"In Piura there is nothing left to do. The situation is dramatic," said the VP of Promango, one of the largest mango cooperatives in Peru, in a recent conference in Casma.
The United States imports mangoes primarily from Mexico, Peru, and Ecuador. While Mexico is the leading exporter overall, Peru dominates the market from November to April (Peru's summer months). On average, the U.S. imports 165,000 metric tons of mangoes annually from Peru. In the 2023-24 season, this number plummeted to 47,000 metric tons! The cause was a super strong El Niño that elevated temperatures during the mango flowering season, resulting in harvest reductions of up to 90% in some cases. This scarcity led to a significant spike in mango prices.
Saving Our Shelves
Supermarkets and wholesale distributors have different priorities when procuring fresh produce. While wholesalers focus on profit margins, supermarkets prioritize maintaining fully stocked shelves. This isn't to say that supermarkets disregard margins; rather, their primary goal is to minimize the implicit costs for their customers.
Implicit costs encompass expenses beyond the point of sale (PoS), such as fuel costs for transportation and the value of customers' time. Supermarkets aim to be one-stop shops, allowing customers to purchase all their groceries in a single location, thereby reducing these implicit costs. If a customer can't find what they want in one supermarket, they might travel to another, increasing their implicit costs. Seeing the diminished value proposition, the customer may not only take their business elsewhere that day, they may take their business elsewhere forever. So the availability of a single item, like mangoes, could significantly impact a customer's lifetime value.
The availability of a single supermarket item, like mangoes, could significantly impact a customer's lifetime value.
For supermarket procurement departments, it's important to decide whether to make purchase commitments weeks or months in advance. Waiting too long may result in empty or sparsely stocked shelves. Notably, even half-stocked shelves can deter customers, who may perceive the remaining fruits as less desirable leftovers.
Mangoes present a unique procurement challenge for supermarkets. The fruit takes four months from flowering to maturity, and by the end of the flowering season, the harvest outcome is largely predictable. Consequently, supermarkets need to make purchase commitments well before this four-month window to secure their supply, especially when facing potentially poor harvests. Early information about upcoming seasons is necessary for beating competitors to favorable contracts.
Planette's Umi™ offers industry-leading ENSO (El Niño Southern Oscillation) forecasts, providing companies with essential early insights for securing supply commitments. ENSO, measured by the ENSO 3.4 index, tracks Central Pacific ocean surface temperatures.
ENSO's complexity stems from its irregular cycles, ranging from 2 to 7 years, and varying intensities. These factors make accurate predictions exceptionally challenging. However, Planette's Umi™ forecasts demonstrate remarkable precision. Every single point in this graph was predicted 3 months in advance! This foresight is invaluable for businesses.
Companies subscribed to Umi™ could have anticipated in March 2023 that July's mango flowering would be poor, allowing them to secure premium contracts early. While competitors struggle with supply shortages and customer loss, Umi™ subscribers can maintain their customer base and potentially expand it by meeting demand when others cannot.
