The lure of access and profit
A Washington State grower-packer says club varieties may help small growers survive.
One grower-packer says they joined the "club" because of access to new and exciting varieties, while another signed up with hopes of improving stagnant apple prices. A new trend in apple merchandising promises to do both.
Club varieties or franchises, with a centralized marketing organization controlling quantity, quality, and promotion, may someday be standard procedure for the release of new varieties. But for now, many are watching on the sidelines to see if the concept works as planned.
"We feel very strongly that we need better apples to present to the market," said Dave Allan of Allan Brothers, a growing and packing company in Yakima, Washington. Allan Brothers is one of two packers in the state handling ENZA-licensed apple varieties.
Allan believes that as growers, he and his brother George must focus on the eating quality of apples. Both of the new varieties that they have planted— Pacific Rose and Jazz—fit that focus.
Pacific Rose, developed by New Zealand's Hort Research and ENZA, is a late-season variety, ripening near Fuji. He described the apples as large, and, if picked correctly and stored for 30 to 40 days, the fruit can sit on a retailer shelf for five days without softening and still taste sweet with wonderful aromas.
Challenges to growing Pacific Rose are some finish or checking problems and producing too much crop. "Overcropping results in a flat taste, but if you crop moderately, it's a great-tasting apple," he said.
In describing Jazz, he said that the biggest plus is its consistency in flavor—tart and sweet. "I've never met a Jazz that I didn't like." It is a smaller apple and ripens slightly before Braeburn. Negative aspects include blank wood and the need to use a stop-drop material as the fruit has a tendency to fall easily. It can suffer from soft scald if picked late.
While most marketing efforts for standard varieties focus on the retailer, the concept behind club varieties is to focus on the consumer, Allan said.
"With the club concept, we are responsible to the consumer for success of these varieties. The variety's success or failure lies with the club because we control supply, quality, and output. We are responsible for the direct connection to the consumer."
To achieve success with the new consumer connection, Allan believes that an integrated approach will be needed to reach the consumer.
"I think we have to integrate all these people—New Zealand's Hort Research who develops the varieties; ENZA, the New Zealand company that owns them; growers and shippers; and the marketing arm, The Oppenheimer Group. If we segment any part and keep the entities separate, then nobody's responsible."
Allan noted that total integration including the retailer and consumer is a foreign concept to the fruit industry and will require dedicated effort. Success of the program will depend on both the genetics and quality of the varieties as well as the organization's ability to integrate the program.
Bob Brammer, president of Crane and Crane, Inc., sees potential from club varieties for the small grower. Crane and Crane, in Brewster, Washington, is the second packer in the state to handle ENZA-licensed varieties.
Apple prices have been stagnant for the last 20 years, with the same people buying apples, he said. To stay competitive, those who can, become larger to achieve economies of scale, while the small grower struggles to survive and retain land and equipment equity.
"I don't see a lot of ways of changing that," Brammer said. "What we need are new varieties like Honeycrisp, Pacific Rose, and Jazz to come along and break the mindset. All of a sudden, it's like wow, these guys are paying $35 to $50 for Honeycrisp, Ambrosia, Pacific Rose, and Jazz. They're seeing that we can bring in good-eating apples with these new varieties."
He believes the real potential of the club varieties will be to the small grower who can receive sufficient value back for his or her fruit and stay in business. "I really see hope for the small grower in this club program."
Brammer agrees that success of the club program will be the ability of the marketing organization to put it all together.
In the past, introduction of new varieties has been a few acres at a time, scattered across different regions. But this time, varieties are being introduced in a very coordinated and organized approach. Growers are planting an average of 15 to 35 acres of the new varieties, though some, like Crane and Crane, are making a much bigger commitment.
Controlling every aspect of the program—including limiting the number of packers and having only one sales arm—is necessary to prevent underbidding each other and reducing value, Brammer explained.
"It's been very positive to have people pull together in common," he said, noting that communication between all involved has been good.
Another benefit to the centralized club concept is the ability to obtain and evaluate empirical data, something that is difficult to achieve with the current industry setup.
"We will have the ability to look at production data, horticultural practices, sales information, and such, to help determine things like the best size to pack and best growing practices," he said. "We will have 100 percent of the acreage in Washington, with packout and production data to share. It won't be us against Allan Brothers. Instead, there is a shared interest for everyone to receive the highest price and grow quality."
Where club programs take the industry in the future is still open for debate.
New varieties may do well on a regional basis, but to be in demand on a national reach, it will take an extraordinary variety.
"I don't think anybody assumes that there is unlimited potential for as many varieties as you can come up with," Brammer said.
Honeycrisp would have been a good club variety, he mused. "It will be interesting to watch how that variety goes in the future, because it is so difficult to grow with its alternate bearing and other issues. If prices come down, it may not be sustainable."
But he sees Honeycrisp playing a valuable role in shifting the mindset of buyers, getting them used to buying new varieties for $50 a box.
"Maybe then we can get them to buy standard apple varieties for prices in the $25 range."