Cherries touted as value item
More middle- to upper-income shoppers are frequenting Wal-Mart, says Andrew Willis with Northwest Cherry Growers.
With soft economies around the world, an aggressive sweet cherry promotion program is what's needed this season, say representatives of the Northwest Cherry Growers.
The growth rate of the U.S. gross domestic product is negative, deflation is putting downward pricing pressure on all products, and recessions are being felt around the world. "Make no mistake, this is going to affect our year," said Andrew Willis, promotion director for the Washington State Fruit Commission, which conducts promotions for the Northwest Cherry Growers. It's a tough economy, he said, adding that it could be until the third quarter of 2009 or later before consumer spending shows signs of improvement.
But amidst the economic gloom and doom, there is positive news for sweet cherries.
"Some of our biggest retailer allies are posting gains and record sales as a result of people seeking value," Willis said, pointing out that Wal-Mart, Costco, and Kroger sales are up. People are trading down, switching to lower cost brands, eating more at home, packing lunches, and grocery sales are up.
What this means for sweet cherries is that the Northwest Cherry Growers will be using promotions and working with retailers to position cherries in that "value" category, he explained.
Willis sees tremendous opportunity for cherries in Wal-Mart stores, reaching middle- to upper-income shoppers who have traded down and now are Wal-Mart regulars. "Wal-Mart will be a real key for Northwest cherries. In the past, we haven't seen the sales at Wal-Mart that we would have liked. I think that a lot of our clientele will now be shopping at Wal-Mart."
Wal-Mart has an impressive reach considering that 87 million people visit Google on the Internet each week, 80 million people tune in to watch the annual Super Bowl football game, and 140 million shop at Wal-Mart each week.
During the coming year, the Northwest Cherry Growers will use in-store media at Wal-Mart for the first time, while continuing work with past in-store media networks at other retail chains to remind shoppers that Northwest cherries are in the produce section. Willis cited data that shows that 73 percent of shoppers make purchase decisions when they walk into the grocery store and 29 percent of the purchases of those shoppers are impulse buys.
Demonstrations and sampling are also planned for key weekends and markets. He notes that demos can lift cherry sales by 200 percent. Consumer publicity efforts will help generate stories and recipes about sweet cherries in national magazines and television.
A major component of the Northwest cherry promotions is the financial incentive paid to retailers who advertise cherries. To qualify for the incentive program in 2009, retailers must run two ads in June, three ads in July, and two ads for Rainier cherries. The 2009 program will require more ads to qualify than past years, but Willis said that retailers who perform will also move more product. An additional Rainier ad is required, which reflects the increased Rainier acreage and production. Industry members predict that Rainiers could reach 2 million boxes this year and represent well over 10 percent of the crop.
Keith Hu, international promotion director for the Washington State Fruit Commission, said he is most concerned about the influence of foreign currencies on sweet cherry exports. Since July 2007, most currencies around the world are down, and the dollar is expected to stay strong against all major currencies. He noted that the Asian markets of Japan, Korea, Taiwan, and Hong Kong, which are big importers of Northwest cherries, could be difficult markets as their economies are heavily dependent on the U.S. economy.
There were several bright spots in the 2008 export markets. Record sales of Northwest cherries were tallied in China, Mexico, and Russia. Overall, sweet cherry exports represented nearly 28 percent of the total Northwest crop.
Cherry promotions in 2009 in foreign countries will depend heavily on grass-roots marketing and promotions to reach consumers, such as in-store promotional material, giveaway promotions at the retail level, consumer contests, and outdoor advertising.
Hu will continue to provide marketing best practices to retailers and educate importers and retailers how to handle and merchandise cherries. He will stress a message of "affordable luxury" in the foreign promotional campaigns.
Market research data collected on behalf of the Northwest Cherry Growers have shown that cherries are the number-one-selling produce item in summer, averaging $233 per square foot of retail space in June compared with $79 per square foot in the same month for bananas. Cherries have the highest transaction amount in the produce department and cherry consumers spend about 10 percent more at the checkout compared with the average fruit consumer.
Such information, along with data that shows how cherry ads and their timing can increase sales, is contained in a 2009 best practices guide which was developed by the Northwest Cherry Growers. The guide is being shared with retailers.
Northwest Cherry Growers President B.J. Thurlby said they plan to personally meet with all 215 cherry accounts in the United States before the start of this year's season. "My message that I've been giving to retailers is that cherries are the economic stimulus for your produce department this year," Thurlby said.
Both Willis and Hu shared their outlook for the 2009 cherry season and plans for promotional activities during the March meeting of the Fruit Commission's board of directors.
Promotional activities for Washington State peaches, plums, nectarines, and apricots will include in-store support materials, a summer fruit tour for key retailers, consumer publicity, and an incentive program for retailers.
Washington peaches, in the shadow of California peach production, represent only about 3 percent of the nation's peach production, compared to California's 60 percent. But there is a strong following for local peaches in the Northwest, particularly in retail markets in Canada, Montana, and Colorado.
Commissioners during the meeting approved the 2009–2010 domestic promotion budget at $1.6 million, which includes $322,000 for Washington soft fruit promotion. The international budget was set at $1.9 million, with $1.16 million coming from the federal Market Access Program.
Estimations of the new cherry crop size began the third week of April, with adjustments made every three weeks by industry analysts to reflect weather impacts on the fruit. A final crop estimate will be announced in late June.