| Marketing relationshipB2B | ProductsFruit preparations, fruit juice concentrates, not-from-concentrate juices, fruit wines, natural flavours and beverage bases | Raw materials processedFruits (leading raw material for fruit preparations: strawberry; raw materials for fruit juice concentrates: apples and berries) |
| Key marketsMarketed worldwide | CustomersDairy, ice cream, bakery, food service and beverage industries | Special strengthsCustom-designed, innovative products |
Fruit segment revenue in 2023|24 grew to € 1,566.9 million, or by 5.7% from the previous year. In the fruit preparations business, the revenue increase was driven primarily by price, but also by volume. In the fruit juice concentrate activities, revenue eased slightly, with lower delivery volumes not fully offset by higher selling prices. The Fruit segment was responsible for 41.4% of Group revenue (prior year: 40.7%).
The segment’s EBIT was € 60.2 million (prior year: EBIT loss of € 38.5 million). In EBIT in the second half of 2023|24, a non-cash impairment of about € 24.7 million was recognised, in two steps, on assets in Asia (due to a severe deterioration in the market environment) and Hungary (for the closure of a carrot processing plant). In the prior year, following an impairment test performed as of 31 August 2022, impairment on goodwill (and assets) was recognised in exceptional items as part of EBIT, due primarily to increased cost of capital. Details on exceptional items are given in the Fruit segment report from page 74 and in the Notes from page 129. In fruit preparations, the amount of the item “operating profit before exceptional items and results of equity-accounted joint ventures” was very significantly above the year-ago level. The improvement was attributable mainly to a positive business performance in the Europe region (including Ukraine), in North America and in Russia. The fruit juice concentrate business grew its operating profit before exceptional items further compared to the already very good previous year. This was driven primarily by improved contribution margins of apple juice concentrate made from the 2022 crop. In addition, improved contribution margins from the value-added business (including beverage bases) figured into the EBIT growth.
Further details on the results of the Fruit business are provided in the segment report in the full version of the annual report.
The troubled global economic situation and multiple crises are dampening the market trend for fruit yoghurts (which constitute the main market for the products of the fruit preparations business). Analyses by Euromonitor in February 2024 showed a stagnating global market for the 2023 calendar year (with a 0.1% growth rate compared to 2022). While the fruit yoghurt markets in Asia (–2.9% p.a.) and Western Europe (–1.5% p.a.) declined, volumes in Eastern Europe (+1.8% p.a.) and Latin America (+2.2% p.a.) increased. A similar global market situation is expected for the 2024 calendar year, with only a slightly positive growth rate of 0.4% compared to 2023. Average annual volume growth of 0.5% in the following years is forecast up to 2028. The niche category of plant-based yoghurt alternatives showed appealing volume growth of 3.7% in the 2023 calendar year. This market segment is expected to grow by an average of 3.4% per year in the longer term up to 2028.
Besides yoghurt, the main market segments significant to the diversification of the fruit preparations activities are ice cream and food service. According to Euromonitor (February 2024), the global ice cream market expanded by 0.7% in the 2023 calendar year and is projected to accelerate slightly to 1.2% growth in 2024. Average annual volume growth of 1.3% is then expected until 2028. In the food service segment, the most important markets served by AGRANA are quick service restaurants (QSR) and coffee and tea shops. Current forecasts from GlobalData predict a very positive volume trend in these subsegments to 2028, with average annual growth of 4.8% for QSR and 4.6% for coffee & tea shops.
The market environment for fruit preparations is determined by consumer trends in the global markets for dairy products, ice cream and food service. The main market-driving trends are pleasure, affordability, convenience, naturalness, sustainability and health. The persistently volatile market situation is partly curbing the willingness of consumers to experiment. This can be seen in the fewer new product launches on the market and the tendency towards familiar flavours. In the food service sector, consumers remain more willing to experiment and introductions of time-limited offerings (known as limited editions) are on the rise. Seasonal products are in particular demand here.
The fruit juice concentrate business remains subject to the trends towards lower fruit juice content in beverages on the one hand and towards not-from-concentrate 100% juices on the other hand. As a consequence of the first trend, there is growing demand for beverage bases with a reduced fruit juice content. AGRANA addresses this trend with its strategic emphasis on the increased production of beverage bases and natural aromas.
In fruit juice concentrates, customer call-offs were at a normal overall level in 2023|24. The contracts for both apple and berry juice concentrates made from the 2023 crop were concluded at very good contribution margins. However, the historic high contribution margins of the previous year could not be matched.
Sales volumes and contribution margins in the value-added business increased very strongly. The growth targets set were achieved despite lower sales volumes, thanks to improved contribution margins.
In the course of the 2023|24 financial year there was a further easing in logistical challenges, such as high transport costs and little availability of containers, that disproportionately affected the export-heavy concentrate business since the COVID-19 pandemic (notably for shipping to the USA).
In 2023|24, about 336,000 tonnes of raw materials were purchased for the fruit preparations activities (prior year: 340,000 tonnes). The lower consumption of raw materials is explained mostly by reduced demand in the Chinese plants as a result of the declining yoghurt market in China. The average raw material prices for fruits and ingredients were down slightly overall from the prior year. Higher sugar prices were offset by price reductions on fruits and stabilisers.
The global requirement of approximately 50,000 tonnes of strawberry, the most important fruit by volume in the fruit preparations business, was contracted at slightly lower prices than in the year before. In the fourth calendar quarter of 2023, harvesting began in the growing regions with a Mediterranean climate – Egypt, Morocco and Mexico. Due to reduced strawberry acreage in Morocco, availability of the raw material is expected to be reduced, resulting in slightly higher average prices than in the previous year. Stable volumes and prices are expected for the harvest in Mexico.
The second most important fruit by processing volume for fruit preparations was peach, at around 18,000 tonnes. Average crop yields were achieved in the main European procurement markets, while the harvest in China fell short of expectations due to weather conditions. Price increases for raw materials were offset by lower freight costs; purchase prices were therefore slightly below the year-earlier level.
There was a favourable trend in raspberries and blueberries, where good crop yields in the most important European and North American growing regions led to significant price declines for frozen product.
In tropical fruit, purchase prices for mangoes from the 2023 summer harvests decreased from the prior year as a result of falling freight costs from Asia. For the new mango harvest in Vietnam that started in the fourth calendar quarter of 2023, a moderate price increase looks likely amid reduced availability of the fruit.
The 2023 apple crop in the fruit juice concentrate business was slightly reduced from the previous year as there was less availability of the raw material in Poland and China. At the Ukrainian site, the apple processing volume reached an average level despite the difficult circumstances. Due to the high processing volumes of red berries from the 2022 crop, demand for berry juice concentrates in 2023|24 was significantly lower than in an average year; accordingly, about 30% less red berries were processed in the 2023 campaign (“red berries” is an industry term that includes strawberries, raspberries, black and red currants, sour cherries, chokeberries and elderberries).
Capital expenditure in the Fruit segment in 2023|24 was € 50.8 million (prior year: € 37.7 million). The various CapEx projects across all 40 production sites represented primarily capacity expansions, plant modernisation and energy efficiency improvements. The following individual investments were made, among others:
1MVR: Mechanical vapour recompression, an energy-saving technology that recycles waste heat and thus recovers energy.
