Question-and-Answer Session
Operator
(Operator Instructions)Your first question comes from Scott Mushkin - Jefferies.
Scott Mushkin - Jefferies
Just want to talk about two or three things. First of all, banana volumes in Europe. That seems to be falling sequentially down 15.5% I think if the latest quarter. Can we talk a little bit more about what’s going on there? What your expectations are for the EU and this a trend you think is going to continue?
Fernando Aguirre
Most of the volume reductions there are the choice that we made to stop unprofitable customers, mostly in the U.K. and France. That was very specifically the impact in the third quarter, we are being very disciplined in terms of pricing in terms of profitability by customer and for those customers that are not reaching the target margins then we are not renewing those contracts.
So most of this is really our own decision to not renew those contracts. The trend, as far as the future concerned, is you know the European business is much more dynamic than in the US, because there we price weekly, we also negotiate a volumes on a weekly basis. I don’t see this changing majorly, but clearly most of this has been our own choice.
Scott Mushkin - Jefferies
So, of that 15.15%, Fernando, is it all of it or is it in the core markets you are down 5%? How should we look at that?
Fernando Aguirre
About two thirds that have declining in the third quarter were due to the U.K. and France.
Scott Mushkin - Jefferies
The trend there, is that somewhat stable or is that been accelerating or where has that been?
Fernando Aguirre
If you take out, if you exclude that two thirds, the trend is roughly the same maybe even a little bit slower in the third quarter following the first and second quarter.
Scott Mushkin - Jefferies
The second question banana pricing in the U.S., I think we had some research out last week talking about what Wal-Mart’s doing. We had Fresh Del Monte give their opinion, as we go through that the contracts here in the North American market, what’s your take and what the retailers are doing and will it spill over?
Fernando Aguirre
What we have seen so far is, there are some retailers who as I mentioned in my prepared remarks, some of them are choosing to try private label. They are choosing to do that mostly in low price categories, low price brands. That is their own choice as you know, their margins are quite healthy and they can afford to reduce their pricing, because their own margins, but their margins are significantly higher than any of the margins that we generate.
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