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Frozen produce market: why nobody is buying frozen berries despite the sharp price decline?

“Why are our regular buyers of frozen fruits and berries silent?! Why are they not buying anything from the beginning of the season until now, end of January 2023?!  Prices of many products have fallen sharply and there still no demand?! Are they really waiting for even more price cuts?!” These are the most typical questions, which puzzle participants of the frozen produce market in the 2022/23 season for the EastFruit region.

In this article, we will try to answer this question, which is now worrying many “frosts” in Eastern Europe and Central Asia.

It is likely that the answer is much simpler than it seems to many – customers of buyers of the frozen berries and fruits have reduced their consumption. And who are the customers for these products? The customers for frozen berries and fruits come from the dairy, confectionery, bakery, and other food industries and, of course, the supermarket chains.

It is important to note that large traders of frozen fruits and vegetables usually have some stocks of frozen products. In the normal circumstances stocks are being actively updated but now, for a number of positions, the stocks do not move. The stocks of frozen fruits are frozen. Against the backdrop of rising electricity costs, these stocks, purchased at high prices, are a serious liability that brings only headaches and additional storage costs, not to mention the funds frozen in them. Buyers are not communicating with usual suppliers because they do not know what to say.

The global recession impacts consumer preferences. Declining purchasing power of the end consumers in most countries while costs are rising seems obvious. Frozen berries have begun to compete with alternative products in the consumer basket, and they lose this competition because of their high cost. Now it is no secret to anyone that the market for frozen berries this season has decreased in size significantly.

Large buyers of frozen produce, as well as the end consumers, are frightened by high energy tariffs, inflation, and a general decline in living standards. Today, frozen raspberries or blueberries can be perceived as a product that you can do without, which cannot be said about bread, milk, cereals, pasta, or vegetables.

It should be noted that while consumption of frozen berries is declining, consumption of frozen vegetables is growing. The reason is probably the same – vegetables are included in the daily diet and are not too expensive, but it is quite possible to do without expensive berries.

Read also: Frozen raspberry market in the EU – when will the free fall in prices stop?

Who is more resistant to the market fluctuations of frozen produce – large or small companies?

Small companies often feel that larger companies have more resources and more ability to deal with a crisis. However, they forget that the losses from downtime or wrong decisions are also much greater for large companies than for small ones, which makes large players less flexible to market fluctuations. That is why, even on a macroeconomic scale, countries with a higher share of small and medium-sized businesses show higher stability during the crisis years. This might also be the case with business of frozen produce – smaller companies may show better resistance and flexibility and will be able to adapt faster.

However, let’s return to the “silence” of buyers of frozen fruits and berries. Silence, in our opinion, is not the absence of activity. Moreover, today the silence of buyers is a peculiar and very active process. They are not just silent, they are in the process of cleaning up the leftovers, adjusting the assortment, recalculating the costs, revising the target audience, and marketing plans.

The silence of large regular customers today is actually a huge daily work in order to cope with changes and adapt to them. At the same time, they still do not have an understanding of how to explain this process to a permanent partner.

It is a fact that producers of frozen fruits and berries currently have large volumes of products on stock, and there is less and less time before the start of the new freezing season for berries, fruits and vegetables. Therefore, everyone, without exception, is anxiously awaiting further market fluctuations and new price realities.

And this means that the new season may be an even bigger shock for farmers who grow berries and fruits to sell them for freezing, given the prices at which they sold products last summer and even last autumn.

EastFruit

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