Quarterly Publication

This Quarter we look at the Megatrends that are shaping the trade flows.

1. Buyers seem to move from a JIT mode to a more comfortable mode of holding stocks.

Table 1. YTD Shipment Export 2019. YTD Export 2018

Due to decade low prices in 2019 we witnessed many companies increase inventory and build up pipelines which were generally empty. Therefore it was observed YTD year on year shipments were as high as 25%. Shipments from Brazil and Vietnam witnessed a similar pattern. Will this mean a slower than usual demand in 2020? - Remains to be seen.

2. Quality levels from Brazil seem to have improved significantly over the past few years.

Be it B2, B1 or ASTA etc. Customers reported globally that cargo from Brazil has bolder berries, cleaner cargo and higher density. This has helped uplift the image of the origin. This has certainly helped the origin to get far better market access.

Table 2. Shipments from Brazil to top 5 Destinations.

3. Destination processing making a comeback

Europe has been increasingly seeing more processing happening at the destination- be it white pepper decortication, steam sterilization and milling. The principal reason is EU MRL passing regulations. Customers want to make sure that cargo coming in passes regulations and then gets processes or value added. They do not want to pay for processed goods that enter and then fail on pesticides. USA generally was destination processor due to its scale of consumption.

4. Origin processing continues to be strong and growing but more for the Asian and nearby markets.

China, Australia, South East Asia have been growing in terms of consumption and are now importing value added products from Vietnam, Indonesia, Malaysia and India.

5. Border trading is reported and more information is available.

Chinese buying from Vietnam, Indian buying through Nepal, Myanmar etc. Is more visible and that allows for a far superior Supply and Demand Analysis.

Table 3. China Import from Viet Nam

6. Plant based Protein and Vegan diet is the hottest food industry trend

In the developed world (at least) there is a wave of structured change in Diet. McDonald, KFC, Burger King they all have introduced plant based protein burgers. Going green and sustainability have become the cynosure of consumer awareness and demand in foods. Is this good for Pepper?

Pepper demand is directly related to meat consumption in the developed world. Fortunately plant based protein also has to be seasoned and pepper along with other spices are being used for the same.

Thus it is expected that demand for pepper to continue to grow despite a slow change in the structure of the diet.

7. Sustainability is becoming a global trend in the food industry

Consumers today are more aware and want to know more about how their food was sourced, processed, handled and packaged. They expect the supply chains to provide not only clean, healthy, safe but also something more. This something more means - fair treatment of producers and least damage to the environment. In nutshell sustainability or a way of sourcing that ensures social, economic and environmental sustainability.