Wooing the global customer
Why are consumers willing to pay up to three times more for cherries than apples and pears?
The formula for success in an ever-expanding global sweet cherry market is easy to define: deliver to the consumer, with style, an extraordinary product at the optimum time. But the execution will be more difficult, requiring the industry to focus on marketing, variety selection, and horticultural practices, an agricultural economist said.
"What's needed to succeed is to deliver with flair a superlative product at the optimum time that will woo pampered consumers while meeting the needs of retailers, and to do that at a profit," said Dr. Desmond O'Rourke, president of Belrose, Inc., a fruit consulting firm in Pullman, Washington.
O'Rourke, who shared his views on the challenges facing the world sweet cherry market during the annual Cherry Institute meeting held in Yakima, Washington, noted that the demand outlook for sweet cherries is still favorable. But world production of sweet cherries will likely increase by 25 percent in the next five years, from an average of 1.8 million metric tons annually from 2002 to 2004 to a projected 2.3 million metric tons by 2010. The availability of sweet cherry exports could grow even faster.
"Sweet cherries have done exceptionally well in the last few years in a very crowded fruit market," he said.
During the last two decades, when world supplies of other fruits were expanding faster than per capita consumption or population-which put downward pressure on prices-cherries were growing slowly. Volume has certainly been a factor in keeping returns in the sweet cherry business healthy relative to those of other deciduous, citrus, and tropical fruits, O'Rourke stated.
Another difference between deciduous fruit and sweet cherries are the international players. "You're dealing with a different set of players than with those for apple and pears. While the European Union and North America are major players in apples and pears, the Near East and Eastern Europe suppliers are much more prominent in cherries."
He reported that sweet cherry production has grown rapidly in the Southern Hemisphere in recent years, with exports increasing 165 percent in the last decade, although it is a small player in the total world market, representing less than 10 percent of world exports. However, cherries from the Southern Hemisphere might be an important complement to U.S. cherries because they don't compete against each other.
Buyers and sellers
Data compiled up to 2004 show that the 15-member European Union is the biggest importer of sweet cherries, taking about half of all the world sweet cherry imports from 2002 to 2004, nearly 86,000 metric tons.
Asian countries, which took more than 42,000 metric tons in 2002 to 2004, account for nearly a quarter of the world's cherry imports. Their cherry imports increased by almost 465 percent from 1985 to 2004.
North America is also a significant importer of sweet cherries, nearly tripling the volume of sweet cherry imports into the country in the same time frame.
O'Rourke explained that total imports of sweet cherries by all countries have grown 73 percent in a seven-year period.
International competition will increase for U.S. cherry growers and come from the countries of Austria, Turkey, Spain, Chile, and Poland. "They are strong competitors and would like to get stronger," he suggested. Germany is also a country to watch.
However, thus far, major suppliers have been prone to erratic production due to weather-induced fluctuations in the size of the crop and harvest timing. This makes it difficult for U.S. cherry producers to develop a robust international marketing strategy under various possible supply conditions, O'Rourke said.
"In recent years, blockbuster crops from major producers have not occurred in the same season, but the odds are that such a glut will occur in the not too distant future. A strategy needs to be developed to prosper even under such glut conditions."
"The demand profile for fresh sweet cherries is relatively favorable," O'Rourke said, adding that demand thus far has been elastic. As volume has increased, the price hasn't dropped significantly. "As people get better off, they want to buy more sweet cherries or they're willing to pay more, unlike with apples and pears."
But there are limits, he warned. "Profit could suffer if the crop continues to grow. Markets have been receptive to an increase in supply, but a further push for demand needs to continue."
He noted that data clearly show that demand for larger fruit is rising.
"Growers with small fruit size probably won't survive," he predicted, adding that size has a status element for consumers.
"Success will go to those who understand best what the consumer really wants and to those who can meet that," O'Rourke said, explaining that today's consumers are familiar with gourmet restaurants, fancy hotels, and cruises-things that represent the "good life"-and they enjoy indulgences once out of reach. "It's spoiling yourself that makes cherries really appealing."
Marketing agencies need to learn why consumers are willing to pay three times as much for cherries as they are for apples and pears, he suggests. What does the consumer need to receive to continue justifying paying so much more for cherries?
Queen of fruit
Growers should think of their product as the queen of all fruits, he advised. They must respect the product in the orchard, warehouse, and on the road to the consumer. The fruit must be exceptional in taste and appearance, and extra efforts must be made to ensure that the product reaches the consumer in perfect shape. Improved packaging, presentation, and promotion must meet the needs of retailers and consumers.
With larger supplies of sweet cherries, producers should be working to increase demand, reaching new consumers as well as increasing the number of purchases made by consumers.
If consumers are to buy cherries more often than twice a year-the current average-the industry is going to have to increase desire, he said. "You've been lucky in the last two to three years with expanding your market, but you won't get away with that in the future."