Good Fruit Grower

October 2013

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Learning from last season Last year's apple crop taught some odd marketing lessons. by Richard Lehnert T he 2012 U.S. apple crop holds some lessons for apple marketers, lessons that are not "intuitive." For example, consumers will buy apples even at high prices. Steve Lutz, executive vice president of the Nielsen Perishables Group, is an analyst who tries to understand people from what they do while shopping in supermarkets. He spoke to about 320 people who attended the U.S. Apple Crop and Market Outlook Conference in Chicago on August 23. "This year was really different because of what happened with the eastern apple crop," he said. Freezes in the East and a large crop in the West divided production even more sharply than normal. Even though total supply was not short, apple prices rose significantly. Apples showed the largest price increase in the produce section, and volume sold did not decrease, Lutz said. This led to an overall 16 percent growth in dollar sales and to apples passing bananas as the leading fruit. The big change, Lutz said, was there were not many apple promotions. There were few deep discount promotions and deals disappeared, perhaps because eastern retailers perceived that the crop was short because it was short in their area. The absence of low price promotions suggests that deals hurt, Lutz said. "You can turn a $2 customer into a $1 customer. They will trade down if we make the offer." How did eastern consumers react to the virtual disappearance of McIntosh apples and their relatives, like Cortland and Macoun, supposedly their favorite varieties? Economic theory would suggest that these consumers would buy fewer apples because they were not favored varieties or locally grown. That didn't happen, Lutz said. Eastern consumers ate more apples, not fewer, and shifted to newer, more exotic, club varieties, like Kiku Fuji, Lady Alice, Envy, and Opal. "A few consumers dropped out, but most paid more and bought more," Lutz said. "Volume was not hurt by the shift in production region." Despite high unemployment and a flat economy, fruit sales remain fairly strong, Lutz said. It is perceived as healthy and convenient, and the core apple buyers are least driven by price. "Fruit is in the sweet spot despite the headwinds." He warns that the coming apple season can be turned into a battle for distribution as eastern apple sellers try to recover markets they lost last year when they had nothing to sell, and that could lead to lower prices for apples. That need not happen, he said. "What we learned last year is that what we put on the shelf dictates what consumers will buy. Variety trumps growing region more than ever. New varieties are attracting consumers, no matter where the apples come from." Retailers need to learn shelf discipline, he said. They need to put the right varieties in front of the customers, and manage the asking price. "Consumers will pay for apples they like. Why not ask for the price we want?" Lutz left the Washington Apple Commission in 2000 to join the Perishables Group. At the Chicago meeting, he announced he was leaving the Perishables Group at the end of this year, with no plans as yet to where he is going.  • ® WIND MACHINES— The standard by which all others are measured We've been able to pick up 7 to 8 degrees with a good inversion layer We've been farming for 3 generations, and for 30 years we've been exclusively tree fruit. About 4 years ago we put in our first Orchards Rite® frost fan and have since added 2 more. Before we put in these machines, we never had a full crop in the valley acreage, where we typically will be around 25-28 degrees on some nights. With these machines we've been able to pick up 7 to 8 degrees with a good strong inversion layer. Since we put in these machines, we've had a full crop most years. We've had apples when some of the neighbors didn't have any. When we're ready, we'll certainly be going back to Orchard Rite® to add new machines. We're a firm believer in them!" Mike VanAgtmael VanAgtmael Orchards Hart, Michigan They paid for themselves in one year We farm 150 acres of Pistachios at an elevation of 4,500 feet. In February, we put in nine Orchard Rite® Wind Machines and in April our temperatures dropped to as low as 25 and 26 degrees on three different nights. I'm sure we would have lost 80% of our crop this spring without our wind machines. They literally paid for themselves in one year. We like the Ford V-10 engine with the auto start option and have found with a good inversion we can consistently bring the temperature up 3-5 degrees, sometimes even 7 degrees. It's a no brainer to use wind machines in this part of the country. Almost all of the Pistachio farmers in our area use Orchard Rite® Wind Machines. When it comes to frost protection, I don't know of anything that performs as well as wind machines. Don Fortman Wilcox, AZ Let us help you solve your unique frost control needs. 1615 W. Ahtanum • Yakima, WA 98903 • 509-248-8785, ext. 612 For the representative nearest you, visit our website: Good Fruit Grower OCTOBER 2013 17

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