Importer and exporter BanaBay has been in the bananas business for several years and as well as entering new markets this year, they are bringing new products on line. But how is the current banana market and how is the unstable currency situation and low banana prices affecting business?
"It has been a strange market lately," explains CEO Mark O'Sullivan. "The banana business has been a difficult business to be in this year. We have spent time improving our processes and business communications as well as spending more time in Ecuador, to reconfigure our plans and prepare for a stronger season ahead. Our reliance on the Ecuadorian supply has probably gone against us this year, in terms of having the right solutions to cope with the different market situations which we have encountered."
"For a few months it was only the US market that was really buying huge volumes from Ecuador and because we don't really have a full business set up over there yet this impacted on us. Part of our strategic plan for next year is to develop our US business so we can accommodate these market fluctuations."
Prices have been extremely low across the whole of Europe, Asia is struggling and Russia is still has a very low CIF price. In particular the last three months have been challenging for companies in this industry.
"We have a project to look at different suppliers, but even with more suppliers I don't think that would have made any great difference this year," said Mark. "No one would have been able to cope with the prices people were willing to pay."
Exit prices have remained high so producers have had an excellent year, but for everyone else in the chain it has been a challenging last three months, according to Mark
Diversifying offer
"We are developing a program of different offerings to enhance the BanaBay brand and give our customers what they want, and also to fill some of the gaps caused by seasonality and pricing. We are completely clear that we have to diversify our offer so mangoes and avocados are two of the key products which we will be introducing."
Both these products are in the early phases for BanaBay, the company is still developing a supplier base for these products, as well as extending its existing sourcing option for bananas.
"We are hoping to achieve a full supply base and offer a year round supply in 2017," said Mark. "It is about growing and developing those products alongside what we are doing with the banana program."
"We are gathering feedback from our customers to understand exactly what they are looking for, and developing the procurement and supply chain to meet that demand. It is exciting to be moving into these new products, but it is essential that we have establish strong continuity and growth in our banana program too."
China
China has had minimal demand for bananas for the last couple of months, according to Mark. Everyone has pulled back their volumes from Ecuador as there is a huge amount of local production in China at the moment, which is much cheaper and always dominates the market at this time of year. "We would expect the market to pick-up around December. Historically there have always been issues with supply from the Philippines to China, but at the moment there is an opportunity for them to send bananas to China, but the prices are maybe 3-4 dollars less than they were a few weeks ago in the Philippines. This is a reflection of where the market really is at the moment."
BanaBay has supplied from the Philippines before and is working to form a joint venture with the right partner there in order to develop the BanaBay.
Unstable currency
In terms of being a UK business and converting accounts back into Sterling, Mark said that since the Brexit announcement companies are having to cope with the resulting weakening of the pound, however in terms of dollar to dollar business it not having that much effect.
"There will be a long period of uncertainty due to Brexit, in the meantime it's important to keep your business strong while you are going through these fluctuations. There maybe a long way to go, but we will find ways to work around it, you just have to work harder and work smarter."
Amsterdam Produce Show
BanaBay will heading to Amsterdam next week for the very first edition of the Amsterdam Produce Show which takes place 3-5 November in the Wester Gasfabriek. We asked Mark what his expectations for the show were.
"This is the first event of its kind in Holland and we are big supporters of Tommy and the team. It is hard to know how it is going to be, but it will probably have more impact for us than the London show as all of our fruit goes into Holland. It will be interesting to see what kind of discussions take place and who will turn up for the first event. But the events they run are always good and we enjoy this format as it is a little bit different to other events in the industry."
He goes on to say that it is a good time of the year to have the show. "Towards the end of the year you can start to get into discussions with people for the following year. Fruit Logisitca in February take places when all the deals are already done, so with its proximity to 2017 it should be a really great event."
