“Sometimes, it may feel like you’re working harder than you ever have before just to tread water. As challenged as we are to continue to deliver all these things to today’s world, we have to figure out how to deliver that much more in the coming decades.”
Apples have been a pioneering crop with the development of dwarfing rootstocks and high-density plantings, which have enabled U.S. yields to continue to increase even as acreage has declined.
That’s good news when economists look at rising population and demand globally for food. The global population is forecast to increase by about 30 percent between 2010 and 2050, but most of that growth is in urban settings in developing countries.
“People in those urban settings, their incomes are going up, they spend more money on food,” Fumasi said. “That’s why, while the population is going to go up by 30 percent, global food demands are expected to increase by double that.”
At the same time, as incomes rise, consumers start to demand more fresh products, like fresh fruit.
An area of concern is the high concentration of exports in North America, with Mexico and Canada importing more than 40 percent of the U.S. crop, particularly in light of recent trade disagreements with Mexico.
The U.S. apple industry’s increasing focus on export markets elsewhere is “heading in the right direction,” he said.
The domestic market also poses opportunities for growth.
Some 75 percent of Americans don’t get the daily recommended allowances of fruit in their diet. From that perspective, the domestic market has room to grow, he said. “The unfortunate thing is to get people to eat anything based on their health is challenging,” he said.
One of the biggest challenges for apples: They have stiff competition. Domestic consumption of apples in the U.S. is trending flat or down, though there’s been a slight increase over the last few years, largely due to Honeycrisp and some of the managed varieties that are keeping the apple category “really relevant” against strong competition from products like berries and easy-peel mandarin oranges, Fumasi said.
“The industry delivers on taste better than we probably have ever before,” he said. “Affordability, I think in general we’ve got that covered, when you look at the value or cost per unit. The other thing is convenience; that’s where I think some of these other fruits are beating us a little bit is the convenience factor.”
Demand for organics also is starting to play a role, even though the price has gone up. Much of that trend is being driven by retailers wanting more organic products on their shelves, he said, and over time, the organic price premium will tighten.
“That means as producers and the value chain, we have to figure out how to do it as effectively as we possibly can.”
A common misconception in the organics category, though, is the belief that millennials are driving it.
“While millennials are the generation that is probably most willing to pay more for organics, they don’t necessary have the purchasing power yet to do that,” he said. “They’re frugal. But keep in mind, over the next three to five years, about 70 percent of the workforce is going to be millennials. Their purchase power is going to increase dramatically.”
Canaries in the coal mine
Fumasi also highlighted some areas for possible concern — or areas for opportunity, depending on how you view them.
All eyes are on the industry, and technology can create challenges; negative news from consumers moves fast online. However, marketers who are taking advantage of new technologies and information flow are in a good position to benefit, he said.
In another area, the growing availability of online grocery sales likely is an early signal of a long-term trend — one that could be positive or negative for fruit growers.
“Everything else is moving online. Why don’t we think food will move that way, too?” Fumasi asked.
The trend is being driven largely by major retailers, including Amazon and Wal-Mart, who can make money in a generally unprofitable area — selling groceries online — by selling other products simultaneously. The key is that these retailers know they have to get it right the first time, he said.
“Retailers gain much more control for exactly what the consumer sees,” he said, noting that retailers can drive consumers to high-market, fresh produce items immediately. “In general, if grocery really moves online, it’s going to be positive for fresh produce, because that’s exactly what retailers want to sell consumers.” •
– by Shannon Dininny