Canadian growers who are upset by low apple prices should not get angry at retailers, because retailers don’t like the situation either, produce consultant Michael Mockler told growers at the British Columbia Horticultural Forum in Penticton.
“Supermarkets are not happy that the apple market is cheap,” he said. “If the market moves up, retailers are ecstatic because they make a percentage on the dollar sale,” he said.
Selling apples cheaper doesn’t drive consumption, Mockler said. When the price of apples is very low, a percentage markup is not sufficient to cover the retailers’ overhead, so they are unable to drop their retail prices below a certain level.
But supermarkets don’t want to pay more for poor quality apples, he stressed. “The real problem is that the growers are sending so much inferior product to the market, and if they don’t accept a lower price, they get nothing.”
Consumers want different, exotic, tasty, and healthier produce, he said. They have the money to pay higher prices and will not buy more of something just because it’s cheap.
“Quality will always linger on the lips of the consumer. The thrill of cheap produce will dissipate in two hours.”
Charge more, sell more
A survey of major B.C. supermarkets suggests that when they sell higher quality produce, they sell more of it, even at higher retail prices. For example, five years ago, avocadoes cost Can. 29 to 59 cents each in British Columbia. The retailers are now selling larger avocadoes for $0.69 to $1.50 each and are moving more volume than ever.
“The consumer has realized that by paying more money they get a better product,” Mockler said.
It’s an even more dramatic story with pineapples. The market went upscale with gold varieties of pineapples that were sweeter and riper, but cost more. Sales volume has tripled in the last three years.
The B.C. supermarket chains’ cherry sales have also been increasing, going from 415 tons in 2002 to 784 tons in 2005. The value jumped from just under $4 million to almost $7 million this year.
Mockler attributed the gains to new varieties of cherries that have been introduced, a longer marketing season, and larger fruit. “Higher quality and higher prices benefit everyone,” he said.
In contrast, the survey showed that although the B.C. supermarkets sold more apples in 1995 than in 1993, the total value of sales was lower, meaning retailers did more work to earn fewer dollars from apples. Their pears sales declined in dollars and tonnage between 2003 and 2005.
Tree fruit growers must focus on quality and supplying what consumers want, Mockler said. This means producing new varieties and organic fruit.
Whole Foods Market, the fastest growing supermarket chain in North America, sells organic foods at a premium of 25 to 100 percent over conventional.
“Consumers perceive organic to be of higher quality and to have health benefits,” Mockler said. “Retailers are begging for more organics, and they want them year round. There are not going to be enough organic apples in British Columbia for the next five years.”