You may not know much about the arcane world of foreign currency. But if you sell imported products, exchange rates have been bleeding money from your bottom line.
In 2003, the dollar declined about 30 percent against most of the world?s currencies. For importers, that means a 30 percent increase in the cost of goods, on top of any other price increases or boosts in the cost of doing business.
?It?s impossible,? says Joshua Scherz, chief operating officer of Blue Galleon Inc., a seafood importer in Wayland, Mass. ?It hammered us.?
Blue Galleon imports canned Bela-Olh?o sardines and skipjack tuna from Portugal. The euro cost 87 American cents when Blue Galleon launched the business. Now it?s $1.27. ?It just hits our bottom line,? Scherz laments.
On the other hand, the unfavorable exchange rate means that domestic products have new market opportunities at home. Retailers are looking for domestic replacements for pricey imports all over the store, from the cheese case to the chocolate counter.
For example, at Zingerman?s Delicatessen in Ann Arbor, Mich., a pound of Keen & Montgomery cloth-wrapped English cheddar is $19. Fiscalini Farms? bandage-wrapped cheddar from California?s San Joaquin Valley, named the best farmstead cheese in North America by the American Cheese Society, costs $16 a pound by mail order.
At Amazon.com?s gourmet food store, consumers will pay $26 for 10 ounces of Godiva truffles from Belgium, while 9 ounces of Ethel M truffles from Nevada cost $18. Stonehouse California Olive Oil?s premium Olio Santo is $11.40 direct from the grower for a 500 ml bottle, while Tenuta di Valgiano, named best olive oil by Cook?s Illustrated, is $30 for 500 ml at Amazon.
Says Debra Dickerson, who handles U.S. sales and marketing for both Redwood Hill Farm and Neal?s Yard Dairy, an artisanal cheese purveyor in England: ?It?s a very good time to buy American.?
What caused the once-strong dollar to fall so far in value last year? The glib explanation is world reaction against the U.S. invasion of Iraq, but in reality, the dollar?s value has been sliding since 2001, when the dot-com economy began to sour.
The Bush administration?s monetary policy has been to let the dollar decline in value, hoping that a weaker American currency would encourage foreigners to buy U.S. products, thus boosting manufacturers? sales. Low interest rates also conspire to keep the dollar weak.
That news, released in February, provoked frenzied currency trading that saw the euro flirt with $1.29 and the British pound sterling reach $1.90. Financial experts agree that the federal policies that contributed to the dollar?s decline—including low interest rates—aren?t likely to change much before the November election.
How are producers and importers coping? By branching out, Scherz says. Along with the sardines, Blue Galleon now handles Wild Catch salmon from Alaska, a line that complements the Portuguese products? nutrition profile (all are laden with omega-3 and -6 fatty acids) and provenance from contaminant-free water.
Retailers looking for lower-priced alternatives that still bear the cachet of imports can also look to products from Australia, South Africa, Canada and other countries where costs are lower and growing conditions are similar.
While much stronger than it was a year ago, the Australian dollar is still comparatively weak against the American greenback. Fifty-five Lincoln pennies would buy an Australian dollar 18 months ago; the rate was up to 79 cents in mid-February.
Known worldwide for wines, Australia exports many other food products from its Mediterranean-like regions, including fruit products, olive oil and cheese. Maggie Beer is a vintner, chef and author from the Barossa Valley in south Australia. At the January Fancy Food Show in San Francisco, American foodies got their first look at her line of fruit pastes, jams and verjuice, a cooking liquid made from unfermented grapes.
The weak U.S. dollar is ?terrible for us in export,? Beer admits. But she?s optimistic that such unusual products as verjuice and blood plum or quince pastes will fly in the North American market because they appeal to consumers who want to taste something different. Her products are not certified organic but ?for all the years I?ve been doing food, I?ve never used preservatives,? she says. ?We were a farm first, then a restaurant.?
The appeal of a good tale also helps sell imported goods. As he sampled King Island Dairy Endeavour Blue and Stormy washed-rind cheeses at Fancy Foods, Steve Berman, general manager for new business and export development for King Island Group, talked about the 100-year-old cheese maker on a speck of land off the coast of Tasmania. King Island Dairy buys all the milk on the island, which boasts 1,400 residents and one policeman, who is also the ambulance driver. ?The beauty of this brand is, it?s a story,? he says.
Natural Foods Merchandiser volume XXV/number 4/p. 18, 20