Apple Culture

With more available varieties and growing competition, retailers need to do all they can to merchandise offerings.

Photo Courtesy of CMI Orchards

The iconic Red Delicious ruled as king of the apple category 20 years ago. Beyond this, selection meant a Golden Delicious, Granny Smith or McIntosh for those retailers in the Midwest and East Coast. Then, the apple industry experienced its Newtonian moment: the gravity of potentially falling sales in the future due to stagnant varietal development in the present.

Today, there is a slew of varieties that offer consumers not just better taste, but something that is new, different and exciting. The result: per capita consumption of fresh apples increased to 18.7 pounds, the highest it’s been in more than a decade, according to USDA Economic Research Data presented in the U.S. Apple Association’s 2017 Production and Utilization Analysis, released Aug. 24, 2017, by the Falls Church, VA-headquartered organization. What’s more, the apple category represented a healthy 6 percent of total produce sales for the 52 weeks ending July 1, 2017, according to data supplied by Chicago-based Nielsen Perishables Group.

“The apple category is one of the largest in the department, especially as we go through the fall and winter timeframes,” says Vic Savanello, director of produce and floral for Allegiance Retail Services, an Iselin, NJ-headquartered company that supports more than 80 independent supermarkets in New Jersey, New York and Pennsylvania under banners Foodtown, Freshtown, D’Agostino, Market Fresh and Uncle Giuseppe’s Marketplace. “New varieties have expecially been incredible for the category.”

The domestic 2016-17 apple season offers plenty of fresh product to fill retail shelves nationwide. More specifically, on Aug. 10, 2017, the USDA forecasted the U.S. apple crop at 248.7 million bushels. This represents 20 million bushels less than the 2015-16 season and roughly 2 million bushels below the most recent five-year average. Sixty-seven percent of the crop is marketed as fresh.

Suppliers say there are ample commodity varieties to market volume-wise and good margins to be made given the premium nature of newer varieties. In fact, continuing to cultivate apple category sales requires retailers to focus on the opportunities afforded by recent and new varieties in all aspects of merchandising from what to stock to how to promote.

Here are some ways retailers can increase the sales of apples this season.

Stock What’s Hot

Photo Courtesy of Fowler Farms

Ten apple varieties make up nearly 85 percent of fresh apple volume sold in the United States, according to U.S. Apple’s 2017 report. These, in order from greatest to least volume, are Red Delicious, Gala, Fuji, Granny Smith, Golden Delicious, Honeycrisp, McIntosh, Cripps Pink (Pink Lady), Rome and Empire.

Additionally, some of these legacy varieties, such as newer strain Galas, Aztec variety Fuji’s that pick with full color and contain starch reserves that enable storage for up to 12 months, and Cripps Pink, are joining the ranks of Red Delicious, Golden Delicious and Granny Smith by moving to year-round domestic availability, according to Roger Pepperl, director of marketing for Stemilt Growers in Wenatchee, WA. This means there will no longer be a need to import these varieties from the Southern Hemisphere during the summer.

“Honeycrisp, Gala and Fuji are our three best-selling apple varieties in that order,” says Travis Stickler, produce planner and merchandise planning at Meijer, a Grand Rapids, MI-based retailer that operates 223 supercenters and grocery stores in six Midwest states.

Gala, averaging $1.28 per pound but representing 22 percent of category volume, and Honeycrisp, with an average price per pound of $2.81, dominate in terms of sales dollars, according to IRI/Fresh Look scan data for the 52 weeks ending July 9, 2017, as shared by Domex Superfresh Growers, Yakima, WA.

Trend lines for each of these apples are drastically different, says Don Roper, vice president of sales and marketing for Honeybear Marketing, a subsidiary of Wescott Agri Products in Elgin, MN. “Galas have plateaued. It is a mature value variety that has flattened in sales. On the other hand, Honeycrisp continues it meteoric rise, and its annual growth continues to push well into double-digit gains. This variety alone has reminded the growing community that consumers will pay for — and demand ­— an apple that provides flavor and a rewarding eating experience. This has promoted the explosion of new varieties. These varieties, to survive and find a place in the market, need to be better than Honeycrisp. Honeycrisp, especially the newer plantings of high-flavor, high-color varieties, is the new bar.”

The handful of new varieties introduced each year, says Allegiance Retail Services’ Savanello, “again creates excitement in the category and the whole department.”

“We’ve introduced up-and-coming varieties Lady Alice, Envy and Ambrosia over the past few years,” says Stickler of Meijer.

The fastest growing in the apple category after Honeycrisp falls in the ‘New’, ‘Club’ or ‘Managed’ varieties category,” says Roper. “This includes, but isn’t limited to, Ambrosia, Envy, Pazazz, Opal, Jazz, RiverBelle, EverCrisp, Juici, Autumn Glory, Piñata, Kiku, Kanzi and Rave.”

New varieties from East Coast growers include SnapDragon, RubyFrost and Sweet Cheeks.

Phase Out What’s Not

Many commodity apple varieties are literally losing ground to newer varieties, says Scott Marboe, director of marketing for Oneonta Starr Ranch Growers in Wenatchee, WA. “The reason is that consumers’ tastes are changing.”

Among the Top 20 apple varieties sold in the United States in the past five years, an equal number is noticeably declining, including Red Delicious (-4.2 percent), Golden Delicious (-16.2 percent), Braeburn (-40.6 percent), Jonagold (-58.0 percent) and Cameo (-66.3 percent), according to U.S. Apple’s 2017 report.

Some of the older regional apples are also fading.

“Rome, York and Stayman are decreasing,” says Laura England, director of market development for the Pennsylvania Department of Agriculture, Harrisburg, PA.

Cortland and Crispin varieties are primarily for niche markets, according to David Williams, vice president of sales and marketing for Fowler Farms in Wolcott, NY.

Boost Organic Offerings

“Organic apples continue to be an incremental part of our business,” says Meijer’s Stickler.

Indeed, organic represented 10 percent of apple category sales at retail, according to Chicago-based Nielsen Perishables Group data for the 52 weeks ending July 1, 2017.

Organics is probably the second biggest trend in the domestic apple industry after new varieties, says Roper. “Approximately 90 percent of available land for organic apple production is in Washington, attributable to the dry high desert climate around Wenatchee and Yakima. Washington’s distinct advantage over other U.S. apple growing regions is its ability to grow organics in mass volume. This transition has already started, and this year will see double-digit growth in organic production.”

Large growers such as CMI Orchards in Wenatchee, WA, are anticipating growth in organic apples of about 15 percent this year on top of 65 percent last season, says Steve Lutz, vice president of marketing for CMI Orchards. “These increases are across the board in all of the core, as well as newer varieties such as Ambrosia, Kiku and Kanzi.”

Domestically grown organic apples are currently available from October to April, says Stemilt’s Pepperl, who adds that nearly 40 percent of the company’s apple crop is organic. “We are working on the scientific front with our controlled atmosphere systems to see if we can extend the availability into later in the spring or summer while maintaining superior quality.”

Make Sure There’s a Size for All

Larger-than-normal-size apples are due out of New York, according to Fowler’s Williams, who expects at least a two-size, if not three-size swing, from last year’s smaller fruit. On the other hand, apple sizing out of Washington will be down at least one size and potentially two, says Honeybear Marketing’s Roper. This means instead of the crop peaking on 80 or 88, depending on variety, it is peaking on 100 or 113.

“Retail strategies are often to promote large premium fruit at a higher price point or smaller size apples in bags as a ‘value focused’ item,” says Sally Symms, vice president of sales and marketing at Symms Fruit Ranch in Caldwell, ID. “If implementing two separate-size programs, it is important consumers are able to discern a difference between the sizes.”

There really aren’t many varieties that justify two bulk sizes on an everyday apple display, except Gala, Honeycrisp, Fuji and Grannies, says Lutz. “The reason is retailers need to make room for fast-growing branded apples. If the department is plugged with duplicate items (small and large bulk, plus bags), there is limited space for the new varieties driving the highest growth. Here is the very important catch: about 75 percent of total apple sales are driven by legacy varieties. So, a small decrease in sales of these varieties can have a huge impact on the total category. The key for retailers is to develop a strategy that stabilizes sales of legacy varieties while at the same time drives growth in the new high-flavored branded apples that are driving category growth.”

Just Sell It in the Bag

A season of smaller-sized fruit out of Washington means a greater opportunity for bagged apple sales.

“Bagged apples continue to be a large part of our business, making up almost half of total apple sales. In fact, the Michigan tote bag program to launch the season is always a big hit,” says Meijer’s Stickler.

Similarly, Allegiance Retail Services’ Savanello says, “We had a lot of luck with smaller bags that target kids and lunchboxes. It’s a new trend that is getting some traction.”

Bagged or packaged apple sales increased 10 percent in dollars and 11 percent in pounds, and 42 percent of sales by volume were bagged, according to IRI data for the 52 weeks ending July 9, 2017, as supplied by Domex Superfresh Growers.

“Our consumer survey data indicates Millennials, Gen-Xers and small households favor bagged apples, particularly in smaller packs. To meet this demand, it is critical to carry packaged-apple SKUs, such as 3- and 5-pound conventional and 2-pound organic pouch or poly bags,” says Catherine Gipe-Stewart, Domex’s communications manager.

“A season of smaller-sized fruit out of Washington means a greater opportunity for bagged apple sales.”

“New packages are being introduced on a regular basis, and one of the larger ones for us has been the emergence of the pouch or zipper bags,” says Andy Figart, sales manager for Hess Bros. Fruit Co. in Leola, PA. “Many retailers like the way these bags look in their display.”

The optimal package type ultimately depends on the product, says Lutz. “For legacy varieties, 3-, 5- or 8-pound poly bags work well. Totes are popular with many consumers in the fall. However, we think the data is completely clear that for newer varieties of branded apples like Ambrosia, Kiku, Envy, Kanzi, etc., the 2-pound pouch is the superior package. A key reason for this is that the packaging allows for superior graphics to tell the story of the apple, and the 2-pound pack size allows a price point consumers are willing to accept.”

Figure for Enough

The optimal number of apple varieties offered for sale varies by store size, neighborhood and demographics, says Dave Nelley, vice president of categories for Oppenheimer Group, Vancouver, British Columbia, Canada. “Ideally, retailers should carry varieties to provide a range of flavor and color, while not offering so many that it becomes difficult to distinguish one from the other on the shelf.”

Carry all legacy or mainline varieties during the peak fall season and allocate space based on movement in that part of the country, suggests Chuck Sinks, president of sales and marketing for Sage Fruit Company in Yakima, WA. “Retailers in the western United States, for example, should give more space to Fuji apples.”

Cynthia Haskins, president and chief executive of the New York Apple Association (NYAA) in Fishers, NY, agrees. “Make room for both new and classics. We continue to see strong consumer demand for varieties like McIntosh and Empire, which are synonymous with New York state.”

Numbers-wise, the average supermarket carries about 35 unique apple items per store per week, according to CMI’s Lutz. “This number peaks in the fall and gradually declines to the upper 20s to low 30s in the summer. In some cases, these items represent varietal duplicates — for example, a large Gala, small Gala, 3-pound bagged Gala and organic Gala. With the new branded apples like Jazz, Envy, Kiku and others, there tends to be a single item on the shelf. I don’t think you can generalize about a correct ‘number’ when it comes to new varieties.”

Honeybear Marketing’s Roper agrees. “Consumer sales preference should drive the mix. Take what’s needed every day to drive sales. Couple this with testing of new varieties, actively manage the promotions on all the varieties and then assess where the strongest performance is from both a gross sales standpoint and gross margin contribution. If a variety is not contributing strongly to your overall mix as a retailer, you should allow that space go to another variety.”

Introduction of limited supply of new varieties offers a point of distinction and differentiation for retailers, and a treasure hunt for customers, says Mac Riggan, marketing director for Chelan Fresh Marketing in Chelan, WA. “Merchandise these as a ‘get them while they last’ item to drive urgency. There is less price sensitivity when something is urgent. It also makes shoppers pay more attention to the apple category by looking for what’s new each week or month.”

Front Row Center Displays

Fresh market apples should be displayed front and center in the produce department from Sept. 1 through Feb. 28 to maximize sales, according to Sinks.

It has become more difficult for retailers to create color breaks and eye appeal in bulk apple displays since so many varieties are now red bi-color, says Honeybear Marketing’s Roper. “This is where good signage comes in.”

Bins are useful for merchandising, says Allegiance Retail Services’ Savanello. “We’ve been doing a lot of business with bins, especially to start off the season and reset the department for the fall.”

Stand-alone bins are well-distinguished from inline shelf space and provide more flexible merchandising options, according to Joe Barsi, president of T&G North America, a division of New Zealand-headquartered T&G Global, which works with Washington growers Oppy, Rainier Fruit Company and CMI Orchards to grow its Envy brand apple. “We’ve seen a clear association between enhanced displays and stronger sales, especially among premium varieties/brands, which is very encouraging.”

Secondary displays are an especially good way to merchandise new varieties.

“Consumers are looking for these new varieties, and it’s important for supermarkets to leverage the impulse purchase power these branded apples deliver. Secondary, off-shelf displays are key to stopping the consumer long enough to see there is a new product available. We offer a variety of two-box and five-box shippers that are specifically designed to be easy, instant retail level displays,” says CMI’s Lutz.

This season, Sage Fruit offers a number of themed different point-of-purchase bins, including organic bins, baseball bins, orchard fresh bins and bins for its new Breeze variety.

Creatively Cross-Merchandise

Caramel dip and apples go together like hand in glove.

Beyond this, “we work to share information about how versatile apples are as ingredients in savory, as well as sweet recipes,” says Diane Smith, executive director of the Michigan Apple Committee, Lansing, MI.

Cross-merchandise apples with other items in the produce department, recommends Sage Fruit’s Sinks. “Build a display that includes pears, lettuce or bagged greens, apples and butternut squash. Showcase a harvest salad in the fall. Also include cheese, dried cranberries, nuts and salad dressings to complement the dish.”

Other ideas include apples and peanut butter; an ‘express charcuterie’ featuring apples, other fruit, cheeses, breads and spreads; and apples (along with other fresh options) set alongside Halloween candy, recommends T&G North America’s Barsi.

For gourmet foodies, “offer apple, cheese and wine pairing suggestions that pair sweet and savory flavors with a variety of wines, sparkling, whites and reds — even rosés. After all, apples are a member of the rose family of plants,” says NYAA’s Haskins.

Introduce New Varieties

Photo Courtesy of Envy Apples

New varieties introduced at retail require a significant investment in marketing to differentiate them from the rest of the newly introduced pack, say grower-shippers.

Sampling, additional display space and promotions both in-store and in print ads are ways Meijer’s Stickler says the chain has introduced new varieties such as the Lady Alice, Envy and Ambrosia.

“Taste samples are the best way to engage consumers with an apple they’ve never tried,” says Oppy’s Nelley, who with T&G North America took its Envy-brand apple on a roadshow from Boston to San Francisco earlier this year, saturating these markets with promotional activity and holding taste demos alongside retail displays in the produce department. “In Boston, one retailer recorded a 35 percent lift in sales. Through the roadshow, thousands of consumers who had never tried Envy are now converted (and committed) fans, and have joined the ranks of the apple’s social media faithful. The high-impact promotion will appear at retailers in Texas through the month of November.”

Overall, CMI’s Lutz recommends three keys to success for new variety introductions. “First, they have to be priced right. Since Honeycrisp is the gold standard to consumers, the data is clear these varieties must be priced slightly below the Honeycrisp retail, but above the legacy apples. Second, new apples need consistent distribution. Short-term distribution never allows sufficient time for the variety to gain traction and consistent purchases. Third, merchandising that creates shelf visibility is key. Unless the retailer can build a unique display or create a secondary display location, the ‘new’ apples get lost in a sea of choices, and consumers just don’t realize there is a new product to try.”

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