The dragon fruit market is experiencing strong growth due to the increasing demand for fresh and exotic tropical fruits because of their health benefits, which are highly sought after in developed countries, and the rising incomes of consumers, especially in developing countries. Despite being relatively new in Europe, the market is highly promoted and attracts more consumers, which are the main factors driving the growth of the dragon fruit market. Demand for dragon fruit in the United States is increasing, transitioning from being an exotic product in Asian and ethnic markets to being more widely available in the general market. This trend began before the pandemic when consumers showed increased interest in the product and its variety, which benefited from dragon fruit consumption. This growing demand represents an opportunity for producers in developing countries in Latin America, especially in Peru.
New markets for Peruvian fruits
According to Jennifer Contreras, head of Agricultural Development and Irrigation (Midagri), Peru intends to open up to new markets in the coming year to remain one of the region’s leading exporters of agricultural products. During her presentation of the 2024 Public Budget in the Congress of the Republic, the minister stated that Peruvian-produced products will be distributed in South America, North America, Central America, and Asia. It was reported that it is planned to introduce Aguaymanto and pitahaya into the U.S. market, while bananas will be exported to China (Artica). In 2022, 3.5 tons of pitahaya were shipped for $15,000, while 46 tons of Aguaymanto were shipped for $326,000. Although most products are destined for Europe, dragon fruit and Aguaymanto can be exported from Peru to the United States. Josué Carrasco, the general director of plant health at the National Agrarian Health Service (Senasa), confirmed that an agreement had been reached with their U.S. counterpart, the Animal and Plant Health Inspection Service (APHIS), for dragon fruit and Aguaymanto fruits from Peru to be exported to the United States without the mandatory quarantine treatment starting from the third quarter 2024, after demonstrating that these fruits do not transmit fruit flies (Fresh Plaza). In 2023, Peru began harvesting the first tons of commercially viable pitahaya. According to data provided by the Veritrade portal in February, Camposol was one of the first companies to carry out exports by sea. According to the website dedicated to international trade, the agro-industrial company was the first to ship 15 tons of pitahaya by sea to Europe (Rotterdam, Netherlands). It also sends this fruit by air to the same place (Gestion).
Dragon fruit taste
In 2017, Peru sent dragon fruit, also known as “pitahaya,” to France for the first time. At that time, Agrokarú, a company exporting exotic fruits, had only 4 hectares (ha) of Palora dragon fruit, a variety originating from Israel and Chachapoyas, all with yellow skin and white pulp, as recalled by Germán Caballero, an agronomist who was its general manager. EpicFarms, a third-party-backed agricultural company, has recently experienced increased production, with 800 hectares planted by various producers throughout the country. The company is cultivating in multiple locations below 2,600 meters above sea level. The company is exploring and installing different varieties with export potential, with a global trend towards red-fleshed pitahayas. The fruit is expected to be crunchy, have a sweet and sour taste, and have Brix degrees of 18 and 19. Global trade is experiencing a trend toward red pitahayas. In Peru, more American beauty crops, including red skin and flesh, are being produced (Ortiz).
Pisco dragon fruit will enter European and U.S. markets next year.
Epic Farms is preparing its first commercial export of pitahaya to the United States and Europe as part of its commercial growth plan. The plant began its harvest in April 2023 in the Humay Valley, Pisco. The company will send 45 hectares of the American Beauty variety to the United States, Europe, Canada, and China via Hong Kong. The bulk of the export will be in the 2025 campaign, with an average of 500 hectares produced. The company also plans to reach 150 hectares, including the American Beauty, Golden Isis, Undatus, and Costarrican varieties. The estimated FOB price for export is between US$5.5 and US$6 per kilogram (Redagricola).
More Peruvian investors bet on export agriculture.
Agroinversiones Dragon is a group of companies that manages various agricultural projects throughout Peru in partnership with small and medium landowners, investors, and farmers. They have a “Fundo Dragon” farm in the District of Grocio Prado, in Chincha-Ica. It is one of the farms they have in Ica, and they also have others in Jayanca in Chiclayo, another in Cañete, and soon in Paita. Kevin Horna, General Manager of the Project, explains that it is a company that develops different investment portfolios. In 2022, the idea of agricultural investment was born, specifically in cultivating and commercializing dragon fruit. This business holding company promotes various farms where it can capitalize the small farmers and investors seeking to diversify their capital and the company managing the business itself. Horna emphasizes that money can be made by investing in agriculture, as this sector has been one of the most stable over the last 20 years. He states this sector has grown more than 2,000 percent over the previous two decades. This makes agriculture a profitable investment portfolio for small farmers and investors. In Chincha, there are two stages of the Dragon farm. The first stage consists of 7 hectares of cultivation that began in 2023, and the second stage, which started in January 2024, will also be 7 hectares. The following projects will be the Jayanca, Paracas, and Paita farms. The company handles everything, from planting, harvesting, maintenance, and marketing. The investor takes the vision of betting jointly with the company and capitalizing on their capital. The company cultivates three varieties, American Beauty, Costarricence, and Golden Isis, initially destined for the European market, and they are awaiting the opening of the U.S. market to start exports to that country. The expectations for the opening of the American market are enormous due to the great demand generated by that country. Horna also stated that they were present at the international fairs of Fruit Attraction in Madrid, Spain, and the Anuga fair in Cologne, Germany, where they had contact with various European buyers. The basis of the business is associativity; that is, some provide the land, others the capital, and the company manages to obtain profitability. Horna stated that profitability is higher than the traditional financial system, approximately 20% annually (Rojas).
After a year of market access, Ecuadorian dragon fruit exports to the United States have increased.
According to Agrícola Pitacava Company, based in Quito, dragon fruit exports from Ecuador to the United States have experienced exponential growth thanks to the market access obtained by the fruit in September 2017. Gustavo Narváez, production manager of the company, reported in an interview with Portalfruticola.com that in the 2018 season, their exports to the United States reached 40 tons, placing them second behind the company’s current largest market, Hong Kong, which totaled 68 tons. Narváez stated that the U.S. market exceeded expectations and expanded rapidly. “Dragon fruit is trendy in the (U.S.) market, and I think that is mainly because now many Asians living in the United States know red dragon fruit and now like yellow dragon fruit,” added the manager. For Agrícola Pitacava, exports to the United States represent more than 18% of their total exports (220 tons) to all markets (i.e., Netherlands, Canada, Hong Kong, Singapore, Malaysia, and now the United States) during the same period. According to Narváez, the company started exporting products to Hong Kong in 2013. It took them five years to enter that market and one year in the United States. At the same time, Narváez attributes this strong growth to market size and higher living standards. “I think the market is huge because of the large population,” Narváez explained. “I think the U.S. market will continue to grow because, as you know, it is a huge target group, and people have higher incomes. This is important because dragon fruit is considered one of the most expensive.” According to Narváez, one kilogram of dragon fruit can cost around $8 per pound in the U.S. market, while dragon fruit is sold per unit in Hong Kong and Europe: HKD 69 in Hong Kong and between 8 and 10 euros per fruit in Europe.
Dragon fruit consumption varies significantly in the United States, Europe, and Asia.
Consumers in Europe, Asia, and the United States are the same. Narváez addressed the differences in consumer preferences in North America and Europe compared to the Asian market. In Asia, consumers prefer a larger fruit weighing 300 grams and above, and fruit weighing less than average sells cheaper. In the United States, everyone accepts small sizes from 180g to large fruit of 450g. In Europe, especially in Amsterdam, preference for size leans towards smaller caliper dragon fruit (Portalfruticola.com).
Interest in dragon fruit grows among retailers in the United States.
According to Fresh Plaza, the demand for dragon fruit in the United States is increasing, and it is transitioning from being an exotic product found in Asian and ethnic markets to being more widely available in the general market. This trend began before the pandemic, and consumers have shown increased interest in the product and its variety, which has benefited pitahaya consumption. This is driving supermarkets to be more adventurous in terms of sourcing. “More and more retailers are betting on these products, and we expect this growth to continue next year,” says Andrés Ocampo of HLB Especialidades. “We have big retail clients who are distributing yellow dragon fruit for the first time, and we see great growth in that category” (quoted in Procomer).
Dragon fruit market trends
According to Mordor Intelligence, the global market research consultancy, the fruit market is expected to grow from $14.11 billion in 2023 to $17.50 billion in 2028, with a compound yearly growth rate of 4.40% during the forecast period (2023-2028).
The COVID-19 pandemic has significantly impacted the global fruit market, with reduced demand for supermarkets and restaurants in Asian countries like China. The pandemic has also led to intermediaries facing non-marketing conditions, reducing their purchasing volume in production areas, thus widening the supply-demand gap in many countries. The pandemic has also decreased supermarket demand, affecting the medical and health services sector overall. Dragon fruit is growing due to the increasing demand for fresh products and the increasing demand for exotic tropical fruits due to their health benefits and rising incomes, especially in developing countries. Despite being relatively new in Europe, the market is highly promoted and attracts more consumers. Health-conscious consumers are demanding more dragon fruit, especially in the United States. The fruit is available in the U.S. year-round but is imported from various countries. LMR (Low Maximum Reuse) laws for dragon fruit in the U.S. are very different from those for traditional products like apples or cherries, and only about 13 chemicals can be used to supply the U.S. (Mordor Intelligence).
According to Tridge, the B2B agri-food platform with global coverage, dragon fruit is consolidating in the American market. Consumption of exotic fruits, especially dragon fruit, is increasing in the United States. As a leading producer and importer of dragon fruit, Goldenberry Farms is educating consumers about the various varieties of dragon fruit. The company addresses the industry’s biggest challenge by balancing domestic and imported products (Tridge). Additionally, the B2B digital platform states that the trend of imports in the last five years from 2017 to 2022 has been increasing, with an increase of 11.32% in the first year, 41.70% in the third year, and 58.95% in the fifth year, respectively, representing a value of $306.3 million.
Resource: Tridge
Conclusion
While it is true that dragon fruit consumption is rapidly increasing due to its health benefits, the United States is emerging as the market with the highest growth, following Europe. The multicultural population of the United States makes it the ideal market as it encompasses diverse cultures such as Asian, European, and Latin American. As the world’s leading economy, the United States has the highest per capita income, further driving the growing trend in pitahaya consumption. The diverse cultural composition of the market leads to the consumption of this exotic fruit in various sizes and colors. This favorable circumstance benefits multiple suppliers of this tropical fruit, including Peru. Peru’s diverse microclimates allow for dragon fruit cultivation against the season, both in the coastal and jungle areas, producing between January, February, and March, May and June, and October and November, unlike Ecuador (January to March) and Asian producers, especially China (May to December) or Indonesia (November to March). Finally, this significant opportunity for dragon fruit production in Peru has begun with companies in the coastal region, such as the market leader Camposol, taking advantage of the favorable climate for its cultivation. Other players like Epicfarms and Agroinversiones Dragon are using innovative business models, including partnerships between farmers, investors, and capital management companies, ensuring a promising future for this product, which is already starting to yield positive results.”
REFERENCES
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Gestion. “Camposol envía sus primeras 15 toneladas de pitahaya a Europa por barco”. www.gestion.pe, 17 Noviembre 2023, https://gestion.pe/economia/camposol-envia-sus-primeras-15-toneladas-de-pitahaya-a-europa-fruta-exotica-fruta-del-dragon-noticia/?fbclid=IwAR3fgBeVqI4Nse58b-2GgBjsqTH8EoJpZ5N0B-Mp1t8LqYw6_hfl7w6MYEk
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PortalFruticola.com. “Exportaciones de pitahaya ecuatoriana a EE.UU. crecen tras un año de acceso al mercado”. www.portalfruticola.com, 20 de Agosto, 2018, https://www.portalfruticola.com/noticias/2018/08/20/exportaciones-de-pitahaya-ecuatoriana-a-ee-uu-crecen-tras-un-ano-de-acceso-al-mercado/
PROCOMER. “Crece el interes de los Retailers por la Pitahaya en Estados Unidos”. www.procomer.com, 17 de Diciembre 2021, https://www.procomer.com/alertas_comerciales/exportador-alerta/crece-el-interes-de-los-retailers-por-la-pitahaya-en-estados-unidos/
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ABOUT THE AUTHOR
Luis Henry Contreras Del Aguila
Food Industries Engineer Universidad Nacional Agraria de la Selva- Tingo Maria- Peru
Master in Agribusiness Administration ESAN University – Lima-Peru
Country Agribusiness CEO