Crops benefit from holiday demand


Issue Date: January 4, 2017
By Ching Lee
Baking, feasting and toasting during the holiday season boost demand for a number of California-grown crops and agricultural products. Marketers say the just-concluded year-end holidays brought an upturn in sales, and that the coming lunar New Year celebrations will also benefit demand for a number of products.

Year-end celebrations may be finished, but a number of California agricultural products continue to feel the benefits of a traditional bump in sales created by increased baking, feasting and toasting during the holiday season.

Holiday festivities boost sales across many wine categories but particularly sparkling wine, which remains a favorite for ringing in the New Year. About 30 percent of sparkling wine sales happen during the last two months of the year—10 percent in November and 20 percent in December, according to Nielsen. During the rest of the year, each month represents about 6 to 7 percent of total annual sales.

Table wine also sees a spike in sales—with the last eight weeks of the year averaging 9 to 10 percent of annual sales. This compares to average monthly sales of 7 to 8 percent the rest of the year.

"Wine sales are pretty consistent throughout the year," said Gladys Horiuchi, spokeswoman for the Wine Institute. "Sparkling wine is the wine that shows the most seasonality of sales."

That may be changing, as more people break out the bubbly for different occasions year-round. Horiuchi noted that sparkling wine sales in the U.S. have been on an upward trend. During the first nine months of 2016, U.S. sparkling wine sales grew 11 percent.

Turkey remains popular year-round as deli meat, but the whole-body bird is still a favorite for Thanksgiving and Christmas, said Bill Mattos, president of the California Poultry Federation. About 30 to 40 percent of annual turkey sales occur in November, he noted, while 25 percent of what's normally produced for Thanksgiving is for the Christmas market.

"Thanksgiving is a huge time for us," he said. "This year was really good too, because we basically sold everything we produced for the holidays; all of the turkeys were gone."

Chicken sales, however, typically drop off in November and early December, and tend to pick back up by the end of December, Mattos said, noting that January is usually "a huge chicken month because people are ready to cut back and eat something lean and healthy."

Other poultry such as duck and squab also have become more popular during the holidays, especially in ethnic communities, he said. Those types of birds "are really big" during the lunar New Year celebration at the end of this month, he added.

California egg producers felt the pinch of low egg prices for most of 2016, as U.S. egg production recovered from the 2015 outbreak of avian influenza with fully restocked barns and supplies that now outpace demand.

San Diego County egg farmer Frank Hilliker said the holidays and winter season have helped to increase demand a tad, with people eating more eggs now that temperatures are colder. He's seen a 10 percent jump in sales because of holiday baking, but he noted the stronger prices won't last.

"It's all going to go away," he said. "Prices have been horrible since after Easter (last year) because of overproduction. I imagine sometime in January to sometime in February, we're going to see the market go down again."

Another baking staple—butter—also does well during the fourth quarter, said Beth Ford, chief operating officer of Land O'Lakes. The dairy cooperative typically begins planning for holiday production and building inventory during the second quarter by reviewing market trends and talking to its customers.

"Consumers continue to make the switch to butter from other products, continuing a several-year trend," she said. "Over the last two years alone, our demand on a pound basis is up 15 percent from just two years ago."

California almonds and walnuts are used in many holiday foods and fourth-quarter sales are typically the heaviest, said Chad Temel, who markets the nuts for Stockton-based Pearl Crop. He estimated the company ships 55 to 60 percent of its crop during the last three months of the year.

Because the company exports more than 95 percent of its nuts, Temel said the holiday rush usually starts as soon as the crop is harvested to allow for shipping time—and because the nuts often need to be further processed, packaged or used in different forms once they arrive at their overseas destinations. He noted export markets buy mostly in-shell nuts and prefer to do their own shelling.

The California Walnut Board began its advertising campaign with heavy emphasis on holiday baking in early November and ran it right up until Christmas, said Jennifer Olmstead, the board's director of marketing and domestic public relations.

"November, December is a very traditional time of year to use walnuts, particularly for holiday baking," she said. "We have really embraced that with a lot of our outreach efforts."

Although shelled walnuts still make up the bulk of the domestic market, consumption of in-shell walnuts remains a popular tradition during the holidays, Olmstead noted. Walnut sales don't necessarily slow down after the holidays, she added, as more nuts are moved to replenish markets.

Board Executive Director Michelle Connelly also pointed out that the holiday season for walnuts is not limited to Thanksgiving, Christmas and New Year's Day in the U.S. A string of holidays in the fall through the end of January in Canada, Europe, India, Korea, Japan and China all help to bolster walnut exports and consumption, she said.

The use of California raisins in more recipes for moon cake, a traditional Asian pastry popular during the lunar New Year celebration, also may help boost sales later this month, said Larry Blagg, a senior vice president of the California Raisin Marketing Board. But November and December remain peak months for raisin consumption, as people use the dried fruit in their holiday dishes and baking recipes, said Jackie Grazier, marketing director for Sun-Maid Growers of California. Data from the market research company IRI show sales of raisins, not counting snack-sized units, are 30 percent higher during this period.

Not all holiday food items experience the seasonal market uptick, however. Even though flour is a major baking ingredient during the holidays, a rise in flour purchases hasn't necessarily translated to better prices for wheat, said Claudia Carter, executive director of the California Wheat Commission. Unlike specialty products such as raisins, nuts and wine that are produced mainly in California, wheat is traded globally and grown in many regions of the world. Not only is there a huge surplus of wheat on the global market, but U.S. wheat consumption has been flat, she added.

"Wheat is more related to the commodity market and currently prices are very depressed," Carter said.

(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.