Entering the European market for macadamia nuts

Importers/wholesalers

In most cases, importers act as wholesalers. They often sell macadamia nuts to roasting companies which process and package them for sale into consumer packages. Some importers also have their own processing and packing equipment, so they can supply retail and foodservice channels directly.

Importers are usually quite knowledgeable when it comes to the European market and they closely monitor developments in macadamia nut producing countries. Therefore, they are your preferred contact, as they can inform you in good time about market developments and provide practical advice about exports. Macadamia nut importers normally import other types of edible nuts and dried fruit as well, so offering other products in addition to macadamia nuts can increase your competitiveness.

For new suppliers, the challenge is to establish lasting relationships with well-known importers, as they usually already work with selected suppliers. Established importers perform audits and visit producing countries on a regular basis. Many new contacts find they must offer the same quality at lower prices than their competitors, at the start of the relationship.

The positions of importers and food manufacturers are put under pressure by retailers. The higher demands imposed by the retail industry determine the supply chain dynamics from the top down. The pressure translates into lower prices but also added value in the form of as “sustainable,” “natural,” “organic,” or “fair trade” products. As a result, transparency in the supply chain is needed. To achieve this, many importers develop their own codes of conduct and build long-lasting relationships with preferred developing country suppliers.

Agents/brokers

Agents normally act as independent companies that negotiate on behalf of their clients and as intermediaries between buyers and sellers. Typically, they charge commissions ranging from 2% to 4% of the sales price for their intermediary services.

Another activity performed by these parties is the supply of private labels for retail chains in Europe or the representation of specific brands as exclusive distributors. For most developing country suppliers, it is very challenging to participate in the demanding private label tendering procedures or to sell their own brands to the retailers. Therefore, some agents, in cooperation with their macadamia nut suppliers, participate in the procurement procedures put out by the retail chains.

Examples of macadamia nut agents in the leading European markets include the following: Hpm Warenhandelsagentur (Germany), California Direct (Germany), Global Trading (Netherlands), J.M. van de Sandt (Netherlands), Secoex (Spain) and R.S. Tinsley (the United Kingdom).

Retail channel

Retailers rarely buy directly from developing country exporters. However, certain developing country exporters (processors) package their products directly for private labels, or even their own label brands. Recently, the retail sector has become increasingly polarised, seeing a shift towards either the discount or high-level segment. Consolidation, market saturation, fierce competition and low prices are key characteristics of the European retail food market.

The leading food retail companies in Europe differ per country. The companies with the largest market shares are Schwartz Gruppe (Lidl and Kaufland brands), Carrefour, Tesco, Aldi, Edeka, Leclerc, Metro Group, Rewe Group, Auchan, Intermarché and Ahold (Delhaize, Albert Heijn and several other brands).

Foodservice channel

The foodservice channel (hotels, restaurants and catering establishments) is usually supplied by specialised importers (wholesalers). The foodservice segment often requires specific packaging of macadamia nuts in weights of 1kg to 5kg, which is different from the requirements for bulk or retail packaging.

World cuisines, healthy food and food enjoyment are the major driving forces in the European foodservice channel. The fastest-growing business types tend to be new (healthier) fast food, street food, pop up restaurants, as well as restaurants serving international cuisines and sandwich bars.

What is the most interesting channel for you?

Specialised importers seem to be the most useful contact if you aim to export macadamia nuts to the European market. This is specifically relevant for new suppliers as supplying the retail segment directly is very demanding and requires considerable investments in the area of quality and logistics.

However, packing for private labels may be an option for the well-equipped and price competitive producers. Still, private label packing is often done by importers that enter into contracts with retail chains in Europe. In addition, in order to have full control of the processing, it is easier to roast and pack macadamia nuts for the snack segment within Europe. As the cost of the labour in Europe is increasing, macadamia nut importers sometimes search for more cost-effective roasting operations, in Eastern Europe or developing countries, for instance.

3. What competition do you face on the European macadamia nuts market?

Which countries are you competing with?

South Africa, Kenya and Australia are the main competitors for emerging suppliers of macadamia nuts to Europe. Those three countries supply around 85% of all macadamias to Europe, followed by Malawi, which has a market share of around 4%. There are a lot of initiatives in other countries to increase production capacities. Planting of macadamia trees is the most intensive in China, so it is likely that China will become the most important supplier in the near future.

South Africa, the leading supplier of macadamia nuts to Europe

South Africa is the world’s largest producer and exporter of macadamia nuts. In 2018, South Africa produced around 17,000 tonnes of macadamia nut kernels. Top South African export destinations were the United States of America (38% of the country share) and China (20%). In addition, 24,000 tonnes of in-shell macadamias were exported in 2018 from South Africa, mainly to China and Vietnam.

Around 30% of the total South African kernel supply (2900 tonnes) is exported to the European Union. 51% of South African exports of macadamia nuts to Europe go to the Netherlands, followed by Germany (24%), Spain (19%) and the United Kingdom (10%).

Macadamia nut production is the fastest growing tree crop industry in South Africa. In 2018 more than 1.9 million trees were planted, and the industry has grown by an estimated 6200 hectares. More than 50% of the macadamia nuts are produced in the Mpumalanga province, followed by KwaZulu-Natal and Limpopo. Beaumont (695) is the most widely planted cultivar, followed by others such as A4, 816, 814, Nelmak 2, 695 and 842. The industry is export based with more than 97% of annual production being exported abroad.

South African growers have established an industry body, the Southern African Macadamia Growers Association (SAMAC). SAMAC supports the sustainable development of the South African macadamia industry through various activities. Considerable effort is invested in research and development programmes. Activities promoting exportation are also supported by the South African Department of Trade & Industry through participation in trade fairs and other marketing activities.

Kenya, the fast-growing supplier

Kenya is the third-largest producer of macadamia nuts in the world, producing an estimated 7700 tonnes of macadamia kernels in 2018. The export of macadamia nut kernels from Kenya is showing significant growth. Exports increased from 4.9 thousand tonnes in 2014 to more than 6.4 thousand tonnes in 2018. Most of the exports go to the United States (59%).

Kenyan exports of macadamias to Europe reached 1.7 thousand tonnes in 2019. Germany is the main destination for Kenyan macadamias with a 57% share followed by the Netherlands with a 38% share. Kenyan exports to Germany have increased significantly, from only 150 tonnes in 2014 to almost 1000 tonnes in 2018.

In contrast to production in Australia and South Africa, the production of macadamia nuts in Kenya relies on small-scale farmers. In Kenya, more than 100,000 farmers grow macadamia trees. The major macadamia production areas in Kenya are counties of Meru, Kirinyaga and Muranga. The Agriculture Food Authority (AFA) is officially responsible for the registration of macadamia processors in Kenya. There are now around 30 licensed macadamia processors in Kenya and this number increases every year. With increased acreage devoted to the crop, production is expected to reach 60,000 tonnes by 2022.

In order to support the production of macadamia and other nuts in Kenya, companies have established the Nut Processors Association of Kenya (NutPAK). This industry platform is focuses specifically on macadamia nuts, cashew nuts and groundnuts. NutPak will host the International Macadamia Symposium in August 2021.

Australia, a long tradition and the leading supplier of Asian markets

With a crop of 14,800 tonnes (kernel basis), Australia was the world’s second largest macadamia producer in 2018. Considering average production over the last five years, Australia was the world’s number one producer. In 2018, Australia exported more than 24,000  tonnes of macadamia nuts. The top destinations for Australian macadamias were China (24%), Japan (19%), Vietnam (19%) and the United States of America (12%).

Most of Australia’s macadamia exports in 2018 (15,700 tonnes) were in-shell nuts, while the remaining 8500 tonnes were kernels. Most of the in-shell exports go to China, where consumers favour the in-shell product. For the Chinese market, macadamias are flavoured and cut to allow hand cracking using a key.

A small proportion (13%) of Australian macadamia kernels were exported to Europe (1200 tonnes). Most of Australian exports go to Belgium (56%), followed by the Netherlands (22%) and Germany (12%). In 2014, exports to Europe totalled 652 tonnes, but that figure has since doubled.

Macadamias are grown along the eastern Coast of Australia. Approximately 41% of the Australian crop is produced in Bundaberg and 35% in the Northern Rivers region. Production is constantly increasing and over the next two years, the planting of macadamia trees in Queensland and in the Clarence Valley is expected to increase significantly.  In 2018 approximately 750 macadamia growers produced macadamia nuts in Australia. The production area consists of 7.3 million macadamia trees grown on 25 thousand hectares of land.

Macadamia production and marketing are strongly supported by the Australian Macadamia Society(AMS). AMS is a key platform for research, development and innovation in the Australian macadamia industry. AMS strongly promotes consumption of macadamias in Australia and worldwide. One of its activities is the organisation of the Macadamia Innovation Challenge with the aim to create new food applications for macadamia nuts. It seems that constant efforts to promote new ways of consuming macadamia nuts has resulted in Australia holding a larger share of ingredient segment (20-30%) than Europe. Within Europe, the promotion of Australian macadamias is currently focused on the German market with several activities including the creation of the specialised Australian Macadamias website in the German language.

Malawi, focus on export to the Netherlands

With a production of 1600 thousand tonnes in 2018, Malawi is the world’s seventh largest producer of macadamia nuts, accounting for 3% of global production. The leading export destination for Malawian macadamia nuts is the United States, followed by South Africa. Within Europe, almost all exports go to the Netherlands. In 2018, Malawi exported around 500 tonnes of macadamia kernels to Europe with more than 80% of that amount going to the Netherlands. The remaining quantities were exported to the United Kingdom.

In the last two years, 230,000 macadamia trees have been planted in Malawi and the target is to reach 300 trees. The country has five commercial processing facilities with Thyolo Nut as the leading processor. The production of macadamia nuts is supported by Tree Nut Growers Association of Malawi.

Hawaii, the origin of modern macadamia nuts

The United States is the world’s fifth largest producer of macadamia nuts with a production of 4300 tonnes in 2018. Both kernels and in-shell nuts are exported. China is the main destination for  exports of in-shell macadamias from the US, while Canada is the main market for macadamia kernels. In 2018, exports to Europe totalled around 290 tonnes with most of the exports going to Luxembourg. Luxembourg is a processing country where imported macadamias are roasted, packed and shipped to other European markets.

The centre for macadamia nuts in the United States is Hawaii, but they are also grown in Florida, California and the southern regions of Texas. The macadamia is native to Australia, but most of the world’s cultivated macadamia trees were bred in Hawaii from seeds collected in Australia in the late 19th century. Recent genetic research suggests that the global macadamia industry originated from a site near Gympie in Queensland, Australia and possibly from a single tree.

The leading macadamia organisation in the United States is the Hawaii Macadamia Nut Association. This association actively promotes the growing of macadamia trees and organises events to inform members about the latest research on topics such as: grafting, soil analysis, pest control and food safety requirements.

Guatemala

Accounting for more than 70% of in-shell exports, Guatemala is increasing its exports of macadamia nuts worldwide. The main destination of in-shell nuts is China while the largest proportion of the kernels are exported to the United States. Guatemala is a relatively small supplier of macadamia nuts to Europe, exporting less than 200 tonnes in 2018. The majority of macadamias were exported to the Netherlands (60%) followed by Germany (40%).

Which companies are you competing with?

The macadamia nut supply chain consists of thousands of farming, processing and exporting companies all over the world. Therefore, the companies mentioned below are just a few examples of successful exporters to the European and international macadamia markets. There are many more. However, there are companies which are very international and not connected to a single production country. Those companies specialise in sourcing macadamia nuts from different origins. The two most notable examples are Green & Gold Macadamias and Macadamia Marketing International.

Both companies are among the world’s leading marketers of processed macadamias. Although they are headquartered in Australia, they sell macadamias worldwide from the suppliers in different countries: Australia, South Africa, Brazil, Malawi and Kenya. This variety of sourcing is one of their key strengths, as supply is not affected by possible seasonal variations, crop failure or weather events in a specific region.

Another example of an internationally operating macadamia company is Camelia PLC, a global agricultural company, which is the second largest producer of macadamias in the world. Camelia produces macadamias on farms in Kenya, South Africa and Malawi. Specialised divisions of the macadamia company  include Maclands and two producing companies called Eastern Produce (Malawi and South Africa) and Kakuzi (Kenya). At the beginning of 2019, Green & Gold Macadamias (G&G) and Camellia Group announced their strategic macadamia marketing partnership. This will enable Green and Gold Macadamias to realise 20% of global macadamia nut sales.

South African macadamia companies

Nearly 500 growers and 21 processing and export companies are members of SAMAC. A number of growers are Global GAP accredited and most of the cracking facilities are HACCP and/or ISO 9001 accredited. In addition to production and processing standards, many companies are certified by the Sustainable Initiative of South Africa (SIZA) for compliance with SIZA Social Standard.

Some of the notable companies in South Africa are the following:

• Green Farm Nuts – one of the leading processors of macadamias in South Africa. The company sources macadamias from a large network of growers which are supported by training and technical tools to improve production. With three large processing facilities, Green Farm Nuts is the largest processor in South Africa. In order to prepare for the expected increase of the macadamia crop in South Africa, Green Farm Nuts launched the world’s largest macadamia processing facility in Mpumalanga in 2018. The company plans to continuously increase processing capacities to 25,000 tonnes. Green Farm Nuts is one of the partners of Green & Gold Macadamias.
• Other examples of South African macadamia companies include Mayo Macs, Valley Macadamia Group, Golden Macadamias, Amber Macs and Khuvuka.
• A consortium of growers - called Global Macadamias, is constructing the world's largest macadamia processing plant in Alkmaar, Mpumalanga. The first phase involves the construction of a facility which will have the capacity to process 15,000 tonnes and will be put into use in the 2020 season. Agristar Macadamias, Barberton Valley Plantations, Vosmac, Ivory Macadamias, Joubert & Seuns and Hotazel Developments are shareholders of this facility.

Kenyan macadamia companies

The Kenyan macadamia nut sector is characterised by a large number of small and medium-sized processors. However, one of the leaders is Kenya Nut Company, which is a globally recognised supplier of macadamia and cashew nuts. Kenya Nut Company has over 4000 employees and operates seven farms on over three thousand hectares of land. This macadamia processing factory is located in Thika town and represents one of the leading processing macadamia facilities in the world.

• Other examples of Kenyan Macadamia Companies are: Limbua (German–Kenyan partnership specialised in the supply of organic macadamia nuts), Kakuzi (already mentioned as a part of the Camelia group), Sasini, Premier Agro Company, Equatorial Nut Processors, Jungle Nuts, Afrimac, Privamnuts, Meru Equatorial Nuts, Superfine African Nuts, Paem and Hanjonuts (another German-Kenyan organic macadamia partnership).

Australian macadamia companies

The Australian macadamia supply chain is very organised. More than 750 growers are united in cooperatives and they sell in-shell nuts to processors. The farmer’s price is based on a quality assessment, variety of macadamia nut and percentage of kernels inside in-shell nuts. Many processing facilities are owned by grower cooperatives. Prices paid to farmers are transparent and are published regularly by AMS. After processing and packing for exportation, processors either offer macadamia nuts on the international market or they sell them via specialised marketing companies, such as  Green & Gold Macadamias, which was already mentioned above.

One of the most notable Australian macadamia companies is the Macadamia Processing Company (MPC). MPC is owned by over 180 macadamia growers and processes between 10,000 and 13,000 tonnes of macadamia nuts annually (approximately 20-30% of the Australian crop). In 2019, MPC completed the acquisition of Pacific Gold Macadamias.

• Other examples of Australian macadamia suppliers and processors include Macadamia Marketing International (the world’s largest single supplier of macadamia kernels) Macadamias Direct, Nutworks, Stahmann Farms and Nambucca Macnuts.

Macadamia companies from other supplying countries

• Malawi – Many macadamia companies in Malawi are the result of foreign investments. The companies which were already mentioned: Eastern Produce (macadamia division of Camelia) is the largest grower, cracker and exporter of macadamia nuts in Malawi. Thyolo Nut is a subsidiary of London based PGI Group, while Tropha Estate (part of Jacoma Estate) is part of the British based AgDevCo investment company.
• The United States – Mauna Loa (the largest in Hawai), MacFarms (Hawai), Olson Trust (Hawai), Royal Hawaiian Orchards (Hawaii, part of the Buderim Group), Gold Crown (California).
• Guatemala - Alimentos Selectos, Camaco, Industria Guatemalteca de Macadamia.

Which products are you competing with?

Macadamia nuts are a unique nut in terms of their flavour. It is unusual to consider alternatives to macadamias. Taking a broader view,  other luxury ‘tree’ nuts such as almonds, pistachios and cashew nuts can be considered competitive with macadamia nuts. The competitive advantage of all other “luxury” nuts is that they are still cheaper than macadamias.

4. What are the prices for macadamia nuts?

Depending on the country, retail chain and brand, prices of macadamia nuts sold to final consumers vary significantly across Europe. The retail prices of salty roasted macadamia nuts usually range from €25/kg to €45/kg. This price indication does not tell macadamia nuts suppliers a lot as the final price is very different from the export price due to the addition of many other costs, such as transport, roasting, packing, sales and profit margins. The approximate breakdown of macadamia prices is shown below.

Table 1: Breakdown of the retail price for macadamia nuts

Steps in the export process	Retail price breakdown (margin addition)
Farmers, traders and local shipping	8%
Shelling and processing	40%
Export, shipping and warehousing	45%
Roasting, packing and distribution	50%
Retailers price	100%

The export price of macadamia nut kernels has varied depending on the season. Prices depend on the form in which they are traded, quality, variety and origin. The prices of macadamias from South Africa and Australia are often higher than the prices of macadamias from Kenya and Malawi. For example, the average FOB price from Australia in 2019 was €15/kg to €17/kg at the beginning of the year and went down to €11/kg to €13/kg towards the end of the year. Export prices from South Africa were in a similar range, while the average FOB prices for macadamias from Kenya were €10/kg to €12/kg at the beginning of the year and increased to €13/kg to €14/kg in the last quarter of 2019.

This study was carried out on behalf of CBI by Autentika Global.