Consumers today are more passionate about apples than they’ve ever been before, which is good news for apple producers, and they’re more satisfied with the apples they’re buying.
New varieties have energized the apple category, says Steve Lutz, vice president of marketing at Columbia Marketing International based in Wenatchee, Washington.
“I can remember, not that long ago, when the feedback we got from consumers was not particularly good because all we could ship them was Red Delicious,” he said. “The feedback we regularly get now is terrific. People are saying, ‘How can I find this apple?’ and ‘Tell me about it—I want to know more!’”
Though there’s no evidence that new varieties have increased apple consumption, they have helped increase the amount consumers are willing to pay for apples, Lutz said. They pay $2.99 or $3.99 a pound for Honeycrisp because it’s a variety they want.
“What we’re getting is a trade-up, where consumers are moving up to more expensive varieties,” he said. “That’s a good thing.”
It’s good for retailers, too, because retailers work on a percentage margin, typically doubling the price of the apples. So, they’re making much more profit on an apple variety that costs $40 a box than on a $20-a-box variety.
Lutz said the impact of new varieties at retail was demonstrated by a major U.S. retailer that decided to heavily promote the old variety Jonamac last fall with big displays of the apples in the front of the store and a price of under a dollar a pound.
“What they did was they destroyed the profitability of the category,” Lutz said. “They did a spectacular job of trading people down. They had a slight increase in volume, but a huge decline in total dollars. They moved people out of the more expensive Galas or Fujis, and certainly out of the branded apples, and down to 79-cents-a-pound dynamics. That’s just a loser. Branded apples are really powerful because they trade consumers up.”
But a problem retailers face is how to accommodate all these new and enticing varieties that keep coming onto the market, because shelf space is finite.
Lutz was president of the Washington Apple Commission in the days when retailers would prominently display three sizes of bulk Red Delicious and multiple sizes of bagged Reds. Now, most stores carry just one size.
Washington produces around 35 million boxes of Red Delicious apples annually, which makes it still by far the state’s top variety. Lutz doesn’t think Red Delicious will disappear in the foreseeable future, but he does expect the volume to shrink. Even a 20 percent reduction would free up shelf space for another 6 million boxes of other varieties. The same could happen with Golden Delicious and Braeburn, which are also under price pressure this season.
“There’s a bunch of apples that are being replaced by products that are better, and consumers are going to figure that out and, as they do, retailers will start changing their merchandising and displays,” he said. “There’s going to be some carnage in terms of some of those varieties that are not going to make it.”
In the meantime, retailers’ strategy is to rotate the smaller-volume varieties, featuring them for a certain segment of the marketing season.
“They’re not just trying to cram everything in the store at the same time,” Lutz said.
One of the problems with a succession of apple varieties at the retail store is that statistics show that consumers only buy apples once every two to three weeks, Lutz said. That means they could buy a variety and find it gone the next time they buy apples. Or they might miss a variety completely and not see it again until the following year.
It means that, each year, the marketing effort has to start over, and that’s both difficult and expensive for suppliers.
“It’s more efficient if you can get longer distribution at the store level and start to develop a consumer following,” Lutz said.
As production has expanded, Ambrosia recently joined Honeycrisp in breaking out of the niche mode and becoming a year-round apple with a consistent following.
“I think there’s certainly some varieties that are going to bridge the gap, that will move from being a niche variety to mainstream like Honeycrisp and Ambrosia,” Lutz said. “They will make that leap because of the quantities being grown and because of the inherent qualities of the apple—it will be a great-eating piece of fruit. There will be some that will become year round, but at the same time there will be significant displacement of existing varieties.” •