Pistachio : Presence of the U.S. Becomes Stronger

Pistachio Kernel

Turkiye

Published Jul 2, 2018

As a top pistachio producing country, the U.S. experienced 29.6% growth in production as of 2017. However, competitors like Iran and Turkey was severely hit by drought in 2017, resulting in production reduction. This provided more opportunity to the U.S. producers by giving more room for export.

On the supply-side, we expect further growth in pistachio consumption due to the global trends towards health-conscious eating. For instance, organic food consumption in Europe more than doubled over the last decade.

Pistachio in Consumption

Known for its low-fat content as compared with other nuts, pistachios are plant-based seeds rich in nutrients. They are grown from trees and thrive best in areas where winters are cold and summers are long and dry. Though they are drought tolerant, constant exposure to high level of humidity will damage the tree. As for harvesting, pistachios develop in early summer and matures at end of August. In pistachio production, high fluctuations can be observed due to their cyclical nature of bearing heavily in alternate years.

In the past, pistachios have been typically found as condiments on ice creams, cookies, and other desserts. Today, however, pistachio oil content is being actively studied for other developments. Because of its subtle and mild flavor, pistachio as flavoring has also been massively popular among all age groups. In North America alone, pistachio-flavored products doubled between 2015 and 2016.

The U.S. Takes the Lead in Production

Source: Wholesale price trend of Pistachio provided by Tridge

The past two years of successful harvests and stable price have encouraged more farmers and growers to enter the pistachio market. As of 2016, thousands of new acres have been developed for pistachio production, reaching global production to 1.1 million tonnes.

Source: Pistachio production data provided by Tridge

The top five producers of pistachios are the U.S., Iran, Turkey, China, and Syria. Together, they dominate the global production. The U.S. tops the list by holding 38.5% of the share.

In 2017 the U.S. produced 407,000 tonnes of pistachios, demonstrating 29.6% growth from last year. Favorable harvest condition contributed towards such growth; good weather condition, sufficient winter chills, adequate bloom overlap in the U.S.

Iran is the second largest player, holding 29.8% of share in the production market. According to CEIC, Iranian pistachio production in 2017 recorded 310,000 tonnes, down 5,000 tonnes from 2016. Iran is expected to further reduce its production by 30% this harvest year starting in March 2018, as Iran struggles to combat the shortage of water. Turkey was also hit by severe drought, recording annual production of 78,000 tonnes in 2017; half of 2016 production.

Pistachio Trades Updates

Source: Pistachio export data provided by Tridge

In 2016, the global pistachio export increased by 30% from the previous year. The top three exporters are the U.S. at over USD 1.03 billion in value (51.7% share of the world's export), followed by Iran at USD 521 million (26% share), and Turkey, exporting USD 58.9 million (2.9% share) as of 2016.

Since 2002, Iran and the U.S. have rivalled each other to dominate the pistachio market. Both are competing to target China and other top pistachio importers. Iran has long benefited from global trade due its strategic location and product quality. Iranian exporters can easily access China and European countries, giving it a proximity advantage.

Iran used to face economic sanctions and challenges that were put in place for its involvement in nuclear program. However, in 2016, following the Iran nuclear deal, also known as The Joint Comprehensive Plan of Action (JCPOA), those restrictions were lifted, allowing Iran to re-enter the international market.

Due to recent unfavorable weather condition in Iran, the U.S. could potentially replace insufficient supply of Iran. Still, in the long-term, as water shortage resolves, Iran is expected to catch up the amount of production and maintain its position as a major pistachio exporter.

Source: Pistachio import data provided by Tridge

Major importers of pistachio are Hong Kong and EU countries. Hong Kong was the largest importer accounting for 37.1% of global imports. Note that pistachios consumed by the Chinese market are exported from Hong Kong, a major trading hub for U.S. consumer-goods that are re-exported to China and other Asian countries. Hong Kong is one of the major importers of the U.S. tree nuts and continues to be the top destination for the U.S. tree nuts export. Because Hong Kong and Mainland China share many cultural values and similar market trends, we see both countries experiencing similar rate of increased consumption in tree nuts, majority of which are pistachios.

Largest pistachio importers in the EU are Germany (8.1% share), Italy (5.2% share), Netherlands (5.0% share), and Luxembourg (4.8% share) respectively. The EU pistachio production is not sufficient enough to meet its rising domestic consumption. As a result, the EU is a net importer of pistachio, most of which are imported from the U.S. and Iran. The EU and China account for 90% of the pistachio imports.

According to USDA, import in EU increased roughly 20% from 2015/2016 to a total of 89,000 tons. Similarly in China, import expanded nearly 60% to a record 116,000 tons. Shanghai and Beijing were the key markets for US pistachios. The rise in import and consumption could be attributed to trend towards health-conscious eating.

Health-Conscious Eating Supports Pistachio Market

Thanks to the increasing demand for nutritious food and healthy eating, the pistachio market in the Asian Pacific region is growing. In particular, the Indian food industry is expected to reach USD 68 billion by 2018, and the growth will contribute to the expanding pistachio market in India.

North America region has the second largest pistachio market for the same reason: trend towards healthy snacks and diet. AAFC predicts that snack products will grow at an annual growth rate of 2.8% from 2016 to 2020. Nut products within the segment will reach USD 5.3 billion by 2020 at an annual growth rate of 2.1%.

Pistachio market is significantly increasing in EU, as demand for pistachio as flavoring agent in baked-goods is growing. Moreover, demand for healthy snacks is further driving the market. There is an increasing demand for pistachios from snack and food industry all around the world. Consumer tendency towards health-conscious decisions is adding to the growth.

The U.S. pistachio production growth is expected to continue, backed by favorable farming conditions. As a result, rising global demand is expected to be met, leading to organic growth in the market value. However, droughts and water shortages are negatively affecting other major pistachio producers like Iran and Turkey. These extreme weather conditions in the Middle East and some parts of Asia show no sign of abating. Producers from these regions will most likely continue to experience a downward trend. As of right now, pistachio buyers can expect to find a wide variety of suppliers from the U.S. given its thriving market.

Contact Us:

Editor: Wonjung Yun / wonjung.yun@tridge.com

Sourcing Team Expert: Elly Lee / eunjeong.lee@tridge.com

Or request for quotation through: https://www.tridge.com/inquiry