In this issue:
But let's look back first:
Initially the pain in the potato sector seemed modest -
especially compared to other sectors - but more
recently, the frozen potato processing industry in North
America and Australia is showing
some signs of distress:
- The North American French Fry
manufacturers (Cavendish Farms,
McCain Foods, Simplot, Lamb Weston) have all scheduled
temporary shut downs, far beyond what was
customary in earlier years.
- Conagra Foods Lamb Weston
closed the french
fry factory in
Prosser, Washington, acquired in 2007 from Twin City
Weston also retired the oldest production line
(1 of 6) in Twin Falls, Idaho.
- French Fry manufacturers are cutting
potato farmers and
contracted acreages and prices. While it should be obvious
that French Fry companies won't buy potatoes they don't
need, these cut-backs have been very painful for the farming
community. The ongoing trend of increased production per
acre and a declining market for french fries inevitably
leads to lower quota each year. Farmers need
to be able to produce high quality potatoes
at the low cost to keep up.
- Increasing competition (geographical,
private label): Australia's Burger King
Jack is said to
import French Fries from Lamb Weston Canada and on the shelves
of Australian retailer Woolworth you
reportedly can find
private label french fries imported from the
Netherlands. Countries with strong
currencies such as Canada and Australia have an extra
The situation seems worst in North America and Australia.
Check here how some of the key North American French Fry
Conagra Foods Lamb Weston,
So what will happen when the recession is over?
First of all, economic recovery does not
necessary mean that people are able and willing to spend money.
So whether any economic recovery will immediately translate
in increased restaurant visits remains to be seen. We will
have a partial answer to this question soon, as many
restaurant chains are currently publishing Q1 results (Looks
positive, see QSR News section for the latest News).
This is especially of interest in the United States, where
the retail sales of frozen potato products is small compared
to the foodservice segment.
However, increasing restaurant traffic does not necessarily
translate in a recovery in the sales of french fries in
foodservice. Recent traffic and revenue growth in the
food service sector has been
strong in (specialty) coffee, sandwiches, smoothies, breakfast,
not necessarily traffic that also results in french fries
sales. Furthermore, a range of french-fry-alternatives
such as apple slices have made inroads.
So economic recovery does not necessarily mean a volume
jncrease for french fries. What's worse, I can imagine
a scenario where "trading up" during a recovery - may
actually hurt (frozen) potato sales. After all, didn't we
argue that sales of frozen potato products would not be hurt
too much because if people are
trading down, they are among the least expensive
Potato growers (especially in the United States) should take
note because if they do not reduce potato supply enough
(e.g. because some bet that recovery would mean a need for
more potatoes) this could lead to continued oversupply of
potatoes and low prices.
I line with the "trading up" principle, I do expect a trend
towards higher value products, such as higher end potato
specialties and battered french fries. In retail, brands can
gain back on private label if they can make the case to
consumers they provide a consistently higher quality
product. Also, this might be the ideal time to launch higher
end retail products to capture the market of consumers that
have decided to cook more at home.
Agree, disagree, different view? Send your view to
Paul@Foodinnovationonline.com and we will include your
view in one of the next PotatoPro Newsletters.
Paul van Eijck
Tour the Potato Industry on Prince Edward Island
A good friend, Lukie Pieterse (you may know him from his
website Global Potato News) is organizing a tour of the
Prince Edward Island Potato Industry this summer, from June
27 to July 4. There are still a few places available. If you
are interested in participation, let me know.
The international potato industry
The international potato industry provides
the most comprehensive picture yet available of the dynamics
and structure of the global potato market at the beginning of
the 21st century, and will be essential reading for all those
new to or already involved in the potato and ancillary industries
worldwide as well as for agricultural economists, fresh produce
brokers and traders and national and international economic
French Fries and Potato Specialties
Chips and Snacks
Dehydrated Potato Products
Other Potato Products
Ingredients for Potato Processing
Potato Supply Chain
Health and Nutrition
Energy and Environment
Clarebout Potatoes NV
Clarebout Potatoes NV is a Belgian manufacturer
of frozen french fries and potato flakes.
Terrells Potato Chip Company
Terrell's Potato Chips company is a local manufacturer
of potato chips supplying potato chips in New
York State, Massachusetts and Pennsylvania.
Nonnis Food Company
Nonni's Foods Company produces products in the
specialty cookie, snack crackers and chip categories.
In the savory snack category Nonni's Food Company
offers New York Style branded Pita Chips and
Reser’s Fine Foods Inc. is a 4th generation
family owned company. Based in Beaverton, Oregon,
Reser’s has kitchen facilities across the US.
Its brands are industry leaders in prepared
salads, side dishes, dips, Mexican foods and
Reser's Finefoods is one of the major manufacturers
of potato salads in the United States.
Albert Bartlett and Sons
Albert Bartlett is Britain's leading grower
and packer of potatoes.