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Exporting desiccated coconuts to Europe

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With 30% of the world's imports, the European Union is the largest importer of desiccated coconuts in the world. Desiccated coconut is a traditional bakery ingredient in many European countries and more recently, the product is benefitting from the rising interest in Asian cooking. The import of desiccated coconuts in Europe is increasing with the Netherlands, Belgium, Germany and the United Kingdom as the leading importing countries.


1 . Product Description

Desiccated coconut, sometimes referred to as Coconut Powder, is a dehydrated form of white coconut meat from freshly selected mature coconut kernels. It is prepared from substantially sound white kernel obtained from the whole nut of coconut (Cocos nucifera). Desiccated coconuts have to be processed in an appropriate manner, undergoing operations such as de-husking (the removal of the husk, leaving the shell intact), hatcheting (the removal of the shell), paring (the removal of the brown skin around the kernel), washing, comminuting, drying (to humidity level below 3%) and sifting. They can be produced without oil extraction or with partial oil extraction by appropriate physical means.

Preservatives are allowed for use in production of desiccated coconuts and the most common in practice is sulphur dioxide. Also citric acid is allowed for use as the antioxidant.

Table 1: Combined Nomenclature code for desiccated coconuts

Number

Product

080111

Coconuts, desiccated

Product Specification

Quality

For detailed standard quality requirements please refer to Codex Alimentarius Standard for Desiccated Coconut

The basic quality requirements for desiccated coconuts are:

  • Colour: natural white to light creamy
  • Texture: free-flowing and free from yellow specks
  • Flavour: distinctive coconut flavour without off-flavours due to deterioration or absorption of extraneous substances.
  • Odour: The odour shall be characteristic of the product, shall not be mouldy, cheesy, smoky, fermented or rancid, and shall not possess any undesirable odour.
  • Oil content: According to the oil content, desiccated coconuts are in trade practice commonly divided into 2 categories:
    1. High fat Desiccated Coconut (sometimes referred as 'full fat') with equal or more than 60% m/m of oil. It is dehydrated form of white coconut meat from freshly selected mature kernels.
    2. Low fat Desiccated Coconut with less than 60% m/m of oil. It is a dehydrated form of white coconut meat after extraction of the Coconut milk. The fat content of this product can vary but is usually in the range of 45% - 55%.

Additional quality requirements

Desiccated coconuts may be sized according to their granulometry into several categories. Cut sizes of Fine, Medium and Super Fine is widely used in the Confectionery and Bakery trades as toppings for cakes and pastries; fillers for candy bars; chocolates etc.

In addition to the Regular Cuts, Desiccated Coconut is also available in a variety of Fancy Cuts such as Chips, Flakes, Threads and Shreds. Desiccated Coconut Fancy Cuts are used as confectionery toppings and as breakfast cereal enhancers. The toasted and sweetened versions of Desiccated Coconut Fancy Cuts with their crunchy coconut flavour are also used as snacks.

Labelling

The name of the product shall be “Desiccated Coconut” preceded or followed by the common or ordinary name legally accepted in the country of retail sale. The name should indicate the oil content of the product. When applicable, the name may indicate the sizing of the product.

Information for non-retail containers shall be given either on the container or in accompanying documents, except that the name of the product, lot identification, and the name and address of the manufacturer, packer, distributor or importer, as well as storage instructions, shall appear on the container. However, lot identification, and the name and address of the manufacturer, packer, distributor or importer may be replaced by an identification mark, provided that such a mark is clearly identifiable with the accompanying documents.

In the case of retail packaging, product labelling must be in compliance with the European Union Regulation 1169/2011. This regulation is in use since 13 December 2014 but the obligation to provide nutrition information will apply from 13 December 2016.

Packaging

Packaging used for desiccated coconuts must protect the organoleptic and quality characteristics of the product, to protect the product from bacteriological and other contamination (including contamination from the packaging material itself) and not pass on to the product any odour, taste, colour or other foreign characteristics.

The most common types of packaging for desiccated coconuts in bulk are craft paper bags with inner sealed polythene to keep away from the atmosphere’s moisture. The most common standard bag size is 25kg but bags of 8kg, 10kg and 50kg are also used. Packed products should be stored in a clean, cool and dry place under room temperature of 26 o C or below. In normal storage conditions shell life of the products should be 12 months.

The bags are packed on EURO pallets (80 x 120 cm) and further transported on 20ft (500 bags of 25kg) or 40ft (1000 bags of 25kg) containers.

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2 . Which European markets offer opportunities for exporters of desiccated coconuts?

For general overview of the statistical analysis of the processed fruit and vegetables sector in the European Union please refer to CBI Trade Statistics for Processed Fruit and Vegetables

Imports

Analysis and interpretation

  • Over the last five years, imports of desiccated coconuts to Europe have grown by 8% annually in value, reaching €223 million and 118,000 tonnes in 2016. This trend provides opportunities for suppliers from developing countries.
  • In 2017 a debate about the healthy properties of coconut products was re-opened, starting with the statement from the American Heart Association that coconut oil is not considered healthy, as it consists of saturated fatty acids. Spokespersons of the coconut industry have reacted to this publication, for example in this publication from the Presidency of the Asian and Pacific Coconut Community. This debate may affect the market for coconut food products including desiccated coconut, since it may influence their healthy image. Especially virgin coconut oil has been promoted widely as a healthy superfood.
  • As desiccated coconut is not produced in Europe, all intra-EU imports originate from countries outside the European Union.
  • European imports of desiccated coconuts are diversified, and the three largest importers (the Netherlands, Belgium and Germany) account for less than 50% of total European imports.
  • The highest import growth in quantity in the last five years was in Ireland (32% annually), which increased its imports from 346 tonnes in 2012 to 1057 tonnes in 2016. High import growth was also noted in Croatia, Estonia and Bulgaria. However, those countries still account for a small share of total European imports of desiccated coconuts.
  • The largest imports from countries outside the European Union come from the Philippines (51% market share), followed by Indonesia (26%) and Sri Lanka (13%). In the range of top 10 European suppliers of desiccated coconuts, the largest import growth in the last five years was from Ghana (127% annually), Malaysia (87%) and India (25%). Especially significant import growth was noted from Ghana, where imports jumped from only 121 tonnes in 2012 to more than 3,200 tonnes in 2016.
  • Exports of desiccated coconuts outside the European Union are not significant, and intra-European Union exports represent 96% of total exports. All exported quantities are re-exports of desiccated coconuts imported from countries outside Europe.
  • Re-exports and exports of desiccated coconuts in the European Union are concentrated, and the two largest exporters (the Netherlands and Belgium) represent 68% of total exports. The highest average annual export growth in the last five years was from Bulgaria (101%) and France (37%).
  • Major external destinations for exported desiccated coconuts from Europe are Switzerland with 23% market share, followed by Ukraine (17%). The highest annual export growth was to Turkey, where export increased from only 10 tonnes in 2012 to 174 tonnes in 2016.
  • Imports of desiccated coconuts are very dependent on the development of the confectionery and bakery industry in Europe. As both industries have positive development forecasts, we can expect that the import of desiccated coconuts will have positive growth in the long term. Additionally, European buyers are looking for new suppliers and new sourcing countries. This provides opportunities for developing country suppliers who can meet standardised quality requirements.

Tips:

  • In addition to targeting the main import hubs, consider diversifying your exports of desiccated coconuts to fast-growing markets, such as countries in Central and Eastern Europe, as well as to Baltic countries.
  • Compare your company with competitors from the market leaders, the Philippines, Indonesia and Sri Lanka, and from countries which are gaining market share in Europe, especially Ghana.
  • Although the leading importing countries (the Netherlands, Germany, Belgium and the United Kingdom) provide the largest opportunities for developing country exporters, new suppliers should be aware of the strong competition from the suppliers who have already established their place in those markets.

Production and consumption

Due to climate, coconuts are not grown in the European Union except in minor quantities on small islands in the South of Italy and in overseas territories such as French Guyana. Therefore there is no production of desiccated coconuts in Europe and apparent consumption is calculated as difference between imports and exports.

Analysis and interpretation

  • Consumption of desiccated coconuts in Europe fluctuated in the last five years. Consumption of desiccated coconuts is directly connected to the world production of coconuts and closely related to climatic conditions which vary from year to year. Global production of desiccated coconuts is estimated to average between 180,000 and 290,000 tonnes annually.
  • The Philippines, Sri Lanka and Indonesia dominate the global production of desiccated coconuts. In the years when the global production is high prices are decreasing. In the years when production was affected by typhoons, supply is tighter, such as in November 2013 when Philippines production was damaged by the super typhoon Haiyan causing decrease of the world supply and the increase of prices. It is important for Developing Countries producers to try to balance the world supply as much as possible in order to keep the prices stable.
  • Largest consuming countries within the European Union are the United Kingdom, Germany and Spain.
  • The largest consumer of desiccated coconuts in Europe is the confectionery industry and smaller quantity goes to re-packing for the retail sale. The consumption of the desiccated coconuts in the majority of the European countries reaches a peak towards the year-ending months and the festive season culminating in Christmas and New Year.
  • Sales of organic desiccated coconuts as well as fair trade products are increasing in the Western European markets.

Tips:

  • Closely monitor the production in the Philippines as it determines the world supply. Also on the European market, producers from the Philippines are commonly reaching higher prices when compared with other suppliers such as Indonesia and Sri Lanka. Try to reach the same quality as leading suppliers from Philippines.
  • Instead of targeting the largest trading countries such as the Netherlands and Belgium, exporters from developing countries can directly export to the largest consuming countries such as the United Kingdom, Germany or Spain. However this approach needs to be carefully considered as many importers prefer to deal with already established European traders.
  • Regular information about coconut crops, processing and market situation can be found on the leading European information service for processed fruit and vegetables FoodNews
  • You can find information on international coconut production and processing on the website of the Asian and Pacific Coconut Community. More specifically you can find or purchase information about production including daily price information for coconut products on the website of United Coconut Association of the Philippines.

3 . Which trends offer opportunities on the European market for desiccated coconuts?

A general overview of the most relevant general market trends for developing countries exporters can be found on CBI Trends for Processed Fruit and Vegetables. In addition, there are some remarks that can be made about specific products.

  • Even as an exotic product in Europe, desiccated coconut has a position as a traditional bakery ingredient in many European countries. Good examples of this are ‘kokosmakronen’ in the Netherlands or coconut macaroons in the United Kingdom. Similarly it is widely used in applications such as breakfast cereals. In this regard, it may be compared to the banana, another tropical fruit widely available and accepted. More recently, the product is benefitting from the rising interest in Asian cooking.
  • The coconut is considered to be a healthy food, although there is some controversy about this, since coconut oil contains only saturated fatty acids. However there is a shift from fresh and desiccated coconuts in the European market toward value added forms of the product such as roasted coconut chips or coconut water as consumers seek a product on-the-go that can fit into their increasingly busy lifestyles.
  • There is increasing demand for transparency in the origin, nutrition and quality of the product. Beside basic quality requirements the European buyers search for desiccated coconuts with the intensive coconut flavour and aroma.
  • Organic desiccated coconuts are increasing sales within European Union.

Tips:

  • Anuga trade fair is the best place to monitor market trends and to meet potential prospects in Europe. It is held every two years in Cologne in Germany.
  • Exporters from developing countries of desiccated coconuts can benefit from the current trend of the health benefits of coconut including its high (soluble) dietary fibre content. This trend has made desiccated and toasted coconut the "choice ingredient" in many major food companies.
  • In order to improve the range of potential buyers, try to introduce possibilities for different "custom made" cuts.
  • Use of the internet and social media are great opportunities to introduce your company and market desiccated coconuts on the European markets.
  • Consider using the health trend to sell organic desiccated coconuts.

4 . Which requirements should desiccated coconuts comply with to be allowed on the European market?

For a general overview of buyer requirements in the European Union please refer to CBI Buyer requirement for processed fruit and vegetables.

Specifically for desiccated coconuts, consult the EU Export Helpdesk where you can select desiccated coconuts under the specific HS code 08011100.

For information on commonly requested standards check the International Trade Centre's Standards Map, an online tool which provides comprehensive information on over 170 voluntary sustainability standards and other similar initiatives covering issues such as food quality and safety. The most frequently asked standards are standards which regulate food safety such as FSSC 22000 or BRC which is more common on the UK market.

Legal Requirements

All foods including desiccated coconuts sold in the European Union must be safe. This applies to imported products as well. Additives must be approved. Harmful residues in pesticides are banned. It should also be readily obvious from the labelling whether a food contains allergens.

In the event of repeated non-compliance of specific products originating from particular countries, they can only be imported under stricter conditions such as having to be accompanied with a health certificate and analytical test report. Products from countries that have shown repeated non-compliance are put on a list included in the Annex of Regulation (EC) 669/2009.

The most common problems that European Union importers are facing when importing desiccated coconuts from Developing Countries are risk of contamination with microorganisms such as Salmonella and too high content of preservatives such as sulphite. In 2014 and 2015 European Rapid Alert System for Food and Feed (RASFF) reported 2 cases of presence of Salmonella spp and one case of presence of streptococci in desiccated coconuts from Indonesia and one case of undeclared sulphite in desiccated coconuts from Malaysia. The common industry practice allows maximum 50 ppm content of SO2.

Labelling Requirements

In December 2014 EU Regulation 1169/2011 went into effect. New labelling legislation forbids to mislead the consumer and to attribute to any food the property of preventing, treating or curing a human disease. Another change is allergens labelling where allergens have to be highlighted in the list of ingredients and requirements on information on allergens will also cover non pre-packed foods including those sold in restaurants and cafés. Also nutrition information is mandatory for most products. However, coconuts and desiccated coconuts are not on the obligatory list of allergens.

Common and niche requirements

  • Food safety certification is a common request by the European Union importers. The most common certification schemes accepted on the European markets are IFS, FSSC22000 and BRC.
  • Environmental protection, organic and fair trade certification schemes are becoming more and more popular in the European Union. For organic production you can consider IFOAM standard. The European Union regulates both organic food and drink produced and/or processed within the European Union and organic goods from elsewhere Commission Regulation (EC) No. 1235/2008 with detailed rules concerning import of organic products from third countries). These can readily be imported from non-European countries whose rules on organic production and control are equivalent to the European Union's - currently Argentina, Australia, Canada, Costa Rica, India, Israel, Japan, New Zealand, Tunisia, Switzerland and the USA.

For all other non-European Union countries, importers can have their organic products certified for import into the EU by independent private control bodies approved by the European Commission.

Tips:

  • Raw, unprocessed coconut supports the growth of salmonellae which is resistant to subsequent desiccation. Original contamination can happen because of contact with bacteria-containing soils followed by dispersion via infected coconut milk and shells. Pasteurization of raw coconut meat in a water bath at 80 °C for 8 to 10 min effectively killed such bacteria, did not injure the product, and provides a prophylactic method now widely used by the coconut industry. Compliance with Good Hygiene Practice, Good Manufacturing Practice and Good Agricultural Practice is recommended and commonly requested by buyers for mills producing desiccated coconuts. Refer to Codex Alimentarius for Code of Hygienic Practice for Desiccated Coconut.
  • To find out the Maximum Residue Levels ( MRL) that are relevant for desiccated coconuts, you can use the European Union MRL database in which all harmonised MRLs can be found. For desiccated coconuts there is a definition of maximum residue levels for 457 different pesticides.
  • Check with importers and experts if the food safety certification company used is approved by the European Union buyers.
  • For an overview of the independent certification programmes aimed at environmental protection and corporate social responsibility you can refer to supply chain of Mars which is one of the leading confectionery producers and big consumer of desiccated coconuts.

5 . What competition will I be facing on the European desiccated coconuts market?

Product competition

As desiccated coconuts are a common ingredient used in the baking and confectionery industry and in home baking and cooking, there are not many direct competitive ingredients. However there are several coconut based products with an increasing demand such as coconut water, spray coconut oil, coconut milk, coconut vinegar and virgin coconut oil (VCO) that can influence demand for desiccated coconuts, as well as supply.

According to the insights from FoodNews and Rotterdam trader Catz International the direct product competitor on the supply side is virgin coconut oil which is being produced from the same white coconut meat as desiccated coconut. It is stated that two tonnes of desiccated coconut production capacity is lost for every single tonne of virgin coconut oil being produced. With more desiccated coconut factories converting part of their capacity into VCO production, this will have an increasing impact on desiccated coconuts output.

Company competition

Desiccated coconuts exporters from developing countries should be aware of the main competitors from countries which are well established producers as well as countries that are gaining market share in the European markets. Apart from the Philippines, Indonesia and Sri Lanka there are a lot of other desiccated coconuts competitors from Vietnam, Singapore, Thailand and Malaysia. The offer from competing companies often includes other coconut products such as coconut oil, milk, cream, flour, water and water concentrate.

Tips:

  • You can increase your competitiveness if you include a range of coconut products beside desiccated coconuts in your offer.
  • Try to find data about competitors from other countries who are present on the European market. You can quickly make a selection by searching on export promotion organisations from competitors’ countries. The list of trade promotion organizations is available on the ITC website where you can search on the member companies which are promoted through specific organisations. More specifically you can search on the websites of Association of Philippine Coconut Desiccators (APCD) or Sri Lankan Coconut Development Authority (CDA).

6 . Which channels can you use to put desiccated coconuts on the European market?

Figure 6: Common trade channels for desiccated coconuts on the European Union market

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Figure 7: Use of desiccated coconuts by the food processing industry in the European Union

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Around 60% of the imported desiccated coconuts in the European Union are re-packed and sold by the retailers (Figure 6). Usually lower fat products are used for re-packing. Final consumers are HORECA sector and final consumers in their households.

Around 35% of imported desiccated coconuts are used by the food processing industry as an ingredient for final products.

Figure 10 shows structure of the use of the desiccated coconuts by the processing industry. The largest share of desiccated coconuts is used by confectionery industry as fillers inside chocolate bars, as ingredient in biscuits, toffees and chocolates. Larger cuts are used as snacks sometimes sweetened and toasted. In baking industry desiccated coconuts are used as ingredients and for cake decorations.

Examples of different trade channels for desiccated coconuts in the European Union are the following:

Tips:

  • The snack segment, although very small, usually pays more for bigger toasted cuts as this is the only final product aimed for immediate consumption. However you need to diversify your offer in order to supply different market segments. Also desiccated coconuts with high fat content will be paid better by the European importers.
  • Dealing directly with European processor will bring added value as there is no margin by the connecting traders. However, for many confectionery companies it is not very common to buy directly and they usually source desiccated coconuts from the well establish traders. Developing country exporters can carefully target the final segments as this is usually long way.

7 . What are the end-market prices for desiccated coconuts on the European market?

Indication of margins according to final retail prices for desiccated coconuts is not precise and Developing Countries exporters can have only a very rough general overview of the price development. However, very roughly, it can be estimated that the CIF price represents around 25% of the retail price of a retail pack of desiccated coconuts (which is usually packed in 250 and 300 g retail sizes). The best option to monitor prices is to compare your offer with the offer from the largest competitors. The prices are also different between producing countries and desiccated coconuts from Philippines as leading world supplier usually reach higher prices when compared to other producing countries because as they are considered as premium quality product by majority of the European buyers.

The highest price paid for a metric ton of desiccated coconut in over a decade was in February 2011. The price was US$ 3128 (€2784). This took place after a price tumble of two years, in which the lowest price recorded was in 2009 (July) at US$ 1085 (€966) per metric ton.

Average price developments, in USD per tonne, of the leading supplying countries in August 2017 (FOB):

  • Phillipines: 2,500 – 2,600
  • Indonesia: 2,430 – 2,460
  • Sri Lanka: 3,000 (for medium grade)

Generally prices for desiccated coconuts from all origins have shown an significant increase in 2017 compared to 2016.

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