Honeycrisp would have been the perfect apple to manage under a club system, but when the University of Minnesota released the variety in 1991, no apple marketer was interested in licensing it in the United States.
“At that time, they had no proprietary varieties,” recalled University of Minnesota apple breeder Dr. David Bedford. “It amazed me, because in every other industry, that’s the Golden Fleece—if you have something no one else has. They weren’t thinking that way. They thought they would slug it out with Red and Golden Delicious forever. But in the last three years, their thinking has changed. They’re lining up to get varieties.”
Several years after Honeycrisp was released in the United States, the university licensed Pomanjou of France to manage Honeycrisp in Europe under a club system. Bedford said the University of Minnesota hasn’t placed any limits on acreage, and is leaving it to Pomanjou to find the right balance. There is no per-acre royalty, but a percentage of the sales price goes to marketing. The university also receives a percentage.
One of the advantages of a club system is the ability to manage the quality of the fruit that goes to market, he said. “I was reminded of that last night when I was in the grocery store. We’re starting to see Honeycrisp coming into the Minnesota market now that are just not good fruit. It’s not a Honeycrisp at its best, or even its mediocre best.”
Bedford bought some of the apples. They had a bland, watery flavor and weren’t very crisp.
“If this was my first introduction to Honeycrisp, I don’t know if I would buy another one,” he said. “They cost 20 to 40 percent more than anything else in the store. When you pay that, you’re expecting something. This is what we worry about as variety owners—seeing the variety damaged from poor quality control.”
That’s why some future varieties from the University of Minnesota will be released under a club system. Part of the appeal of a proprietary marketing system is that the licensee has a vested interest in maintaining quality control so that apples going to market look and taste like the variety should.
“With the old system, we, as variety owners, have to sit on the sideline and watch thirty years of work be undone in front of us,” he said.
However, Bedford said not all varieties developed at the University of Minnesota would be released under a club system. “I don’t think it will be a majority of our new introductions. I put the apple that’s good enough to be in a club in a real small group of apples. It’s not just any new apple. It has to be an exceptional new apple.”
Honeycrisp’s origins go back to 1960 when Bedford’s predecessor made the cross. The variety was selected in 1974 and assigned the number MN 1711. Fruit was evaluated during the 1980s, and the variety was released in 1991. Records showed it to be a cross of Macoun and Honeygold, but recent DNA testing disproved that. Bedford said the tests show that Keepsake—a University of Minnesota variety—was one of the parents. No match has been found for the other. He speculates that it was a numbered selection that has since been discarded.
Another advantage of the club system is that it generates revenues for the variety owner or developer. Bedford’s breeding program is supported entirely by the university, except for the royalties it receives. The Honeycrisp patent will expire in about three or four years. Although it’s likely many trees will be planted after that time, the university’s income will stop.
Bedford said considering the huge investment in developing new varieties, it does not make sense to simply release them and hope someone is interested in growing them.
It took 31 years, and an estimated $4.8 million to develop Honeycrisp, for example. No other type of business would invest that kind of money and time in a new product and release it without regard for how it would be marketed or for the quality of the product going to market, he noted. “That would be laughable.”
With a proprietary system, there’s a marketing balance, and a system to create demand. The number of trees produced and planted can be in kept line with the demand that’s anticipated when the trees come into production. Growers have the advantage of a marketing system behind the varieties they’re planting.
With the old system of releasing varieties, the growers end up taking all the risk, Bedford said. If they’re bold enough to plant a new variety, their packer is not going to be enthusiastic when they show up at the packing house with a few bins of a variety they know little about. If the variety turns out to be a good one and becomes established, there’s the risk of it being overplanted.
“It’s definitely time for a change, and we think this club structure is good for everybody,” he said.
Some growers might complain that they don’t have access to a variety, but there will be multiple club varieties.
Bedford acknowledged that there’s a limit to how many varieties retailers will display, because it’s unlikely they’ll devote more space to apples, so the new varieties will have to displace the old ones.
Club varieties will benefit the industry overall, he believes, because they should ensure superior apples in the stores, which should encourage people to eat more of them. And they should also help raise the price of apples because people will pay more for apples they like to eat. Retailers used to say their customers would never pay more than $2 a pound for apples, but Honeycrisp, for example, is selling at retail for up to $3 a pound, Bedford pointed out.
“We know people will pay more for something they really like. We have to give them something they like. That’s where new varieties can play a role in pulling the industry up. Trying to market old varieties creatively can make you incremental improvements, but you really want the consumers to be pulling things through the pipeline, not us pushing. Until we give them something to be excited about, they’re not going to be pulling.”