North American Fresh Asparagus Market

North American Fresh Asparagus Market

North American Fresh Asparagus Market Chris Martin, President and CEO of Gourmet Trading Company Global Asparagus Production 1

Global Asparagus Imports North American Fresh Asparagus Market History Today Future Production Driven Growth 2

Asparagus Marketing, 1990 Commodity based Direct communication with retail and food service buyers Little concern for end consumers Asparagus 1990 15 Lb Wood Crate 30 Lb Wood Crate 3

1990 U.S. Market Supply MI.5 PE.4M 2% 15.8M 11lb. units 3% 86,900 tons MX 2.9M 19% 1990 CA 9.5M 60% WA 2.5M 16% Sources: Mex/Peru-Dept of Commerce, Census Bureau, Foreign Trade Statistics and U.S. International Trade Commission MI/CA/WA-USDA National Agricultural Statistics Service and USDA Commodity Reports 1990 U.S. Weekly Supply 1,600,000 1,400,000 1,200,000 1,000,000 Michigan California Washington Mexico Peru 800,000 600,000 400,000 200,000 0 4

Asparagus Consumption in USA 1.6 1.4 40% Growth 1.4 lbs per person per year 1.2 1 0.8 0.6 0.4 0.2 1 lbs per person per year.59 lbs per person per year 86.44% Growth 1.1 lbs per person per year Fresh Total 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Retail Asparagus Ads, 2008 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Presidents Day Easter 19% Mother s Day 6.42% 4 th of July Labor Day Thanksgiving 1% Christmas SOURCE: USDA MARKET NEWS 5

Retailer Outlook In my mind it s kind of like the lobster of the vegetable world. Well liked. Considered a bit upscale and expensive in the past, primarily consumed in restaurants I don't think we've found the top yet, there's lots more to go. -2008 Michael Agostini Senior Director, Produce and Floral Food Service Outlook Asparagus has become an important part of plate presentation in many restaurants and a sought after side on many menus. It is a staple on most white tablecloth and steakhouse offerings. -2008 Robert Sorenson Director, Strategic Sourcing 6

Asparagus Marketing, Present Building a brand, adding value Outreach to retail and food service buyers, as well as end users Cross promos, leveraging the CPG company s budgets Use of press, bloggers, and social media for promotion of asparagus Leveraging the health benefits of asparagus Working with retailers on category management Pushing retailers to promote at peak times New packaging Locally grown promotions Regional Purchases 7

Asparagus Quick Facts Fresh Trends 2010 Likelihood of Asparagus Purchase Based on: 8

Asparagus Price Elasticity Example: The average retail for Asparagus over the last year has been $3.50/lb The peak season is January thru March. On a seasonal basis, retailers promote off of this average. Research indicates the following incremental sales gains at different price reductions: 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 8.1 4.0 ASPARAGUS PRICING ELASTICITY TOTAL # WEEKS LIFT VS AVG WEEK 1.5 1.3 1.2 1.2 0.9 0.9 0.7 0.6 0.6 $1.50 $1.99 $2.50 $2.91 $2.98 $3.51 $3.79 $3.91 $3.97 $4.82 $5.99 Asparagus Seasonality Typical Retailer Wk Ending 24-Aug 31-Aug 7-Sep 14-Sep 21-Sep 28-Sep 5-Oct 12-Oct 19-Oct 26-Oct 2-Nov 9-Nov 16-Nov 23-Nov 30-Nov 7-Dec 14-Dec 21-Dec 28-Dec 4-Jan 11-Jan 18-Jan 25-Jan 1-Feb 8-Feb 15-Feb 22-Feb 1-Mar 8-Mar 15-Mar 22-Mar 29-Mar 5-Apr 12-Apr 19-Apr 26-Apr 3-May 10-May 17-May 24-May 31-May 7-Jun 14-Jun 21-Jun 28-Jun 5-Jul 12-Jul 19-Jul 26-Jul 2-Aug 9-Aug 16-Aug 23-Aug 30-Aug 6-Sep 13-Sep 20-Sep 27-Sep 4-Oct 11-Oct 18-Oct 25-Oct 1-Nov 8-Nov 15-Nov 22-Nov 29-Nov 6-Dec 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 $1.50 $2.74 $2.05 $2.49 $2.49 $1.99 Pounds Price $2.00 $1.99 $1.99 $1.99 $2.50 $3.01 $3.01 $2.38 $2.94 $2.97 $2.98 $2.50 $2.99 $2.93 $2.94 $2.97 $2.96 $2.96 $2.97 $2.97 $2.89 $2.88 $2.99 $2.87 $2.96 $2.99 $3.99 $3.91 $3.73 $3.83 $3.84 $3.49 $3.77 $3.53 $3.88 $3.50 $3.85 $3.90 $3.95 $3.91 $3.98 $3.98 $3.98 $3.98 $3.81 $3.72 $3.86 $3.91 $3.93 $3.96 $3.95 $4.83 $4.83 $4.72 $4.94 $5.62 $5.97 $5.97 $5.96 $5.95 $5.87 $6.67 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 9

Asparagus Packaging 2010 Bunched, 2.5 kg, 5kg, and 28lb box Asparagus Packaging 2010 Bunched, 2.5 kg and 5kg box 10

Asparagus Packaging 2010 Grilling Bunched, 5kg, and 28lb box Asparagus Packaging 2010 Club Store, 2.25lb bag and 1.75lb bunched 11

Asparagus Packaging 2010 Food Service, trimmed and washed 2.5kg bagged Asparagus Packaging 2010 325gram value bunch, 220gram tip bunch 12

Asparagus Packaging 2010 Bagged Microwaveable, 12oz Green, 8oz white Asparagus Packaging 2010 Purple Bunched, 2.5 kg and 5kg 13

2009 U.S. Market Supply WA 1.9M 5% MX 12.3M 35% CA 3.3M 10% 2009 MI.6 2% 34.9M 11lb. units 192,000 tons PE 16.8M 48% Sources: Mex/Peru-Dept of Commerce, Census Bureau, Foreign Trade Statistics and U.S. International Trade Commission CA/WA-USDA National Agricultural Statistics Service, USDA Commodity Reports and WAC Asparagus Document MI- MI Asparagus Advisory Board 1990 vs 2009 U.S. Market Supply Net Change in Market Share 1990 2009 %Chg Peru 2% 48% 46% Mexico 19% 35% 16% Washington 16% 5% -11% California 60% 10% -50% Michigan 3% 2% -1% Sources: Mex/Peru-Dept of Commerce, Census Bureau, Foreign Trade Statistics and U.S. International Trade Commission CA/WA-USDA National Agriculture Statistics Service, USDA Commodity Reports and WAC Asparagus Document, MI Asparagus Advisory Board 14

Other Production Areas 2008 Michigan 420,000 11lb units Canada 953,000 11lb units Source: Michigan Asparagus Advisory Board and CPMA Michigan STOCKTON SALINAS State of Michigan SAN JOAQUIN Oceana County Lansing Los Angeles 1990 2009 23,500 acres *20% Fresh *80% Processed 11,200 acres *27% Fresh *73% Processed Sources: 1990-USDA National Agricultural Statistics Service 1991 Veg. Annual 2009-MI Asparagus Advisory Board 15

Factors in Michigan Cost of Labor - $7.40 minimum wage per hour Average Yields 4,000 lbs/acre Major Crops -Corn - Soybeans - Wheat Other major industries Car Manufacturing, timber and fishing Michigan Acres 30,000 25,000 23,500 20,000 15,000 10,000 5,000-52% Decrease 11,200 Sources: 1990-USDA National Agricultural Statistics Service 1991 Veg. Annual 2009-MI Asparagus Advisory Board 16

Michigan Acres Future Predictions 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000-10,700 10,700 10,700 10,700 11,000 Sources: 1990-USDA National Agricultural Statistics Service 1991 Veg. Annual 2009/2010-MI Asparagus Advisory Board California STOCKTON SALINAS SAN JOAQUIN 1990 2009 29,000 acres 14,680 acres Los Angeles Sources: USDA National Agricultural Statistics Service and USDA Commodity Reports 17

Factors in California Cost of Labor minimum wage $8.00/hr Water Shortages Average Yields 2,850 lbs/acre Seasonal Crops Blueberries Corn Pistachio and Almond Crops Yield Source USDA Commodity Reports California Acres 35,000 30,000 29,000 25,000 20,000 15,000 10,000 5,000-42% 49% Decrease 14,680 18

California Acres Future Predictions 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000-13,880 13,080 12,280 11,480 11,080 2010 2011 2012 2013 2014 Washington Seattle Pasco 1990 30,000 acres * 27.5% Fresh * 72.5% Processed 2009 6,500 acres * 95% Fresh * 5% Processed Sources: USDA National Agricultural Statistics Service and USDA Commodity Reports and WAC Statistics 19

Factors in Washington Transition from Process Production to Fresh Cost of Labor minimum wage $8.67/hr Average Yield 3,750 lbs/acre Alternative Land Uses: Corn, Cherries, Apples, Hay, Potatoes Washington Acres 35,000 30,000 30,000 25,000 20,000 15,000 78% Decrease 10,000 5,000 6500-20

Washington Acres Future Predictions 8,200 8,000 7,800 7,600 7,400 7,200 7,000 6,800 6,600 6,400 7,000 7,500 7,500 7,500 Increase of 23% 8,000 2010 2011 2012 2013 2014 Mexico Caborca, Sonora North Mexico 77.7% Baja Ca. 5.4% Guanajuato Central Mexico 16.8% 1990 7,677 acres 2009 28,767 acres Sources: Dept of Commerce, Census Bureau, Foreign Trade Statistics and U.S. International Trade Commission 21

Factors in Mexico H. Caborca, Sonora 78% of Mexico s crop Water Yield-6,000 lbs/acres NAFTA Factors in Mexico Guanajuato-17% of Mexico s crop Alternative Land Uses-Corn, Berries and Seasonal crops Yield-3,000 lbs/acres Production Shift to Spring Baja 5% of Mexico s production Water Soil Types Hurricanes Yield 2,400 lbs/acres Production Shift to Spring 22

Mexico Acres 35,000 30,000 25,000 20,000 15,000 375% Increase 28,767 10,000 7,677 5,000 - Mexico Acres Future Predictions 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000-28,967 28,467 28,467 28,467 28,467 2010 2011 2012 2013 2014 23

Peru Trujillo Lima Ica 1990 22,232 acres Air 100% 2009 66,341 acres Air 71%, Ocean 29% Total US Industry-34.16% of total acres 2008- White 17%, Green 83% Fresh 66.37%, Canned 25.29%, Frozen 8.34% *III Censo Nacional de Productores de Esparrago 2007 Factors in Peru Added cost of airfreight Option to divert from fresh to processing Fumigation/Irradiation Water (Ica Valley) Free Trade Agreement 24

Peru Acres 70,000 66,341 60,000 50,000 298% Increase 40,000 30,000 20,000 22,232 10,000 - Peru Acres Future Projections 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000-65,353 61,276 60,040 58,805 58,558 2010 2011 2012 2013 2014 Source - IPEH 25

Supply Comparison 15.8M 11lb. units 86,900 tons MI.5 3% PE.4M 2% MX 2.9M 19% WA 1.9M 5% CA 3.3M 10% 34.9M 11lb. units 192,000 tons MI.6 2% PE 16.8M 48% CA 9.5M 60% 1990 WA 2.5M 16% MX 12.3M 35% 2009 Source: 2014 Estimated growth using historical data. 1990-2010-Mex/Peru-Dept of Commerce, Census Bureau, Foreign Trade Statistics and U.S. International Trade Commission. CA/WA-USDA National Agriculture Statistics Service, USDA Commodity Reports and WAC Asparagus Document U.S. Supply Million Pounds 450 400 350 300 250 200 150 100 50 0 Domestic Imports Source: ERS USDA Vegetable and Melons Yearbook Data #89011 26

Supply Trends Past and Present 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1990 Michigan California Washington Mexico Peru 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 2009 2009 Michigan California Washington Mexico Peru Source: 2009-USDA Commodity Reports and National Agricultural Statistics Service. 1990-Mex/Peru-Dept of Commerce, Census Bureau, Foreign Trade Statistics and U.S. International Trade Commission. CA/WA-USDA National Agricultural Statistics Service U.S. Industry Forecasted Units 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 - Michigan California Washington Mexico Peru 15,305,320 14,350,268 14,060,392 13,770,748 13,828,585-11% 12,591,691 12,319,191 12,319,191 12,319,191 12,319,191 3,596,182 3,388,909 3,181,636 2,974,364 2,870,727-3% -14% 2,386,364 2,556,818 2,556,818 2,556,818 2,727,273 545,455 559,091 572,727 586,364 600,000 2010 2011 2012 2013 2014 25% Source: 2009 based on USDA Commodity Reports and IPEH Forecasts % 27

2014 A Projection WA 1.9M 5% 34.9M 11lb. units 192,000 tons CA 3.3M 10% MI.6 2% WA 2.7 8% 32.3M 11lb. units 177,650 tons CA 2.9 9% MI.6 2% MX 12.3M 35% 2009 PE 16.8M 48% MX 12.3 38% 2014 PE 13.8 43% 2014 A Projection Net Change in Market Share 2009 2014 %Chg Peru 48% 43% -5% Mexico 35% 38% 3% Washington 5% 8% 3% California 10% 9% -1% Michigan 2% 2% 0% 28

Supply Trends Present and Future 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 2009 2009 Michigan California Washington Mexico Peru 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 2014 Proj. Michigan California Washington Mexico Peru Source: 2009-USDA Commodity Reports and National Agricultural Statistics Service, MI Asparagus Advisory Board. 2014-Forecasted hectares and avg.yields, Peru IPEH forecasts Asparagus Marketing, Future Special packs, less commodity based More category management and assistance More promotion to end consumer More emphasis on locally grown and sustainable 29

Asparagus Packaging 2014 Trimmed Microwaveable Tips Microwaveable Asparagus Packaging 2014 New Varieties: Purple 30

Competing Vegetable Consumption 16 14 12 10 8 6 4 2 0 9 Lbs Artichokes Asparagus 6 Lbs Snap beans Broccoli Carrots 2.2 Lbs 1.6 Lbs 1.1 Lbs Future 35,000,000 34,500,000 34,425,012 34,000,000 33,500,000 33,174,277 33,000,000 32,500,000 32,690,764 32,207,485 32,345,776 32,000,000 31,500,000 Demand Supply 31,000,000 2010 2011 2012 2013 2014 31

US Production Time Frame 1,200,000 1,000,000 800,000 600,000 400,000 200,000 MI CA WA Mexico Peru - Apr Apr May May June June July July July Aug Aug Sept 1415161718192021222324252627282930313233343536 Distribution Areas Washington Michigan New Jersey California Mexico Peru 32

US Based Marketing Opportunities Locally grown 1 day s truck ride Michigan NJ WA CA Sustainable, family farms Transition to Organic Thank You. Questions? Chris Martin Gourmet Trading Company 33