On the premise of getting better deals for both growers and supermarkets, Chilean company Safoods plans to expand its outsourced export services with a new Peruvian office next year. With a business that cuts out middle men in the fruit distribution chain, general manager Claudio Canziani says volumes have grown 10-fold over the last three years with U.S. chains Wegmans and H-E-B.

Claudio Canziani

Canziani tells www.freshfruitportal.com he hopes to replicate this recent success with new clients around the world.

"It could be a client in Colombia, Germany, Spain, the United States or China, Saudi Arabia, they’re all the same because conceptually what they’re looking for is the same - fruit with a good price and in better condition," he says.

"For instance, Wal-Mart can afford an office here because of the quantity of fruit they move, but other companies wouldn’t be able to compensate that with five or six people organizing it with the producers, trucks, the shipping, and that's too much fixed cost.

"So we said, let’s go to other supermarket chains and tell them 'we will be your office in Chile'."

Canziani admits many importers are after his head, but the opportunity for him was clear when seeing the traditional distribution model with too many Chilean producers losing money when others were turning a profit.

"The producers had years where they lost money, a lot of money, and the result was that in the same season the exporters made money, the importers made money and the supermarkets made money. So this produced a complicated business environment

"Having fewer intermediaries, the producer can get a higher price and at the same time the supermarket can get a lower price.

"The second issue is flow; the supermarket pays 30 days before the fruit arrives but in the case of a producer who sells to an exporter on consignment they start to receive money from the sales during the season and afterwards there’s a long period of liquidation, which can be from three to six months."

Canziani's formula is quite straightforward in improving returns for producers and prices for supermarkets, but he makes the important distinction that he is 'not a broker'.

"The producer does the invoice, and we sell that to the supermarket chain and they pay to the producer’s savings account; we make the relation direct," he says.

"We negotiate the price, we review the fruit, we organize the papers, all the documents that are necessary so the fruit can get out. We also negotiate in terms of the maritime freight charges to get the best price possible."

"In the first year we started and learned the business, thinking about how we can organize it, what were the papers needed. Today we have the sufficient knowledge to have more clients, and in fact we are in the process of getting more."

The quality question

He claims the model allows for better quality fruit, both from the perspective of time savings and consistency.

"When a producer passes the fruit to an exporter for example on Monday, and then you have the importer who puts in an order for 10 pallets on Friday, which batch are they going to give them? They’re going to give them the fruit from Monday - every day that passes is one day more or less in terms of the probability of having profits or waste.

"Time is not wasted from when the fruit is harvested to when it arrives at the warehouse of the supermarket; through the traditional channels it takes a lot longer.

"Another thing is the exporter might have 50 producers they source from. For us, we concern ourselves so that fruit from no more than five producers are going out - what does this mean? It means that when the supermarket receives the fruit it’s more uniform. If there there is only one region, one zone, fruit from just one area, it’s more sure that the fruit will react in the same way."

The company currently has three staff working on the direct exporting operation with an additional six or seven control staff who are contracted and review the fruit.

He says the team will get bigger next year with the opening of a new office in Peru, in a bid to expand the product offering for clients.

"We are expanding to Peru, and we plan to be there for the next season. The idea is to move the same as what we have here. We’ve travelled there in recent years, and made contact with good producers who are interested in working in this way.

"The idea is mainly, more than competing with Chile, to arrange a longer period of time for available fruit; for example with the grape season it can start with Peru and then move on to Chile, or the same with avocadoes."

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