Produce Business ‘Western Apples’

Feature Writing

Western Apples

Taste rules when in selecting varietals

When tracking trends in the apple category, produce people naturally look to the West, where the 2005 harvest is just now getting underway. Growers in Washington, California, Oregon, Idaho, Arizona, Utah, Colorado and New Mexico produce about 65 percent of the domestic apple crop, with Washington leading the way by a wide margin. California ranks second in the region’s production totals and among the top five apple-producing states nationwide.

“Our apples come off about two to three weeks earlier than Washington, so our market is primarily tied to timing,” says David White, President of Trinity Fruit Sales in Fresno, CA. “We fill in the gaps between imports and Washington crops, and we compete on flavor and quality with some of our California-grown strains of Galas, Fujis and Grannies.” Between now and early November, the Wenatchee-based Washington Growers Clearing House Association expects the state’s growers to pick 103.2 million boxes of apples—a bumper crop amounting to a 31 percent increase over last year’s harvest of 78.7 million boxes.

An estimated 37 percent of this year’s Washington harvest will be comprised of the longtime favorite Red Delicious variety, with Gala and Fuji together representing 29 percent of the total. One of every four apples in this year’s crop will be either a Golden Delicious or a Granny Smith. One of every 20 boxes will contain a Braeburn or a Cripps Pink (including Pink Lady brand cultivars), while one box of every 100 will be filled with about 42 pounds of Jonagolds or Cameos.

One of every 50 boxes will contain apple varieties classified as “other.” Besides traditional favorites such as Rome and Jonathan, this catch-all category includes many of the industry’s newer varietal offerings. Among the boxes of Honeycrisp, Ambrosia, Jazz, Ginger Gold, Pacific Rose, Sonya, San Rosé and others, apple industry leaders hope to discover the next ‘big thing’ in varietal apples.

“The Western United States and Washington state in particular have a lot of progressive apple growers trying to stay ahead of the curve—probably more so than anywhere else in the world,” says Bob Mast, director of marketing for Wenatchee, WA-based Columbia Marketing International. “We’re always looking to give retailers something new.”

Up-and-Coming Apples

Many apple marketers cite Honeycrisp as one of the most promising of the “other” varieties being shipped this season. University of Minnesota apple breeders spent 30 years perfecting the original Macoun-Honeygold cross before introducing the variety in 1991.

Described as sweet, juicy and “explosively crisp,” Honeycrisp has its own growers’ association and is one of an increasing number of patented “franchise” or “club” varieties that may be propagated only by licensed growers.

“The trend right now is franchise varieties,” says Andy Tudor, director of marketing for the northwest office of L&M Companies, Inc., in Selah, WA. “The breeders are holding onto the rights to their trees and maintaining control over growing, packing and marketing. That way, they hope to avoid having so many in production we end up selling under the cost of production.”

“The problem with the mainstream varieties—anybody can plant as many trees as they want in any location, and quality control gets lost,” says Randy Steensma, sales manager for Nuchief Sales, Inc. The Wenatchee-based company was a founder of the Honeycrisp Association. “We prefer the club varieties where you can get with like-minded growers and set the quality standards within a group formed around a particular variety.”

“We are currently testing some club varieties,” says Eric Patrick, director of marketing for Domex Marketing of Yakima, WA, “but we expect the public domain apples will continue to make up the bulk of tonnage for now and the immediate future.”

The advantage of the newer club varieties, says Patrick, is their ability to generate interest in the category. “People like to see what’s new, and these club varieties definitely create excitement. Consumers realize they’re not just your everyday apple.”

Demand for the Honeycrisp currently outstrips supply. The variety is relatively challenging to produce, and as with any licensed variety, the up-front costs associated with growing Honeycrisp are about 20 to 25 percent higher than the costs of planting public domain varieties.

“Honeycrisp is incredibly popular, probably because of the limited supply,” notes Suzanne Wolter, director or marketing for Selah, WA-based Ranier Fruit Company. “It’s difficult to grow, harvest and pack, and we are extremely particular about where we grow it and the quality that goes into the box. We’re focused on making sure that what gets out there is exceptional.”

“We know we can sell Honeycrisp,” says Lee Reynolds, produce director for Haggen, Inc., based in Bellingham, WA. The chain operates 31 Haggen and Top Foods stores in Washington and Oregon. “Along about mid-August, our customers will start hounding us for them. We buy one grower’s entire orchard to have the product.”

“Consumer interest in Honeycrisp is huge, and with demand exceeding supply, they’re willing to pay a premium for it,” observes Mast. “It’s our number-one varietal in terms of growth percentage.”

“The apple with the highest level of interest right now is the Honeycrisp,” says Tudor. “Consumers take a bite of this apple as they’re walking away, and they turn around and come back and ask, ‘What is that apple?’ Retail price doesn’t matter. People who’ve had that apple want that apple. It’s an apple worth investing in and promoting, and I know for certain it will be quite a while before we satisfy the demand for Honeycrisp.”

“The Honeycrisp is an example of a consumer-driven apple,” says Steensma. “Even at price points as high as $2.49 a pound, these apples just fly out of the stores.”

Jazz and Pacific Rose are two more licensed varietals considered especially promising.

Washington growers first purchased licenses to grow the Pacific Rose variety in 1997, followed by investments in Jazz in 1999. HortResearch of New Zealand owns the two varieties, and they are licensed and managed by ENZA, the export brand for the New Zealand Apple & Pear Marketing Board.

According to recent figures from the Oppenheimer Group, the Vancouver, BC-based company authorized by ENZA to handle all North American marketing, more than 30 Washington state growers have planted a total of 680 acres of Jazz and 475 acres of Pacific Rose.

Steensma is among the champions of Jazz and Pacific Rose. “We’re the largest grower in North America because we approached ENZA and said we wanted to get in on these new varieties,” he says. “They both have good eye appeal, but our main criteria is eating quality, and these two stand out. We think, once they’ve tasted them, the consumer will drive sales.”

Steensma also mentions Sonya, also from New Zealand, as another patented variety of interest to Nuchief. “We’ve planted some Sonyas because we like its distinctive flavor,” he says. “As with the Jazz and the Pacific Rose, we’re looking for exceptional eating experiences.”

Managing the Variety Mix

While retailers will routinely continue to stock mainline varieties like Reds, Goldens and Grannies, the allocation of space to the varietals presents more of a challenge. “Retailers are faced with so many apples,” observes Marketing Director John Hein of Kingsburg Orchards in Kingsburg, CA, “but there’s only so much room in the stores, and they can’t feasibly put out every new variety.”

“A retailer has so many feet of apple space in the cooler,” agrees Tudor. “Are they going to chop it up into smaller and smaller segments to put all the new varieties in there?”

Hein suggest savvy category managers will make their varietal apple choices based on consumer preferences. “Consumers want fruit that’s good to eat,” he says.

“Consumers are focused on flavor and crunch, and they’re looking beyond color and price,” adds Jessica Wood, representative for the Cameo Apple Marketing Association, based in Chicago. “At the same time, they’re broadening their horizons and trying new varieties and combinations of foods they’ve never tried before.”

According to a 2002 CAMA study, while 58 percent of consumers continue to shop for mainline varieties, varietal shoppers now represent 41 percent of market share. In consumer test panels, shoppers indicated they would support a 20 percent price premium for varietals over mainlines.

“Consumers are becoming more willing to try new and different varieties,” says Mast, “and if they especially like a product, they’re willing to pay a premium for it.”

“You can’t bank on any one variety,” adds Wolter. “You need to have a mix. We can make recommendations to retailers, but ultimately it’s their decision.”

“Each apple has its own customer,” says Reynolds. “We go to market thinking, ‘What can I sell this customer on an individual basis?’ We try to upgrade them to a better-tasting apple. We know they look at price, but if it tastes good, we can get them to buy it.”

Sidebar:

Beyond the 2005-2006 Season

Among the planting trends noted in a 2004 survey by Tree Tops, a Selah, WA-based network of 1,750 Washington, Oregon and Idaho growers:

• Red Delicious has declined steadily since 1994, a trend expected to continue.
• As in the organization’s 2002 survey, Galas were the most-planted variety in 2004.
• Granny Smith plantings were substantial between 2002 and 2004, driven by strong continuing consumer demand and steady returns from fresh markets.
• In the two-year survey period, Golden Delicious plantings reached their highest percentage in the 21-year history of the survey, primarily as replacements for Reds and Goldens.
• Fuji plantings increased from 2002 to 2004 and are expected to continue as eight to 10 percent of all new plantings.
• Honeycrisp is the third most popular planting between 2004 and 2006, prompting the survey report author to classify it as a “mainstream” variety.

The Tree Tops bi-annual survey is based on trees sold and trees budded for sale.

Sidebar:

Apple Merchandising Essentials

Show and tell. Consumers can easily underestimate the variety of your apple offerings without clear visual cues and signage.

“A typical retailer might have 10 or 12 varieties of apples,” says Bob Mast of Columbia Marketing International, “but they all tend to blend together if there are no significant color breaks.”

“Retailers need to make sure consumers can find new varieties,” adds Suzanne Wolter of Rainier Fruit Company. “Many apples look alike to shoppers, so if you don’t separate a new variety by color or put it in a more prominent position, it will get lost.”

According to the Cameo Apple Marketing Association, strategic use of color breaks can improve both category and item performance. CAMA research shows as much as a 3.8 percent drop in category dollars when similar-looking varieties are slotted side by side.

CAMA notes an average category profit increase of six percent when retailers use signs and recipe cards.

“We’ve done quite a bit to educate consumers on varietals, using point-of-sale materials that talk about the different flavor profiles,” adds Mast. “They’ve been a huge hit at retail.”

Build seasonal excitement. Leverage the seasonal availability of the apple varieties you stock.

“You need a selection of fresh apples in stock year-round,” says Eric Patrick of Domex Marketing, “but one of the great strengths of the varietals is the seasonal availability. You can build anticipation and excitement when a variety comes in so consumers think, ‘I gotta have it now,’ and encourage them to purchase now because that particular variety might not be available next week.”

Bags and bulk. Some consumers like to select their apples one by one, while others prefer to grab them by the bag and go. Savvy retailers accommodate both by offering varietals bagged as well as in bulk.

“It’s a new approach to bag a gourmet apple,” says Jessica Wood of the Cameo Apple Marketing Association, adding that CAMA recently introduced a five-pound bagged product. “The idea is to trade up those bagged Golden and Red buyers.”

Sample. Particularly with unfamiliar new varieties, or for new, improved mainline apples, the very best merchandising strategy is sampling.

“Nothing will sell any apple better than allowing people to sample it,” says John Hein of Kingsburg Orchards.

“The best promotion we’ve found is product sampling,” says Nuchief’s Randy Steensma.

“You have to demo the fruit,” agrees Tudor. “You’ve got to put that apple into somebody’s mouth.”