Proprietary Variety Management—the company that is managing the commercialization of Washington State University’s WA 38 apple—has formed an industry-wide marketing group to discuss how the apple will be launched in the market place.
PVM of Yakima, Washington, worked with WSU faculty to develop the variety’s brand name Cosmic Crisp. PVM’s general manager John Reeves said his company is consulting with a group of sales and marketing organizations that represent a large chunk of the industry’s apple acreage to develop marketing themes.
PVM will help develop concepts and graphics for promotional materials, working with marketers to try to stimulate consumer demand for the apple. But it will not be involved in selling fruit.
“We may provide information that marketers use in promotions,” Reeves said. “But I would say all these individual marketers will do their own promotions. What we want to do is make sure we’re all using the same vernacular and the same general theme. What’s most important is to not confuse the retailer or consumer.”
The first commercial trees of WA 38 will be planted in 2017 and the first fruit could go to market two or three years later under the brand name Cosmic Crisp.
Reeves said consumer input will be important in guiding commercialization because the revenue stream that will provide a return to growers and others involved comes only from consumers. If consumers aren’t happy, the variety won’t succeed.
PVM will license all the entities that handle the variety, from the Northwest Nursery Improvement Institute to growers, packers, and marketers, and will be in charge of protecting the intellectual property rights both in the United States and abroad.
WA 38 is different from most other managed varieties in that access will be limited to Washington growers for the first ten years.
Dr. Jim Moyer, director of the Agricultural Research Center at WSU, said that as a public institution, the university felt an obligation to make the varieties available to the growers who have helped fund the apple-breeding program through the Washington Tree Fruit Research Commission.
“We had to do some things that you would not do
as a private company,” he said. “We can’t go with one company and say, ‘Here’s the variety, take it.’”
The commercialization strategy, developed in collaboration with the Cultivar Licensing Committee (a group of Washington apple industry representatives), calls for tree and production royalties that will help support WSU’s apple breeding program. The tree royalty is set at $1 per tree, at least through 2018, Moyer said.
The royalty on fruit will be $1 per 40-pound box for sales at $20 but less than $35 a box f.o.b., $2 a box for sales at $35 but less than $50, and $3 for sales at $50 a box or more. There will be no royalty on fruit sold at under $20.
To be sold under the Cosmic Crisp brand, the apple will need to meet certain standards, which PVM will develop in collaboration with the industry. Reeves expects that there will be plenty of outlets for WA 38 apples that don’t make the grade. It should be suitable for fresh slices, for example, because the flesh is slow to turn brown when cut.
Reeves has experience with managed varieties, being also general manager of Pink Lady America, Brandt’s Fruit Tree’s master licensee for the Pink Lady brand, and said he’s learned a lot from that and will not make the same mistakes. Pink Lady is the trade name for the Australian variety Cripps Pink.
He said it has not been determined how the Cosmic Crisp standards will be enforced. But his experience with Pink Lady shows that the requirements of major retailers far exceed the minimum quality standards for the variety.
Reeves has experience with other branded products, having worked in the past for Anheuser-Busch Companies, Inc., and EarthGrains Baking Companies, Inc. He has also been chief executive officer of the hop growers cooperative, Yakima Chief, and president of the Crop Certification Association. The CCA was associated with the Nursery Licensing Association (later the National Licensing Association), which sued many producers and lenders for alleged patent and trademark infringement a decade ago.
PVM’s management team also includes Lynnell Brandt (president) and Alan Taylor (marketing director), who are both with Brandt’s Fruit Trees.
PVM is working with other fruit variety owners, as well as WSU, to commercialize their products.
Tom Kelly, technology manager with the WSU Research Foundation, said WSU is fronting some money to PVM so that it can function until the royalties start to come in. Then, PVM will receive a share of the royalties that it collects.
Kelly said 50 percent of the royalties that WSU receives from PVM will go back into the breeding program, 10 percent will go to the university’s Office of Commercialization, 10 percent to the Agricultural Research Center, and 30 percent to the breeder. Both WA 2 and WA 38 were bred by Dr. Bruce Barritt before he retired, but current breeder Dr. Kate Evans will likely receive some of the funds.
Moyer said funds from royalties will help strengthen the apple breeding efforts. “It will go to the breeding program to build capacity. There may be needs in the orchards and needs in instrumentation or bioinformatics. This allows us to be responsive and look at whatever the needs of the industry are related to the breeding program.”
The university has tried hard to communicate with the industry and keep everyone informed, he said, and he welcomes questions or concerns.
“I think we have a pretty good plan, and once we’ve been able to explain exactly what we’re doing, I think the growers, packers, and marketers have been reasonably accepting of the fact that as a public institution we had to do some things that you would not do as a private company.
“I think most of them have been pleased at our willingness in working with the industry and getting their input and it being a very collaborative, shared process,” he added. •