Chiquita Brands International has said that average pricing for its bananas in its core European markets fell 13% in the first two months of the 2006 second quarter (10% in local currencies).
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The company attributed the lower average European prices in 2006 to the impact of regulatory changes in the market that have encouraged certain new competitors to enter the market, causing pronounced year-over-year declines at the low end of the price spectrum.
“In addition, April-May 2005 pricing had been particularly robust, up 19% on a local currency basis (up 28% on a US dollar basis) versus April-May 2004, making year-over-year comparisons in 2006 more challenging,” the company said.
In January 2006, the European Commission implemented a new regulation for the importation of bananas into the European Union. It imposes a tariff rate of EUR176 (US$221.29) per metric ton on bananas imported from Latin America, up from EUR75 per metric ton under the former regime, and eliminates the quota that had previously applied to Latin American banana imports.
The volume of bananas the company sold in its core European markets fell 2% overall in the April-May 2006 period; while volume declined 5% in April, it rose 2% in May.
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By GlobalDataThe company attributed to overall volume decrease primarily to a strategic focus on selling premium-quality fruit: the company sold 3% more premium Chiquita-label bananas and 30% less lower-margin second-label fruit during the period versus the same two months in 2005.
Meanwhile in North America average banana prices in the US and Canada rose 10% in the first two months of the 2006 second quarter versus the same period last year. The company attributed the increase primarily to successful renegotiations of customer contracts at higher pricing levels as well as to the impact of the company’s surcharge policy initiated in the fourth quarter 2005, which is linked to the average market price of marine bunker fuel. However, banana volume fell 11% in the two-month period due primarily to the continuing disruptive impact of fourth quarter 2005 storms, including Tropical Storm Gamma and Hurricane Stan, on sourcing and logistics. The company reiterated that it expects banana supply to normalize by the third quarter 2006.
In the company’s Fresh Express retail value-added salads business, volume rose 6% in the two-month period, as new product introductions, merchandising and value-added selling continued to drive year-over-year growth. Net revenue per case rose 3% compared to the year-ago period.
In Asia Pacific and the Middle East banana prices in this region rose 1% on a US dollar basis in April and May 2006, compared to a year ago. The volume of bananas the company sold in Asia Pacific and the Middle East rose 15% year-over-year in the two-month period, due to growth in markets outside of Japan.
