do business allow us to be just a click away from our end consumers. This isn’t some wave of the future, it’s happening today, enabling us to reach our customers’ tables and turn around the stagnation in world consumption we’ve experienced over the past few years.

But the best part of it all is still our super product. We sell health and wellbeing; we sell a bone mass regenerator; we sell fiber, vitamins and a series of antioxidant components.We sell a healthier future. So, let’s get out there and offer our product, communicating its benefits in a proper, responsible way.

We honestly believe that within this issue of Chile Prunes magazine, you will find very useful concepts and ideas.

Andrés Rodríguez Chile Prunes Executive Director

Chile Prunes Association, address Cruz del Sur 133 of. 703 Las Condes - Santiago - Chile (56 2) 24724783 - info@chileprunes.cl

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Editorial Board Pedro Pablo Díaz Andrés Rodríguez María Paz Soto Christian von der Forst Jorge English General Publisher Christian von der Forst Edition and Design PuertoC Comunicaciones & Marketing.

A magazine of Chile Prunes Association AG.

Advertorial

“Fadei, technological evolution on the consolidation in the chilean market”

By Juan Carlos Morsucci, President of FADEI S.A.

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everal and known are the benefits granted by Fadei prune pitting machines. It have been assimilating for more than 15 years by more and more producers around the world and particularly in Chile, where with the recent incorporation of six machines in Agrícola Siemel Ltda plant, Fadei becomes the world’s largest supplier of prune pitting machines.

Sebastián Bariggi, Administrator of Agricola Siemel states: “The incorporation of these equipments becomes immediately into a considerable reduction in production costs and productivity increase. This is explained by the replacement of many mechanical functions difficult to maintain and adjust, by modern electromechanical systems. On the other hand, the size of the machines has allowed us to reduce by half the number of units to be managed, compared to our previous supplier. The freedom that implies the non-existence of any type of rental unit, added to the possibility of being able to acquire spare parts from other suppliers, and that many components of the machines are of a commercial nature, make Fadei our best option.”

The company from Mendoza (Argentina) has for almost 5 years a subsidiary of its own, (MP Chile anonymous company) with the brand “Fadei Chile”, which allows trans-Andean users not to have to incur expenses of internment and freight when buying spare parts or equipment.

Fadei also incorporated this year in Chile, (MP Chile anónima) the permanent technical assistance in case it is required by any user. For this, a vehicle and a Chilean specialized technician with permanent residence in the country was incorporated, who is attentive to the requirements of the users, in what refers to spare parts and services and in a 24/7 service modality.

It should also be noted that users already know the free “Online” service offered

by Fadei for remote technical assistance.

For this, it is only necessary to connect a laptop to the machine that requires assistance.

The future: Morsucci ensures that far from stagnating what has already been achieved, its technical department is constantly working to continue with the constant evolution of its equipment, in this sense, 2018 machines are provided with automatic lubrication system, which assists the user in the task of maintenance and help to the greater useful life of critical parts, especially in plants that have extended working hours.

In this sense, Bariggi also states: “the process of the transition from the previous (rented) machines to the Fadei was simpler than it appeared, the advantages in terms of productivity, price and quality were already known by many colleagues, and this new service offered here in Chile with the permanent presence of a technician at our disposal, was a determining factor that confirmed that the decision in our final change was very successful “

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Briefs

Prune Industry Faces Swiftly Changing Consumer Trends

Why not sell Prunes on Amazon?

The digital age changed everything, including how to conduct business in the farming industry. Omnichannel, Customer Journey, Artificial Intelligence, Big Data, Mobile First and Marketplace are common concepts in this new world that growers, exporters and retailers of this particular food sector are going to have to get used to.

For this very reason, Carlos Honorato, digital sales manager for Ripley and eCommerce expert, was invited to this event to speak about “The Challenge of Selling Prunes in the Digital Age”.

The impact of eCommerce and the challenges that come with selling in the digital age; innovation and trends in packaging; the need to be a sustainable industry; the realities involved in exporting fresh fruit, as well as the marketing and promotional efforts needed to increase demand; and, of course, working on quality from the orchard until the end consumer.

These were some of the core issues discussed at the 6th Expo Ciruelas Secas “Times of Change”.

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‘Chile Week China’ Seals Deal Prunes were one of those benefitted industries. On Friday, November 5th, an agreement was signed between the VI Region of O’Higgins (which produces 68% of Chile’s exported prunes) and the Chinese province of Shanxi, an area inhabited by 40 million people.

Chile Week China 2018, which was held between November 1st and 6th in an attempt to deepen trade relations and promote Chile in China as a reliable supplier and an appealing investment destination, drew some interesting results for a number of different industries.

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Historically, the Chinese market has focused on raw materials when it comes to prunes, but, little by little, the finished product is making its way into Chinese supermarkets.

ChileWeek 2018 is conducted under the framework of a 34 billion dollar trade relationship.

In the main picture we see Chile Prunes Chairman Pedro Pablo Díaz along with Ambassador Luis Schmidt,

Minister of Agriculture Antonio Walker and the Intendant of the VI Region, Juan Manuel Masferrer. In the next picture, ProChile Director Jorge O’Ryan ProChile is accompanied by Luis Schmidt and former President Eduardo Frei.

Briefs

Prunes Present at SIAL, Europe’s Premiere Food Exhibition Promoting prunes in international markets, generating market information, product quality and, overall, optimizing the prunes industry both domestically and internationally, are four overarching objectives the prune industry will be pursuing in 2019. These points were unveiled by María Paz Soto, commercial projects manager for Chile Prunes, at the SIAL Exhibition in Paris, France.

This event, which is held at the Parc des Exposition de Villepinte in Paris between the 21st and 25th of October, is the most important food tradeshow in Europe (along with Anuga); therefore, having 13 Chile Prunes member companies participate is no small feat.

“The exhibition was a good opportunity to meet new clients we can close long term deals with”, says Sebastián Plaza, sales & product manager for Frutexsa. Andrés Santa Cruz from Surnat was pleased by the high quality and level of decision makers that attended the tradeshow, both known and prospect. Agustín Marín from Onizzo also added that “the exhibition has drawn lots of sales and served as a great setting to prepare for the 2019 season”.

Sector brand Prunes From Chile had their own stand inside the Chilean pavilion organized by ProChile and it was run by Chile Prunes. Approximately 7,200 companies from 109 countries showcased their products at SIAL.

Chinese Journalists Visit Chile Bet ween the 8th and 15th of December, 2018, our country was visited by a delegation of Chinese journalists from important media outlets specializing in food to learn firsthand where and how the products that reach Chinese tables are produced and exported.

One of the activities organized

by Chile Prunes was a visit to a processing plant and orchards owned by Sofruco Alimentos in Peumo, 30 kilometers from Santiago. “The journalists seemed very interested in the processes; they didn’t know much about Chile

and were therefore pleasantly surprised by the high quality of our industry”, said María Paz Soto, commercial projects manager for Chile Prunes.

This visit ser ved as an opportunity to strengthen ties between trade associations and also between trade associations and the government, including joint efforts to develop these types of promotions. The visit was organized

by Chile Prunes along with Fruits from Chile, ChilePork, Chile Olive Oil and Chile Nut, not to mention the support of ProChile.

How to Break into Retail and New Packaging Trends Nicolás Leal, CEO of LapImport USA, issued a series of comments that could be helpful not only to prune exporters in Chile, but across the world.

First, he says, we have to consider a finished product with extra added value. Today, prune producers face several different problems, and one of them is being a single product. “To earn a spot on retail shelves you need more variety, diversified supply and to not focus solely on prunes, but also on other nuts and dehydrated fruit, enabling you to generate and consolidate a brand by having a stronger presence”.

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6ta ExpoCiruelas

Prune Industry Faces Swiftly Changing Consumer Trends

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Cover Topic

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he impact of eCommerce and the challenges that come with selling in the digital age; innovation and trends in packaging; the need to be a sustainable industry; the realities involved in exporting fresh fruit, as well as the marketing and promotional efforts needed to increase demand; and, of course, working on quality from the orchard until the end consumer.

miss the “bullet train” international trade is becoming, not to mention the ever-changing and demanding preferences shown by consumers, which implies joint public-private efforts, cooperation within the industry (nationally and internationally) and a great deal of responsibility, according to Chile Prunes Chairman Pedro Pablo Díaz.

These were some of the core issues discussed at the 6th Expo Ciruelas Secas “Tiempos de Cambio” (Times of Change), which drew a crowd of 250 sector-related stakeholders, including growers, exporters and service and consumable suppliers, among others. Representatives from Argentina and Spain were also in attendance.

This executive’s words have a significant amount of influence, as he represents a trade association and sector that, according to the latest available information, became the world’s number one prune exporter and producer in 2018.

All of these issues have to be tackled at the same time if you don’t want to

For this expert, one positive aspect among all of these major changes is that “with the world becoming more open, there are new ways to run operations and sell. A few days ago

A crowd of 250 people, including producers, exporters and suppliers, among others, went to the Expo.

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WORLD CONSUMPTION (TONS) TONS 300.000

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50.000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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2001 2002 2003 2004 2005

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1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

I was listening to someone say that ‘we are always subjected to the fact that supermarkets are the ones who determine the value of our products’.That’s how it used to be, but not anymore. Today, there are huge, operational examples around the world of companies that are making sure consumers are the ones who determine the value of products.

The unimaginable progress of electronic trade channels allows us to reach consumers directly with our products, message, packaging, narrative and added value.This new way of selling helps us all grow and these benefits are a huge catalyst for any industry”, stated the Chile Prunes Chairman.

Challenges for Everyone

43 41 39 37 35

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At an international level, the challenges are the same ones we’ve seen over the past few years: maintaining high product quality and strengthening research to provide the market with evidence of the nutritional and health-related benefits prunes have to offer.

Sofía Silva, regional director of ProChile, sees local and global challenges as a mixed bag, especially highlighting “the research work

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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2001 2002 2003 2004 2005

Another challenge that has led to good results in Chile is the relationship between producers and exporters, as both parties understand that the common denominator for the entire industry is “selling”. For this very reason, both sides offer training and strengthen their bond through open communication channels.

WORLD PER CAPITA CONSUMPTION (GRAMS)

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

The industry’s challenges are both domestic and international. In Chile’s case, in order to “exist” and stand out, this trade association has had to constantly remind authorities about the worldwide importance of the Chilean prune, which, in the long run, enabled the obtainment of public funds / financing.

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important buyers are Germany (US$ 49.1 million), Italy (US$ 35.8 million) and the United States (US$ 28.1 million), followed by Japan, Russia, Mexico and the United Kingdom.

Nevertheless, some countries have shown a dismaying decline in consumption over the past few years, such as Russia (-58.7%), Brazil (-29.5%) and Japan (-23.4%). Even Germany, who sits atop of the list, has suffered an 11.3% drop-off in the last 5-year period. On the contrary, the most significant increase was recorded by the United States, proving that not only are they a great producer, they are also a great consumer of this product, because between 2013 and 2017, they went from importing US$ 3 million to US$ 28 million, a growth rate of 825.6% for the period.

Andrés Rodríguez, executive director of Chile Prunes.

conducted at different levels to showcase prunes’ superfood qualities. However, we also need to see progress in packaging, eCommerce and volume. Partnerships are very important in this last point, especially among small farmers”.

Production and World Trade Regarding the current status of production and world trade, Andrés Rodríguez, executive director of Chile Prunes, stated that global consumption has remained stable since 1991 until today, but, given the growth of the world’s population, there has been a clear drop in per capita consumption, decreasing from 40 grams a year to just 29, a situation that should concern all of us as an industry.

In 2017, the world produced 203,419 tons of prunes, 37.6% of which came from Chile, a country that presents little to no year on year variation. The United States, France and Argentina are the other three major producers in the world.

In terms of imports, they added up to US$ 525.8 million in 2017, practically the same number as 2016. The most

A tasty break with prunes.

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Bruno Ceroni, commercial manager for GoodValley, referred to the possibilities Chile has to continue recovering pricewise in international markets. “We need to align our quality criteria in orchards and processes and find a trade partner that enables us to reach a better price. Traceability is also critical; it constitutes a solid foundation, as do certifications. Another undeniable truth is that oven-dried fruit pays better”.

Part of the authorities of the Congress.

How do we face the future? For Andrés Rodríguez, we have to continue working on improving quality, increasing our positions in Asia -especially China, India and Japan- , creating new trade channels, working on increasing global demand through promotion and adding more value through packaging and pasteurization, among other ideas.

During the final roundtable session there was an important reflection on the need to increase investments in promotion, but in an innovative way, adapting to today’s new channels that allow us to reach the consumer in a fast, accessible way. “In these times of change, we all have to work together to develop a greater demand for prunes in Chile and the world”, concluded Chile Prunes Chairman Pedro Pablo Díaz.

Speaking of Asia, Juan Manuel Masferrer, intendant for the VI Region and therefore top authority of the area that produces 68% of Chile’s prunes, emphasized the possibilities offered by China: there are provinces inhabited by 40 million people our products still haven’t broken into, highlighting the importance of a recent agreement signed with the Shanxi province.

In terms of carry-over stock, it has also experienced a strong increase since 1991. In fact, we began to reach our peak in 2017, quickly moving from 67 thousand tons to 196 thousand in 2018, mainly due to the high level of carry-over stock in France, and to a lesser degree, the United States.

From Sustainability to Traceability On a different note, Isabel Quiroz, executive director of iQonsulting, presented two in-depth studies about the use of renewable energy, trends and sustainability demands.

“The world wants sustainable, quality products. People are concerned about their health and are looking for information about what they eat”.

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Chile Prunes Chairman, Pedro Pablo Díaz.

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Digital World

Why not sell Prunes on Amazon?

We have to showcase our products to the online world, which is important “not only for sales, it is also a chance for marketing, creating an image and being where the consumers are” according to our eCommerce expert.

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he digital age changed everything, including how to conduct business in the farming industry. Omnichannel, Customer Journey, Artificial Intelligence, Big Data, Mobile First and Marketplace are common concepts in this new world that growers, exporters and retailers of this particular food sector are going to have to get used to.

For this very reason, Carlos Honorato, digital sales manager for Ripley and eCommerce expert, was invited to this event to speak about “The Challenge of Selling Prunes in the Digital Age”. His presentation drew positive remarks from the audience in attendance at the 6th Expo Ciruelas Secas, “Tiempos de Cambio” (“Times of Change”), which was held in Chile in late November.

“When I logged onto the site, I couldn’t find anything about Chilean prunes; nothing to show me that Chile is the world’s number one exporter and producer.

Being there would not only be good for sales, it is also a chance for marketing, creating an image and being where consumers are looking for products. It’s a chance to tell importers ‘I sell on Amazon, too’”, according to Carlos Honorato.

For our specialist, this is an important component for exporters – not the only one – to better showcase your products. “We have to showcase our products to the online world”, he adds.

The power behind this concept is not sizeEDuring his brilliant presentation, he posed a question: related Why not sell prunes on Amazon? Today, this company controls an 18% share of the global online groceries market, doubling the world’s historically recognized number one supermarket chain: Walmart.

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The prune industry cannot afford to be left out of the eCommerce world, and this can be illustrated by two undeniable examples:

Digital World

In 2016, 15 million products arrived from Asia to Chile, and in 2017, this number swelled up to 50 million. “You can order any product you want from abroad.

Trade is open and it forces us to take our business overseas, to the whole world, and the best way to do this is through eCommerce.

technology, size doesn’t matter.

On the Internet, large and small companies are all the same size. In fact, sometimes it’s the other way around: big companies with heavy assets many times end up lagging behind. The greatest threat are new competitors not classified as competitors”.

Another example: during AliExpress’s famous 11.11 global shopping festival, they earned 1 billion dollars in sales during the first hour. Meanwhile, in 2018, Chile as a whole will net approximately 5 billion dollars in sales…“this is the true power behind this concept”.

This point can be illustrated by companies that started out small and are now dominating their respective categories. All you have to do is look at what’s happening with large, recognized hotel chains versus Airbnb. The same thing is happening in other industries with Amazon – who we have to face in the world of retail –, Spotify, Netflix and, why not, Cornershop”.

The bright side is that size is irrelevant when it comes to conquering markets. “Thanks to

“The greatest threat are new competitors not classified as competitors”.

This last company – according to our expert – created a paradigm shift, and not just through technology. Cornershop has a good app, but their key lies in people… this isn’t a new “big bang”.

Along with stating that size doesn’t matter, this executive would like to extend an invitation to break down paradigms and constantly reinvent yourself, because “if you’re not thinking about this all the time, you’re going to get stuck in the past”.

Today’s marketplaces are undoubtedly one way in which paradigms have been broken down over the last few years. This collaborative way of doing business in which in order to sell a broader array of products on their website, with more variety or new product categories, a retailer opens their doors to others who may be direct competitors, might seem “a little crazy. A company can be an ally and a competitor at the same time. More than 50% of large eCommerce companies have an online marketplace.

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Commercial Analysis

Suggested by Bruno Ceroni, Good Valley Commercial Manager

Measures to Improve ‘Price’

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n 2018, production and exports declined in the United States due to – among other issues – the growth of their domestic market. Within a stable global demand, Chile is covering the market left over from the US, increasing their supply.

However, this increase in Chilean export destinations, which has ballooned up to 80 countries, does not reflect an increase in demand or better prices, notes Bruno Ceroni, Commercial Manager at Good Valley; instead, it appears that the customer is reaping all the benefits by buying prunes of equal quality at a much lower price.

The ‘price’ issue is concerning. Despite the recognized quality of the Chilean product, our prices represent 60% compared to what the United States gets. In other words, if Californians get paid 1, Chileans get 0.6 for the same product. (See graph).

We need to align our quality criteria in orchards and processes and find a trade partner that enables us to reach a better price.

Traceability is also critical; it constitutes a solid foundation, as do certifications. Another undeniable truth is that oven-dried fruit pays better, said Mr. Ceroni.

¿How can we bridge the price gap between the United States and Chile? What can be done to take advantage of market opportunities?

Average Price, Chile vs USA (USD/Kg) 4,50 4,19

4,00

4,32 3,95

3,88

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4,08

3,24

3,00 2,67

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2,56

2,51

2,58

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2011/12

2012/13

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USA average sale price USD/kg Source: Developed by Goodvalley with data compiled by ODEPA + ERS USDA

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2014/15

2015/16

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CHILE average sale price USD/kg

2018/19

Commercial Analysis

No. of Countries that Receive Chilean Exports 85 80 75 70 65

60 55 50 45 40

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Traceability is critical “If a customer is demanding it, the least we can do is provide them that information. It is fundamental that they know where the fruit is coming from”.

Source: Developed by Goodvalley with data compiled by Customs

For Bruno Ceroni, the main points are: First of all, quality criteria need to be aligned for orchards and their processes.

that this fruit is rich in energy, fiber and potassium, among other qualities, making it a super healthy food?

Adds the Good Valley executive.

Second, we have to work on the traceability of each and every product. If a customer is demanding traceability, “I think the least we can do is provide them that information. It is fundamental that they know where the fruit is coming from”.

Finally, Bruno Ceroni also adds that we have to continue looking for scale economies and lowering costs, which is directly linked to the industry acting as a united front in search of a common goal: “We have to work on bringing down costs that end up eating away at your income. We have 70-80 exporters, many suppliers and, to top it all off, we’re fighting amongst ourselves, many times offering our products to the same customer”.

Certifications are another essential, basic issue. “We have to work on this issue as an industry. There are many standards that are very similar, such as Halal, BRC Food Certified, Kosher and Global G.A.P. We need to explore what’s out there are believe in our own products. We need to make it known that Chilean prunes are not just special, they’re sensational”.

Another key point is oven drying, something that sets us far apart from the United States. “Unfortunately, in Chile no more than 20% of the fruit is dried in ovens, and the people who have the technology don’t use it, they don’t see the benefit. “For the last three years, we have been noticing that oven-dried fruit pays better.

In the end, everybody wins and customers thank and reward this trait.

Some other points we have to keep working on and show progress are adding value to the product, offering diversity, breaking into eCommerce, strengthening trade associations and communicating the benefits our product has to offer. “How could we not tell the market

Points we need to work on 1. Aligning quality criteria of orchards and processes 2. Providing traceability 3. Having certified products 4. Increasing the percentage of oven-dried fruit 5. Adding value to the product 6. Looking for scale economies and lowering costs 7. Strengthening trade associations and state organizations

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Practical Experience

Francisco Donoso, grower, performed an in-depth analysis of this option

Chilean Prune Growers and the Advantages of a Mixed Harvest

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he option of having a mixed harvest of fresh and dehydrated products for export is a choice being pondered by more Chilean prune growers every day. Francisco Donoso, one of said growers, presented a lecture at Expo Ciruelas Secas 2018, and said that, in his opinion, this option represents “a great opportunity to complement prunes, but it is complex work that must be performed responsibly”.

According to the producer, this method allows you to diversify risk, as it broadens the options available to select the fruit that can be exported in dehydrated form and fresh, and it improves profitability per acre. However, he also warned than in order to be successful when using the mixed harvest approach, you have to be very careful when it comes to size (delivering fruit in the 60-70 range to the processing plants), make sure that as many plums as possible have their stem, maximize orchard management and reach cold processing as soon as possible.

“This will allow you to reach your destination with a better product”, he said.

Costs caused by different variables

He also shared his cost projections for loss of fruit during harvesting. “Net losses are 300 dollars per hectare. If we export 6,000 fresh kilos per hectare, the cost per exported fresh kilo would be 0.05 cents”. This calculation was based on an average density of 500 plants per hectare and a fruit loss of 1.5 kilos per tree, among other factors.

During his presentation, Mr. Donoso also tackled the costs associated with farming plum trees,

He noted that adding up orchard costs (0.47 cents), plant costs (0.125 cents) and the costs associated

Francisco Donoso also has an important recommendation: “Don’t get overeager and harvest too early”.

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providing a few details about Chile’s current situation. For example, harvesting plus the discarding process costs approximately 60 cents on the dollar.

“Discarding has no commercial value, at least for now. It only increases orchard costs”, warned the grower.

Practical Experience

to losses during the harvest (0.05 cents), we reach a total cost of approximately 0.645 dollars per fresh exported kilo.

He pointed out that considering that the sizes exported as fresh fruit are large and the expected net returns for these sizes in dehydrated form are 0.45 cents compared to the fresh product (US 1.5 / 3), “the balance we have to reach to determine whether to export in fresh or dehydrated form would be a return of US 1,095 for fresh plums”.

Finally, Mr. Donoso stated that export expectations for fresh plums are high in the Chilean industry due to prune prices being “fairly constrained”, a situation he warned will lead many to want to export all of their fruit, which, in his opinion, would apply pressure on sales in China. “We have to be careful”, he concluded.

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Productive Analysis

Juan Pablo Sotomayor, Chile Prunes Technical Committee member

In 2019, Chile will Produce More and Better Fruit in a Favorable International Context

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early 13 thousand hectares (32,123 acres) of Chile’s land is covered by European plum trees. According to the latest fruit survey, these plantations are highly concentrated in the central part of the country: two thirds are in the Region of O´Higgins, 25% are in the Metropolitan Region and a little over 6% is contained in the Maule area.

According to Juan Pablo Sotomayor, technical manager at Frutexsa and member of the Chile Prunes Technical Committee, the importance of these numbers lies in the fact that rainfall, frosts or hail can be more or less damaging to the industry depending on whether or not they take place in areas with a large concentration of plum trees.

He presented these facts during his lecture at the 6th Expo Ciruelas Secas, during which he conducted a production analysis of last season and revealed his forecast for Chile’s 2018-2019 harvest.

“Colchagua province alone represents 41% of Chile’s plum trees, and whatever happens there has a huge impact on Chile’s entire production (…). It’s important to analyze these numbers so that whenever weatherrelated events take place, we can have a clear notion of the implications they have depending on their location, because if a frost hits an area with few orchards, the impact will be irrelevant”, explains Sotomayor.

Optimistic Outlook for 2019 When it comes to production, Juan Pablo Sotomayor estimates Chile’s prune yield for 2018 at 86 thousand metric tons, with an average size of 74.1. “It was a good season in terms of fruit, better than previous years,

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with better sizes. We have to keep this up; we need to continue working on perfecting our pruning”, said the expert.

What are his projections for 2019? With the information available at the time of this interview, he is estimating that Chile could reach up to 94 thousand metric tons of production. This forecast is based, among other things, on the abundant flowering displayed by plum trees, which usually takes place within the foreseen time window, and on adequate control on the part of growers.

This is an optimistic outlook considering that the weather was uncooperative. During September, orchards experienced lots of cloudy, rainy days. However, “even with all of these adversities, fruit curdled relatively well” according to Frutexsa’s technical manager. It also hailed a while later, but the impact of this phenomenon was hardly relevant. “I doubt more than one thousand tons

Productive Analysis

will be affected, because there are no significant plantations where these events took place, although a few specific growers were hit pretty hard”, he noted.

With all of that said, 2019 should be a period of abundant fruit, which, according to Sotomayor, implies major challenges. What is the main challenge? “Sending good fruit to the plants”, he declares.

International Context Chile has managed to position itself among the world’s leading plum and prune producers and exporters, competing head to head with the United States for global leadership.

However, this position involves not only being leaders in terms of quantity, but also in terms of quality and taste.

In this sense, Sotomayor noted that production in the United States plummeted by nearly 24% in 2018 – mainly because of weather problems (the planted surface area remained constant compared to 2017) – and France has increased its plum tree acreage over the past five years, but,

Plums and Prunes: Two Industries that Complement One Another Juan Pablo Sotomayor is concerned by the fact that the plum and prune industries are acting as rivals. He presented this concern during his lecture, pointing out that they complement one another as businesses, looking out for each other. In this sense, he said that pesticide management must take both businesses into account.

“I see plum exporters excited about following their programs without even checking what’s left over for prunes. They have to be careful, because if an unregistered pesticide is used, it can show up later and lead to rejected shipments”, highlighted the expert.

He also clarified that discarded export-grade plums are no good for prunes, not because of a size-related issue, but because they don’t contain sugar.

more importantly, they are making innovations in production that are leading to improved yields per hectare, to the point that today the French are suffering from overstock due to over 50 thousand metric tons being produced every year.

“The French reached up to 12 thousand hectares (30,000 acres) of well-run, organized orchards and are now making significant changes to their new plantations. They are looking for shorter production times by mechanizing everything and using smaller infrastructure adapted to these orchards”. When it comes to harvesting, they do 5 to 8 passes,

unlike Chile, where we try to get all of the fruit out at once. There’s a lot to learn that could help us improve how we do things”, said Sotomayor.

Sotomayor also focused on competition from Argentina. He noted that although this country has a significant amount of land planted with plum trees (around 15 thousand hectares [37,000 acres]), their production is usually highly irregular due to weather-related events. In fact, forecasts for this year are projecting a drop in production of between 60% to 70% due to, among other issues, severe hailstorms and frosts.

Cristóbal Contreras from Ciruelas Chile (VI Region Growers Association)

Juan Carlos Cerda, invited by SuperFruit

What I found most interesting was focusing on fresh harvesting, as it was proven with statistics by someone with 15 years of experience that, although it’s an option, you have to think twice before getting into this business by analyzing its profitability. The second most interesting par t for me was the business side focused on electronic commerce, packaging and the things we need to develop to please our customers.

This is my third year here. I found everything related to technology and sustainability ver y interesting; that part was extraordinary. I also found that everything said in terms of getting out there and selling ourselves better as a country was highly relevant. The part about fresh fruit was interesting and innovative as well, especially because it’s something we’re all very involved in.

Claudia Marangunic, from Onizzo Exportaciones I learned a lot about exporting prunes from three different perspectives: growers, expor ters and processors. It was very enlightening to hear each presentation and get a snapshot of our current situation, see how positive the season has been and know what to expect for next season in terms of ‘numbers’.

Martin Basile, from Pampa Sur, Mendoza Attending this annual event is very impor tant, as it brings together growers, expor ters and key stakeholders representing the Chilean and Mendoza industry around the world. We get to obtain information that is very valuable to us.019

Innovation and Social Tendencies

Nicolás Leal, CEO of LapImport USA

How to Break into Retail and New Packaging Trends The four main pillars of packaging are communication, design, use and materials, but the first one is by far the most important.

N

icolás Leal, CEO of LapImport USA – a brand with lots of experience in the US market, especially introducing Chilean products to retail outlets – issued a series of comments that could be helpful not only to prune exporters in Chile, but across the world.

First, he says, we have to consider a finished product with extra added value. Today, prune producers face several different problems, and one of them is being a single product. “To earn a spot on retail shelves you need more variety, diversified supply and to not focus solely on prunes, but also on other nuts and dehydrated fruit, enabling you to generate and consolidate a brand by having a stronger presence”.

Large investments are another requirement. Breaking into huge markets requires huge investments to promote your product at the point-of-sale, digitally, etc., and to obtain these huge investments, partnerships and publicprivate projects are critical. “If the problem is not being willing to make large investments, partnerships can be created or you can go out and raise 1, 2 or 10 million dollars, but major investment is a must”.

According to the LapImport executive, another problem is lack of knowledge. “You don’t just show up and start

020

exporting a brand. First you need to collect information, get to know the regulations for entering a market, the formats being used to sell products, the price range you can operate in, certifications and know who your competition is, among other issues”.

On the other hand, when there is a low level of differentiation, tactics can be employed to help our products stand out from the competition. This can be achieved, for example, by removing potassium sorbate from the product and adding a natural ingredient, such as maqui. “This way, we can compete at a different price range, because we are a different product”, says Nicolás Leal.

“Breaking into huge markets requires huge investments, and to obtain these huge investments, partnerships and publicprivate projects are critical”.

Innovation and Social Tendencies

Industry Family Tree

the ‘wining points’ or key traits that highlight the benefits of each product, something I haven’t really noticed in the prune industry”.

More Specialized, Focused

· Retail · Grocery Retail · Natural & Speciality Retail

Natural & Specialized, Retail: Whole Foods Market Wild Oats Trader Joe`s

Grocery Retail: Albertson`s Safeway Publix Kroger

Retailers - Super Centers: Wal-Mart

According to the pyramid (thinking about the American market) one very real opportunity for producers to improve pricing is to advance towards specialization: the bottom of the pyramid shows high volume and low specialization, while the top of the pyramid, which growers should aspire to, represents stores that reward “natural, specialized products”.

Packaging that Communicates Attributes To break into large international markets, packaging – sustainable and

Less Specialized, All Inclusive

environmentally friendly – plays an essential, differentiating role. When it comes to this issue, the LapImport USA CEO describes four key pillars for packaging: communication, design, use and materials that respond to market trends, but the first one is by far the most important.

For this very reason, Nicolás Leal invites prune exporters to explicitly communicate product traits in their packaging. “When we don’t have a large budget, we have to communicate the product over the brand, emphasizing your attributes,

In addition, says the executive, our packaging has to use the language of our product’s target destination.

Other important communication-related issues include clear messages, a visually clean product and certifications, which are critical from a commercial point of view more than a quality one.

Regarding other foundations of packaging, the LapImport executive mentioned design. Today’s trends include using transparent materials, keeping things simple, pastel colors, informal wording and pictures, among other issues. Speaking of materials, the 3 R’s are Reduce (from triple laminated to double laminated), Recycle (eco-packaging) and Reuse, as the market expects materials to be able to be used again. Regarding the fourth pillar, use, any efficiency associated to logistics and transportation will always be welcome. The idea is to fit as many products as possible inside a container.

Rosario Larraín from Prunesco

Facundo Lozano, from Agrícola Lozano y Ureta

It is important to catch up on new promotional technologies.

This concept was emphasized heavily through websites, online sales and how to develop promotions to increase consumption, the most important issue weighing over our industry in the past few years: we see that world consumption is stable, so when we have two good consecutive harvests, we end up overstocked, which leads to a price drop.

It was ver y interesting to meet, share experiences and discuss what’s coming in the future. The forecasts, the plagues that are coming and new ones that are being discovered were also very interesting, as were the export markets that are opening up for fresh fruit, something us growers are paying close attention to. We also have to try and dry our products in ovens, even if it’s more expensive.

Luz María Hernández from ProChile It was a ver y comprehensive seminar that mixed trade, market information and where we want to be as an industry.

We saw how electronic commerce is being introduced to the market, a channel that has not been explored enough and is coming whether we like it or not. We have to get on this train to make sure we don’t lag behind in terms of world trade.

021

Social

Pictures of a great meeting These pictures show just how fun and diverse Expo Chile Prunes 2018 was. It was loaded with original and/or important issues for the industry and also hosted coffee breaks that served as a perfect opportunity to catch up with friends and acquaintances and, of course, do business.

Members of the Round Table, make analysis and conclusions of the congress.

Romina Caroca, Frederick Corthorn, Ximena Vargas

Pablo Aspillaga, Ernesto Comparini, Cristián Olivos del Río.

022

Luis Marcelo Vergara, Pablo Campino, Eduardo Bustamante, Cristián Araos.

Several brands were present with stands at the Expo.

Social

Camilo Avendaño, Viera Martínez, Juan Eduardo Labbé, Thomas Jackson, Christian Miranda, Jorge González.

Important brands and over 250 people participated in the sixth version of the Expo.

José Araujo, Sergio Morbidelli, Alain Boulet, Francisco Araujo.

Facundo Lozano, Miguel Cerda, Juan Guzmán, Juan Carlos Cerda, Mauricio Toro.

023

Sector numbers

Chilean Prune Worldwide Export

*To December 23rd (SOURCE: ODEPA) YEAR

UNIT

VOLUME

ANNUAL VARIATION

FOB IN U$

2018*

Kgr.Netos

70.694.809,50

-7,47%

160.558.000,00

ANNUAL VAR.2

MID. PRICE

2017

Kgr.Netos

76.405.433,00

8,99%

175.013.300,00

10,8%

2,29

2,27

2016

Kgr.Netos

70.104.829,94

9,06%

157.948.818,50

-21,2%

2,25

2015

Kgr.Netos

64.278.564,14

-0,31%

200.336.443,15

-14,1%

3,12

2014

Kgr.Netos

64.478.292,93

2,86%

233.350.663,38

54,5%

3,62

2013

Kgr.Netos

62.684.098,89

-18,73%

150.991.753,27

5,97%

2012

Kgr.Netos

77.131.926,87

142.481.542,38

1,85

2006

Kgr.Netos

42.052.782,12

94.329.966,89

2,24

2,41

Exports per month 2018 Producto

Ciruelas Secas

Código SACH

08132090 ene.

VALOR VOLÚMEN

SOURCE: ADUANA

Valor en miles de dólares y volúmen en kilogramos feb.

mar.

abr.

may.

jun.

15.817,30

8.395,00

6.627,60

8.542,50

11.341,90

13.363,70

6.744.194,30

3.676.301,10

2.886.654,00

3.653.296,80

4.882.304,80

5.856.398,70

jul.

ago.

sep.

oct.

nov.

dic.

1-7

VALOR VOLÚMEN

8-15

TOTAL 16-23

16.696,30

20.782,30

13.724,10

22.290,60

14.449,10

3.869,10

2.593.50

2.142,70

160.558,00

en miles

7.391.852,40

9.473.717,70

6.048.398,90

9.798.320,70

6.611.066,10

1.609.834,10

1.148.596,00

960.374,10

160.558,00

en kilos

Source: ODEPA with information from the National Customs Service.

Figures subject to revision due to value variation reports (IVV).

Map – concentration of prune exports per country in terms of value (in terms of value) List of importing countries for the selected product in 2017 Gloss: 081320 Prunes, dry

> 24.771

9.908 - 24.771

4.954 - 9.908

SOURCE : TRADE MAP

2.477 - 4.954

495 - 2.477

0 - 495

N.A.

*Valor Importado. Miles de USD

024

Sector numbers

Destinations Ranking

Number of destination countries for Chilean exports 72 61

74

77

75 69

66

77

80

2017

81 N°

73

FOB en US$

Volume

1

Country USA - EE.UU.

20.304.244

11.358.226

3

México

20.783.555

9.478.250

2

Polonia

16.663.551

7.350.520

5

Reino Unido

17.025.670

6.723.700

4

Rusia

13.613.018

6.026.718

8

Italia

14.382..277

5.003.857

7

Alemania

13.468.867

4.947.880

6

Brasil

5.208.632

3.840.623

9

España

11.943.974

3.697.765

10

Holanda

5.622.179

2.070.131

2018

2107

2016

2015

2014

2013

2012

2011

2010

2009

2008

2015

Consumption of prunes in the world (TON) TONS

N°

Description Volume

FOB in US$

1

Mexico

25.677.111,66

3

USA. - EEUU 8.938.829,44

24.454.420,98

2

Polonia

4.926.390,00

14.839.679,91

5

Reino Unido

4.562.494,00

15.254.920,82

4

Alemania

4.393.460,00

15.669.392,22

8

Rusia

4.380.396,00

13.249.530,66

7

España

3.700.910,00

13.249.239,18

6

Italia

3.687.430,00

13.314.238,95

9

Australia

1.419.265,00

4.900.197,83

10

Venezuela

1.320.000,00

5.114.046,04

9.197.919,00

300.000

250.000

2012

200.000

N°

150.000

100.000

50.000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

2001 2002 2003 2004 2005

YEARS

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

0

Description

Volume

FOB in US$

1

Rusia

17.363.203,00

33.283.418,68

3

Mexico

8.204.610,00

13.091.701,98

2

Polonia

5.933.515,00

10.871.875,31

5

Alemania

5.445.067,50

11.301.756,59

4

Brasil

4.791.741,35

6.509.120,58

8

Italia

3.896.180,00

8.011.353,68

7

Reino Unido

3.097.015,00

5.861.188,35

6

España

2.951.325,00

5.144.896,11

9

Argentina

1.831.020,00

1.684.632,20

10

Lituania

1.686.140,00

3.035.953,61

025

We invite you soon to read our edition Nยบ 7 and if you want to contribute with topics or to advertise, write us to info@chileprunes.cl

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