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There are colloquial expressions in most languages about
peanuts, meaning low-value products: peanut valued, monkey nut,
monkey meat, etc. However, it is considered a key agricultural
product because it may replenish nitrogen in soil, provides quick
returns to farmers because their plantations do not require
expensive techniques and their nutritional properties make them an
excellent food, especially in emerging countries.
Peanuts were originally planted in South America. Spaniards took
their seeds to Europe and started to plant them in the eighteenth
century, following trends similar to the potato in Central Europe
and the UK.
It achieved successful sales due to its flavour and started to
be consumed in the US, Asia and Africa in the nineteenth century
due to the European influence. US manufacturers started to process
it massively after the US Civil War (1860-65), producing oils and
butters.
Almonds are the core of new nut products and pistachios,
macadamias or pecans may command record prices when demand is
peaking. Peanuts are at a minimum price despite being essential in
many recipes and a key ingredient in new health proposals.
The multinational company Mars Wrigley is developing ambitious
global projects for peanuts, especially for India, China and
Brazil.
"The edible nut consumption accounts for over 60% of the total
produced volume in the 2019-20 season, which totalled around 50.3
million tonnes, although its trend is changing gradually and
crushing activity is increasing," the global procurement officer
for nuts of Mars Wrigley, Daniel Whitehouse, explained during the
World Peanut Meeting, held between July 7 and 8.
"Although the peanut price is lower compared with almonds or
walnuts, their consumption growth was weak. On the other hand,
peanuts have two strong points: their consumption level is very
resilient to price rise, especially butters. And all governments
try to avoid hard tariffs against them during trade conflicts,"
Whitehouse added.
"Brazil has experienced an extraordinary development of the
peanut processing industry thanks to a secure supply and an
appetite for peanut flavour. India is a different case. Indian
consumption growth is focused on oil. Candies are still at minimum
levels compared with the EU and the economic effects of Covid-19
has weakened its demand. In addition, most farmers cannot fulfil
the US and European MRL's requests and they are flooding their
domestic markets, encouraging snack consumption but not favouring
new products," Whitehouse said.
He considered that candy consumption may experience a recovery
but middle-class consumers will trust brands with a strong
reputation, rather than small domestic manufacturers.
India and China
Peanuts are at the core of the Indian cuisine and consumers keep
an eye on them. As a result, processors are accelerating
investments in updating factories and lifting production. The
Indian lockdown has strengthened the rising consumption trend
experienced last year thanks to its abundant supply, the director
for quality process of the Indian company Khedut Feeds and Foods,
Tushar Thumar, explained
There are several appliances whose success is pushing up
demand:
Traditional snacks such as 'chikki' (peanut candy) and salted
peanuts with skin are enjoying rising domestic and international
sales.
Manufacturers are being encouraged by the Indian government,
especially to sell in Asian markets due to European restrictions
about MRLs.
Large multinational companies such as Mars, Mondelez and Nestlé
are starting to produce peanut-based confectionery in India to meet
the rising demand from middle-class consumers. These companies are
working directly with growers and the government to improve farming
practices and product quality.
Peanut oil consumption is growing, oil manufacturers taking 30%
of the domestic crop. Consumers consider peanut oil to be a healthy
food, and demand for cold pressed and virgin product is
rising.
Peanut butter is starting to achieve solid sales, following the
European and US health consumption trends.
China is the largest global peanut producer. Peanut oil plays an
essential role in the domestic industry, consuming 60% of the total
crop. In addition, oil peanut imports grew by 51.6% year-on-year to
194,300 tonnes in 2019. Argentina was the largest origin of peanut
oil, with a 48% market share, according to data provided by the
general manager of Sinopharm Fortune Way, the edible oil subsidiary
of Sinopharma, He Miao.
"Peanuts will be the most sold nut snack in China in the
mid-term. Packers are developing low-cost packaging solutions to
cut prices," Miao explained.
US market
Peanut is leading US nut butter products, taking three quarters
of the total sales. Peanut butter is the key product, taking
three-quarters of the produced volume.
"We hope that peanut-based products expand its consumption
growth in the mid-term. US peanut butter exports have been hit by
the trade conflict between the US and the EU, Canada filling our
gap. However, I am confident that the domestic market will offset
falling exports, especially in pet food and health proposals," the
global procurement director for nuts, fruit, and vegetables of JM
Smucker, Brian Reed, said.
JM Smucker is one of the US leaders in conventional peanut and
fruit spreads. It started as a cider processor in 1895.
The UK
British consumption is following similar trends to the US about
peanuts. The UK imported 93,000 tonnes of peanut kernels in 20219,
13% of the total in Europe.
Imported processed peanuts and peanut butter reached 37,000
tonnes and 9,100 tonnes, respectively, 12.2% more year-on-year and
5.6% more.
The US origin has been losing ground as a supplier, Argentina
and Nicaragua now co-leading sales. Around three-quarters of retail
sales are from the four large retailers: Tesco, Sainsbury's, Asda
and Morrison. However, Lidl and Aldi are growing quickly and
together accounted for 15% of the total sold volume in 2019,
according to data provided by the procurement manager of the
British nut processor Sun Valley, Peter Robinson.
Peanuts are mainly consumed as salted and unsalted snacks
although Millennial consumers are pushing health trends.
Salted peanut snack consumption rose by 5% year-on-year in
volume, contrasting with almonds and cashews, which fell by 15% and
11%, respectively.
Spread sales may total USD218 million in 2020. Peanuts will
account for around USD50 mln, thanks to a strong rise during the
lockdown. "Peanut butter consumption has overtaken the fruit
spreads and is expected to reach around USD60 mln in 2025,"
Robinson explained.
The largest use of peanuts outside the retail is in food
ingredients, especially candies. Lockdown and its economic effects
have forced consumers to increase peanut purchases in the retail
industry. Horeca orders suffered a sharp fall.
In addition, he forecast a complex peanut market in the UK due
to regulatory changes once Brexit really came into effect in
January 2021.
"However, I am quite optimistic because one-quarter of British
consumer may be vegans or vegetarian, leading an authentic
revolution for nut sales in the mid-term. Peanut will be a key
category in this new scenario," Robinson concluded.
Russia
Russia is becoming a key European peanut consumer. Its market
consumed around 150,000 tonnes in 2019, according to the owner of
the Russian peanut processor, Aventa Food, Maksim Kazakov.
Confectionery and snacks accounted for 62% and 38% of this
volume. Most sales are taking place in the retail sector, which
takes around three-quarters of the total volume. 700 retail store
chains sell by 55% of groceries in the domestic market. Private
brands take 60% of the total snack sales.
"Russia is experiencing a gradual concentration of players.
Small stores are losing market share step by step due to a
combination of focus on low prices by consumers and a financial
squeeze after the sharp fall in oil prices," Kazakov explained.
Traders are still essential to supply peanuts to retailers and
processors, accounting for 70% of the total volume. Candy
manufacturers and packers only took 19% and 11%, respectively. "11
large buyers purchased 80% of the total imported peanut volume in
2019," Kazakov added.
As a result of a low-price focus, two-thirds of the imported
product was raw. "We must understand that the import rise is mostly
relying on Russian confectionery exports. Imports have been rising
by 10% annually between 2009 and 2019 and confectionery exports by
22% annually, these products being especially successful in
emerging markets.
Kazakov concluded that the lockdown and oil crisis have
accelerated some previous trends, listed below:
Panic buying sales during the lockdown.
Indian sales halted, Russian importers started to negotiate
with Brazilian processors.
Exchange rouble devaluation against US dollar (20% fall in Q2)
has forced to close the spot market, imports being based on
long-term agreements.
Store closures have pushed up online sales. "Online snack sales
have risen by 300% quarter-on-quarter and candies by 500%."
Conclusion
Peanuts combine the best of all worlds: low prices, healthy,
globally accepted flavour… Why is its consumption not rising as
rapidly as it could be, increasing revenues for processors and
growers? All the speakers at the conference agreed: there are no
ambitious promotion campaigns such as those the Almond Board of
California, Walnut Board of California or Australian Macadamias are
undertaking.
There are many global suppliers and no individual player wants
to launch ambitious budgets and projects because they might favour
competitors which are not investing any fund in it. This scenario
is not going to change in the long-term because new global
suppliers such as Uzbekistan, Nicaragua or Brazil are emerging. As
a result, industries will have to develop their domestic
markets.