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BLOG Jun 11, 2020

This is an article taken from our IEG Vu dated05/06/20.

Mangoes are grown all over the world, yet the number ofcountries producing mango purée and/or juice for sale on globalmarkets is quite small.

India is by far the world's largest producer, producing around20 million tonnes of mango annually. Ten years ago this figure wasaround 10-11 mln tonnes, but India has steadily increased its mangoproduction. The sheer scale of Indian production is amply shown inthe accompanying chart, below.

World's top 25 largest mango producers in 2018(tonnes)

The vast majority of India's production is destined for thefresh market. Mango is a fresh fruit that is impossible to storefor long periods of time unlike, for example, apples, and while itcan be grown around a large part of the year, according togeography, the new season fruit is eagerly awaited halfway throughthe year.

As for processing, India does some IQF mango, but the bigprocessing is for chutneys and pickles, beloved on the domesticmarket and abroad. The UK is the country's biggest customer, takingabout 16,000 tonnes annually. Frozen mango is also exported to beused in pickle production elsewhere in the world: the Patak brand,for example, manufactures products in the UK.

This season apart, India's distribution of fresh mango is wellorganised and India still only processes about 7% of its fruit intojuices and single strength or concentrated purées. The country hasa production capacity of around 700,000 tonnes of finished product,but actual output is around 450,000-500,000 tonnes annually.

China produces nearly 5.0 mln tonnes of thefruit annually but is entirely absent on the global juice market.If any fruit is so processed, it is sold domestically or to verylocal markets.

Colombia, on the other hand, produces around350,000 tonnes of fruit annually but annual production is around40,000 tonnes.

Thailand's production is some 3.5 mln tonnes,and the country produces very little juice and purée and what itdoes produce is consumed domestically. The country, like thePhilippines, another large grower, tends toproduce large quantities of dehydrated mango.

Then there are countries in Africa such as SierraLeone that grow and process mango, but the processingplants are often small, inconveniently located in relation totransport links and not very efficiently run. This, and a frequentlack of certification to modern standards, mean that Africanprocessed mango is a rare sight on international markets.

Indian mango production is likely to drop by 4% to 20.44 mlntonnes this year, according to the country's agriculture ministry.IEG Vu thinks this is optimistic. Reports from India tell of largequantities of fruit left unharvested, and huge problems intransporting fresh fruit (which is a huge market) across thecountry. Production may very well be as claimed, but we think thewastage is likely to be huge.

Processing of mangoes (Alphonso, Totapuri, etc) from southernand western India has started, while the season in the northernstates like Uttar Pradesh will begin from mid-June onwards. Thesetwo varieties are dominant when it comes to purée and juice, butother varieties are also processed for beverages, notably Kesar(which is becoming increasingly popular), Tommy and Sindura, whichis sometimes used to blend with Alphonso to keep the cost down.

Whatever happens to Indian production this season, there arestill some inherent problems in the industry. The first is theover-capacity. Smaller suppliers have gone out of business, butothers set up to replace them and there are companies that pretendto be processors, but which in reality own no plants themselves andmerely sub-contract the work to others. A lot of these companieshave no certification acceptable to European markets, though theymay pretend they do. Their numbers are reducing , though, and intime they will disappear - possibly quickly, after this season.

Another factor is the swift trend towards bulk packing ratherthan in cans. Canned production continues and is estimated ataround 25,000 tonnes of finished product last year. Processors havemoved swiftly towards packing in drums of flexitainers. This ispartly due to customer demand and partly for quality reasons.However, foodservice customers (in particular) both in India andabroad like large cans because they are easy for portion controland there is no wastage and so IEG Vu does not think this form ofpacking will disappear entirely.

Then there is the issue of adulteration. Smaller Indianprocessors (see above) have an unenviable reputation for blendingold crop production with new. There is nothing wrong with this, aslong as it is sold as such, but sometimes it is not. Its shelf lifeis thus rather shorter than 100% production from new crop. Alphonsopurée is frequently 'cut' with Sindura, while blending of old andnew stock can be found in any variety of fruit.

Assuming that supplies from India will be expensive this year,some potential buyers are looking around for alternativeorigins.

Pakistan exports fresh mango and makes purée.Fresh exports are going to be down maybe around 80,000 tonnes, thisyear.

Its best-known product is the Chaunsa variety, which iscomparable to India's Totapuri. Unfortunately, Pakistan hascertification problems with some countries. Its main export marketstend to be in Asia-Pacific and the Middle East, which are lessdiscerning (and where, in the case of the Middle East, there is aready and waiting market of expatriate workers). However, this yearconstruction work has stopped in the Gulf States, and many workershave returned home, so this market is likely to be unpromising.

Bluntly, IEG Vu does not see Pakistan as being a viable volumeplayer in the European market for the next few years at least.

South American product is popular in the US,not least because it is relatively quick and easy to ship. Colombiahas Magdalena as its premium product, and also grows varieties suchas Kent and Tommy. The country has planted more land to mango inrecent years and the trees are now coming into bearing. There mighthave been 100,000 tonnes of fruit available before Covid-19 hit,but production is likely to be down.

However, Magdalena purée is very keenly priced at the moment andis duty-free into Europe. Colombia could have a price advantage ofUSD100/tonne.

Peru also grows similar volumes to Colombia andits premium product is the Chato Da Ica variety, which is sold onlyin single strength form and is regarded by some as a worthy rivalto India's Alphonso. It is generally priced close to Alphonso aswell. It is popular in the Americas but unlikely to find manybuyers in Europe as it is a mango for the cognoscenti (as isAlphonso) and there are simply fewer Latin American potentialbuyers than there are Indian.

Brazil grows between 1.5-2.0 mln tonnes ofmango and also processes the common varieties such as Haden, Tommy,and Kent. IEG Vu understands that both European and American buyershave been paying closer attention to Brazil this year. Everythingwill depend on price. The same applies to Mexico, which grows about2.0 mln tonnes annually. IEG Vu understands that more fresh fruitis going to frozen this year and juice/purée production will bedown due to all the usual social distancing and labourconstraints.

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This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.