Rise and fall of the apple empire
Once flush with a $40 million annual budget, the Washington Apple Commission is now dependent on federal export promotion funds and a continued willingness of the industry to join forces to promote Washington apples overseas.
While Harold Copple managed the Apple Commision between 1947 and 1957, most of the apples produced in Washington were Winesap. During that period, the commission hired a larger, year-round merchandising staff of up to 12 people to work with retailers across the country.
Formation of a Washington apple promotion program 75 years ago was deemed essential for the survival of the industry.
The first rail carload of apples from Yakima was shipped in 1894, and Wenatchee’s first carload was shipped seven years later. By 1920, the state was producing around 20 million boxes annually, but not always selling them at a profit.
During the Great Depression, while apple production was increasing nationally, production costs were rising and high freight charges to eastern markets were putting Washington at a competitive disadvantage. Other areas were producing fruit more cheaply and their markets were much nearer. Several voluntary groups made small-scale attempts to advertise Washington’s apples.
“If apple growers of Washington cannot unite on some constructive program of meeting present-day sales methods to claim their share of the consumer fresh fruit appetite, the industry must shrink to a fraction of its present size and most of us must quit,” Ralph Sundquist of Yakima, declared at a grower meeting in 1936.
Growers, shippers, and businessmen in Yakima and Wenatchee formed committees in each region to study the problem. After much deliberation, they created Washington State Apples, Inc., an organization that would go into operation only after growers representing 85 percent of the state’s tonnage signed up and that would be financed with an assessment of 1 cent per box. The new organization launched newspaper and radio advertising and hired four dealer-service men in major markets.
After its first season in operation, with a budget of $150,000, growers believed that this was a step in the right direction but, in order to ensure its success, grower participation should be mandatory. Legislation was introduced in the Washington State legislature in 1937 to establish the Washington Apple Advertising Commission, which was the state’s first commodity commission, and one of the first in the country.
The commission merged its affairs with Washington State Apples and kept the 1-cent-per-box assessment rate. C.M. Zediker of Cashmere was chair and C.E. Chase manager. The commission expanded its program to include full-color advertising in national magazines, billboards, and more radio advertising.
It also funded research on the health benefits of eating apples and on how to reduce apple bruising.
Start of supermarkets
Harold Copple took over as manager in 1947, when most of the apples produced were Winesaps. Golden Delicious was just coming onto the market.
During the war, there had been no need to advertise because of price controls, and the commission saved its money to spend when the controls were over. The assessment of 1.5 cents a box generated revenues of about $300,000 a year.
When Copple first started, apples were sold mainly through mom-and-pop grocery stores, and supermarkets were just starting to be built. Supermarkets made it easier for marketers to make big sales.
“One call now would accomplish what 50 calls would in those days,” Copple said in a later interview.
Robert Johnston, who managed the commission from 1957 to 1963, was succeeded by Joe Brownlow, who had joined the commission staff in 1952. During his early days at the commission, much time was devoted to problem solving in the marketplace because the fruit didn’t always have consistent appearance and quality. Also, with production of between 20 and 30 million boxes during the 1950s, the state did not have sufficient year-round volume to make the apple an important item to the retailer.
“We didn’t always have the varieties that the trade and the consumers preferred at the time,” Brownlow said during an interview after he retired. “We were promoting and attempting to find profitable markets for Winesaps quite a bit after the preference for Winesaps had disappeared.”
The commission began to develop markets for Golden Delicious, which initially had been shunned by the retail trade because it bruised easily.
“They thought of apples as hardware,” he recalled. “We were able to educate them and show it could be a most profitable apple for them.”
Controlled-atmosphere (CA) storage, which came into use in the early 1960s, was one of the most critical changes in the industry’s history. The ability to store apples for longer periods, along with increased plantings of Red and Golden Delicious apples, meant that the industry could offer apples virtually year round. “Then the retailer recognized the Washington apple in the same light as a banana—a year-round volume profitable item,” said Brownlow, who then turned his attentions to the foodservice market and exports.
Tom Hale took over from Brownlow in 1984, assuming the title of president. During his tenure, the assessment rate increased from 10 to 25 cents a box. Production began to rise sharply, after decades of slow growth, and Red Delicious accounted for about 70 percent of the crop.
Hale was at the helm when the Alar crisis hit and worked with the U.S. Apple Association on the industry’s public relations response to the Natural Resources Defense Council’s report about the dangers of the chemical.
“In retrospect, I think the industry fared fairly well through that,” he said. “We took some major hits in those first few weeks, but, I think, on balance, America really thinks the NRDC overplayed their hand,” he told Good Fruit Grower.
The crisis prompted changes within the industry, such as a shift to organic apple production and more interest in producing varieties other than Red Delicious.
It was also a time of consolidation within the industry, and Hale sensed a feeling among the larger shippers, who were promoting their own brands, that the commission was of less value to them and perhaps even a competitor. “I saw the handwriting on the wall,” he said. “I felt this was going to be a major issue that all commissions were going to face.”Steve Lutz, who had previously worked in public relations at the commission, returned in 1991 as national marketing director and became president in 1995. He believed the commission made good headway in terms of retail shelf space and shelf location. “It was hard to go into a grocery store in the United States and not find Red Delicious apples the first thing you saw, and that was the big push of the commission. It helped Washington dominate shelf space, which was critical in influencing consumer behavior.”
But one of the biggest challenges he faced was the industry’s shift from a singular focus on Red Delicious to multiple varieties.
“Instead of being able to focus just on maximizing Red Delicious, it really required the ability to rethink not only the promotion but the merchandising, space allocation, and the types of conversations you would have with retailers,” he recalled. “It introduced a lot of complexity.”
In 1998, after several unprofitable seasons, growers approved a three-year increase in the assessment rate to 40 cents a box in order to boost consumer advertising. When Lutz left the commission, it had a budget of more than $40 million.
Welcome Sauer said that when he succeeded Lutz as president in 2000, he felt that the Apple Commission needed to work more closely with industry sales desks because they were big enough that they could do their own marketing programs.
“I think that’s one of the areas where I earned some respect in the industry by being willing to take the fence down between the Apple Commission and the industry sales desks, and it was well received by the industry,” he recalled.
Sauer said he was also pleased to see the development of the fresh-cut apple industry.
But the greatest change that came during Sauer’s tenure was a drastic downsizing of the commission after it initiated a lawsuit to test the constitutionality of its assessments and lost.
A settlement of the lawsuit, negotiated with several large growers and packers, limited the commission to handling only export promotions. The assessment rate was set at 3.5 cents per box, and a large proportion of the budget was to be passed on to support the Northwest Horticultural Council and USApple. The remainder was to be used for export promotions and to leverage federal funding for export promotions.
“It was a period when the industry had gone through some very difficult economic times,” Sauer recalled. “I don’t think anybody in the industry looks back on those days with much fondness.”
Managing with less
When Dave Carlson, a former board member, took over as president in 2003, the staff had been reduced to seven people, down from more than 50 (not including overseas representatives) before the settlement. The commission no longer had regional managers working on the domestic market. The smaller budget required a major change in mindset, Carlson recalled. “We didn’t have an unlimited budget. We really had to focus on making every nickel count.”
Todd Fryhover, who succeeded Carlson as president in 2009, said the direction the commission takes in the future will depend on whether matching federal Market Access Program funds continue to be available. For the current year, the commission received $4.8 million in MAP funds, which pay for most of its export activities. There are fears that the program might be cut as part of federal budget-cutting efforts.
“If the funding changes, there’s going to have to be some dramatic changes to the Apple Commission promotional program,” Fryhover said. “But I’m going to be optimistic—I’m going to assume that either the MAP funding will continue, or the industry will continue to fund us at a level where we can have an impact in overseas markets.”