Sep 3, 2009
Apple Industry Ponders Ways To Sell Upcoming Large Crop

Leaders of the U.S. apple industry met in Chicago in August to assess the size and condition of the 2009 crop – and perhaps learn some lessons from last year’s somewhat botched effort.

The size of the new crop was pegged by members of the U.S. Apple Association (USAapple) at 234.6 million bushels, about 6 million bushels less than the estimate released by USDA’s Agricultural Statistics Service on Aug. 12, a week before the Chicago meeting. USDA’s estimate is 240.7 million, the 11th largest crop and about average for the last five years.

Unlike last year, this crop was not much plagued by freeze, hail or drought, and most of the apple producing states expect better quality and larger apples. It is well distributed, with no states reporting major disasters, as occurred in 2007.

In a story in Fruit Growers News this time last year, USApple leaders were quoted as saying: “The size of the (2008) crop should make marketing no problem.”

This year, leaders were assessing where things went wrong, and the first place was with the estimate. Last year, USDA estimated 218 million bushels on Aug. 1. USApple said that was too high and estimated the crop size at 207 million.

When the final crop size figures came in, both estimates were much lower than the final figure of 232.6 million bushels. Estimates were short by 10 million bushels in Washington, 2 million bushels in both New York and Michigan and 1 million in Pennsylvania.

This year, state industry groups have gotten the message that the crop will take more aggressive marketing efforts, starting early, and some have already begun promotion programs.

Crop size

Estimates for the top six producing states are:

•Washington is estimated at 138 million bushels by USDA, the same as actual production last year, and at 132 million by USApple.

•New York is estimated at 30.2 million bushels by USDA, 30 million by USApple, which compares to production last year of 29.7 million.

•Michigan is estimated by USDA to have 25 million bushels, while USApple sees 26 million. The previous year’s short crop was 14.2 million bushels.

•Pennsylvania has 11.6 million bushels on the trees, USDA estimates, while USApple says 10.7 million. It harvested 10.4 million bushels last year.

•California has a crop of 7.8 million bushels, according to USDA, 7.5 million by USApple’s estimate. It harvested 8.5 million bushels last year.

•Virginia’s USDA crop estimate is 4.7 million bushels, and USApple agrees. The state harvested 5.4 million bushels last year.

Apples are grown commercially in 36 states.

What happened?

Mark Seetin, the new director of regulatory and industry affairs for USApple, said that average prices to growers fell last year, from 28.8 cents a pound in 2007 to 22.6 cents in 2008, and that fresh-market apple prices were down to 29.6 cents from 38.3 cents in 2007. Moreover, prices fell as the season progressed.

Steve Lutz, Wenatchee, Wash., executive vice president of The Perishables Group, a marketing and consulting firm with its headquarters in Chicago, took a look back at what happened in marketing the apple crop last year.

First, he said, retailers did not get “the big crop message” early on. Fresh apple prices, which had been high, increased by 30 percent ¬– even in the face of a declining economy and failing consumer confidence. As a result, volume lagged as consumers chose substitutes for apples. And there were plenty, as grape producers heavily promoted their large crop.

Stores got bigger-than-usual margins on apples as they failed to “reconnect prices” to the realities of the new, large crop.

“We didn’t get the retail response to sell the apples until Valentine’s Day,” he said.

Dollars devoted to product promotion began to rise then ¬– six months after harvest. Prices ¬¬– in stores and to growers – declined, but volume did rise.

Sales approach

Prospects for this year, Lutz said, weren’t gloomy, but “pressure is mounting on your product.”

Consumers are already deluged with fruit, following large cherry, berry and peach crops during the summer.

In the wake of the recession, consumers have changed behavior. They are “trading down,” “making wholesale lifestyle changes,” “hunkering down,” he said.

Consumer confidence is “shaken,” he said, so they are reducing spending, not eating out as much and are willing to substitute one product for another.

“They are shopping by list, which is bad for apples, where impulse buying is important,” he said.

On the other hand, they are looking for value and respond to specials, bargains, discounts, coupons, promotions and sales.

“They do respond to promotions and to shelf space impressions,” he said.

Retailers need encouragement from the apple industry to put apples in front of consumers and “apply all the retail tools of merchandizing, promotion and assortment.”

Apples are price-sensitive, he said. More than 90 percent of consumers buy fewer apples when prices are higher. More than 70 percent of those who buy organic apples are willing to shift away over price.

His final piece of advice: “Don’t lose the fall.”

Growers can’t afford to wait until February to sell apples.





75 Applewood Drive, Suite A
P.O. Box 128
Sparta, MI 49345
616.887.9008
Get one year of Fruit Growers News in both print and digital editions for only $15.50.

Interested in reading the print edition of Fruit Growers News?

Subscribe Today »


Be sure to check out our sister sites:
produceprocessingsm
website development by deyo designs