Three years ago, a federal court ruling forced the commission to stop doing generic promotions in the domestic market. Major marketers discuss the impact of that.
“We’re going to lose the consumer brand it took 70 years to develop.”
Robert Kershaw, president of Domex, Yakima, Washington, said that the short-term impact of the changes at the commission have been positive for marketers. “It’s forced everyone out there marketing and selling apples to get more involved in what’s really going on with the promotion of their apples, and that can’t be anything but positive,” he said.
“We couldn’t even spell marketing,” commented Ed Kershaw, chief executive officer at Domex. “Everything was sales. You got on the phone and did your own mini-auction. Now, the creative juices are beginning to flow. We’re stepping out into new things. Some are going to be a total waste, but they are all good exercises you learn from.”
—Ed Kershaw, Domex
Ed, a former chair of the Washington Apple Commission, said it was a traumatic experience for retailers when the commission stopped doing promotions. “Money from the Apple Commission went straight to their bottom line. It was free money. Sometimes it went for apples, sometimes other things. They had to make adjustments.”
Although Domex ran its own marketing programs even when the Apple Commission was still promoting apples domestically, the company has had to devote more staff, more resources, and more expertise to marketing, and has hired people from the retail sector who understand retail, Robert said. While Domex is spending more on marketing than it used to, he thinks that the growers it represents are paying less than when they were paying an assessment to the commission.
Ed said the money is better spent now that marketers are doing the job. “We have targeted expenditures and you also have accountability, and you evaluate what you get for your money.”
Robert said the long-term impact of a lack of generic advertising of Washington apples in the domestic market might not be so positive, though. “I think we’re going to lose the consumer brand that took 70 years to develop. I think the long-term impact is probably going to be negative 20 years down the road.”
The Apple Commission’s continuing export promotions have been beneficial, Robert said. “I think that’s helping tremendously, and I think that’s going to help the future of the Washington apple image, especially in some of these economies that are developing.”
Ed expects that, as big retail chains replace traditional outlets in overseas markets, shippers will start to develop relationships with those chains and do individual promotions, with continued support from the Apple Commission and the federal Market Access Promotion funds. “The chains are going to want to work direct,” he said. “They’re going to want the most efficient supply chain that they can put together.”
—Scott Marboe, Oneonta
Although there were mixed emotions on the buying side when the Apple Commission stopped providing promotional and merchandising support, Marboe thinks most retailers are happier the way it is now, because they’re getting better real-time information direct from suppliers. It’s strengthened the direct relationship between marketers and their customers.
The various growing, packing, and marketing companies are building alliances and working together on promotions, because they’re often sharing accounts, even though they are still competitors.
“We’re having to work better together,” Marboe said. “There’s absolutely no question about it, it’s been a whole new spin on how we have to go out and approach our business on a day-to-day basis.”
Marboe said he was a proponent of the Apple Commission and thought it did a good job, over the course of many years, building the Washington name and increasing awareness. “The Apple Commission gave us a wonderful base and a wonderful foundation. I’ll never ever take that away from them. They did a fantastic job.”
For three seasons, starting in 1998, the commission collected a grower assessment of 40 cents a box, up from 25 cents. Marboe said his company is spending less on promotions and merchandising than it did then. Even while the Apple Commission was doing domestic promotions, Oneonta staff still went out to visit customers. Now, they can make better use of the marketing funds and direct them to where the company sees a need.
—Roger Pepperl, Stemilt Growers
Pepperl said the Apple Commission did a good job of putting Washington apples on the map when the industry consisted of many players. But as sales and marketing companies consolidated, it became obvious that they needed to run their own marketing programs.
Long before the Apple Commission stopped doing domestic promotions, Stemilt had its own marketing programs and used the Stemilt logo, rather than the generic Washington apple logo.
Pepperl considers Stemilt’s founder Tom Mathison to be a pioneer of what he calls “self marketing.”
“Tom had a real vision for what putting your name on the product really stood for,” he said. “Tom also was a real visionary in going to meet the customers. He would go out and visit customers himself, and he’d be on the road for weeks.”
Now, the state’s marketers are competing with each other in terms of the quality of their marketing programs, and Pepperl thinks that’s good.
“They always say the best place to be is across the street from a business that’s doing well because it forces you to compete, or go away. I think that’s been the best thing that’s happened to our state’s industry.”
Though the number of retail ads might have dropped since the Commission stopped promoting, the strength of the overall promotion programs has increased, Pepperl said. “The number of promotions may change compared to history, but the amount of meaningful promotions is what we’re looking at.”
Today’s retail ads promote multiple varieties, might carry a health-benefits message, and are backed up with displays and signage in the stores, he said. And retailers devote more space to apples when they advertise them. Pepperl believes this has led to stronger demand for apples and said it’s remarkable that the industry has been able to sell 100 million boxes of apples at relatively high retail prices.
Stemilt markets about 10 million boxes of apples annually. Its costs are about the same as they were when its growers were paying 25 cents a box to the Apple Commission, Pepperl said, and a bonus is that Stemilt’s promotions are targeted to where its fruit is going.
Even though no one is promoting the Washington apple on the domestic market now, Pepperl believes Washington State will retain its reputation as a quality provider.
“I think that image will never go away,” he said. “The best fruit will always be associated with the best growing region.”