Good Fruit Grower / April-15th 2012 / Marketing is the hard part

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Marketing is the hard part

When a new apple is launched as an open variety, it risks becoming a commodity.

Developing a new apple variety that beats those already available is far from easy. But marketing it successfully could be the harder part, Washington tree fruit shippers say.    

Washington State University has released three apple varieties from its apple breeding program. The first, known as WA 2, is available for commercial plantings to growers in Washington State.

“One thing they have to face up to is these new varieties are fantastic eating and many of them are very enjoyable, but the marketing of that variety is the hard part,” said Roger Pepperl, marketing director at Stemilt Growers, Inc., Wenatchee, Washington. “It’s really hard, and however hard people think it is, it’s harder than that.”

WSU’s apple varieties are owned by the WSU Research Foundation which has granted the Washington Tree Fruit Research Commission the license to commercialize them. The varieties are released as numbered varieties without names. The original commercialization plan allows all Washington growers to plant the varieties, since they have contributed towards their development through taxes and assessments. And it allows any Washington shipper to pack and market them using a trade name of their choice. For the latest release, WA 38, the commission is considering revising the commercialization procedure.

Commodity

Shippers say there are different models that can be used to launch new varieties, none of them easy.

The problem with opening up a variety to everyone is that it risks becoming a commodity in terms of pricing, and there’s no incentive for shippers to put extra effort into promoting it, Pepperl says. “If they have more than one marketing company selling the apple—which it sounds like—how do you get ­people to put some effort behind it?” he asked.

If it’s available to everyone, then it’s likely to take the same pathway as Gala or Fuji, Pepperl said, but it took 20 to 30 years for them to succeed. Consumer recognition takes a long time to develop. Two years ago, Stemilt did a consumer study that showed that only 51 percent of consumers knew what a Gala apple was. Cameo is an example of a good apple that never did make it into the top-ranking varieties, he added.

Peter Verbrugge, president of Sage Fruit Company, Yakima, said it’s understandable that a single shipper would not be entitled to exclusive rights to a variety that was developed with public funding, but he agrees that marketers would be less committed to it than to an ­exclusive apple, particularly if it had no name.

“I would still participate in it,” he said. “But it would be a different model, knowing that other companies are growing and planting it. There’s a reluctance on our part to invest in an apple anyone can grow and sell under a different name, and the retailer’s going to be reluctant to get behind a variety unless there’s some consumer pull. I have a hard time believing there’s going to be good ­consumer pull without brand recognition.”

Given that the Washington Apple Commission is no longer able to promote varieties on the domestic market, Brian Sand, sales manager at Auvil Fruit Company, Orondo, said it’s probably going to take some marketing push by shippers to make a new variety successful.

If the Research Commission is hoping someone will launch the variety with a big marketing campaign, then it could pick one of the top ten apple shippers or marketers, convince them that the variety can be their exclusive apple, and let them run with it.

Another option would be to have marketing organizations bid for the rights to the apple, and see who applies, but when the University of Minnesota did that with Minneiska (commercialized as ­SweeTango), it was sued by disgruntled producers who didn’t have full access to the variety. It did prevail in the lawsuit, however.

Brand

Pepperl thinks that for any variety to succeed nowadays, there must be a marketing concept and a marketing strategy for the shippers. And there also must be someone to manage the brand and decide on a name. The brand management company could be owned by a conglomeration of shippers or by the license holder, he said.

Suzanne Wolter, marketing director at Rainier Fruit Company, Selah, said that before making a commitment to a variety, producers will want some proof that it is worth investing in, not only on the grower side, but the sales and marketing side, because it takes a significant investment to get it into the marketplace and convince consumers that it is a good variety.

 “There are so many varieties in the market right now,” she said. “Everybody has at least one.”

Verbrugge said his experience with club varieties has shown that it takes a certain critical mass, in terms of volume, to achieve consumer recognition in the marketplace.

Sage has two managed varieties—Sonya and Breeze—both from New Zealand. It has purchased the marketing rights to several other varieties that are at the testing stage.

“It takes a large amount of time and money to build demand for a variety,” Verbrugge said. “And that’s one of the struggles we’ve seen with the club varieties. It makes it tough to be successful if you don’t do that.”

The whole idea behind managed varieties was that the licensee could control the quality and control the market and pricing, but since there are now so many available in the marketplace, they are competing with each other.

“I can control the price of Sonya, but the retailer can say, ‘I can buy Jazz cheaper.’ They become competitive with each other,” said Verbrugge, who is nonetheless still looking for exceptional new varieties.

“We feel like we need to be doing that,” he said. “We’re still making sure we’re investing in and looking at varieties and club varieties—making sure we have control over them because it does create excitement in the ­marketplace.”

Great name

For Verbrugge to be interested, the variety must have a great name, along with all the right quality attributes.

Other shippers agree that a new variety would have a better chance of success if it was marketed under one name.

Wolter said if the variety was going to be a small-volume item to sell in a few markets around the country—so that marketers wouldn’t be competing against each other—it might be possible to have multiple names. But if it is going into large-scale production, having multiple names would make it challenging and confusing.

“Having the right name is huge,” Sand said. “Who could have come up with a better name than Honeycrisp? And when they came up with Red Delicious, it was a great apple, but it had a great name.”