Apple industry discusses collective marketing

Every young person in America used to know that an apple a day keeps the doctor away. 

Today, Gen Z — that’s young people ages 13 to 26 — makes up 20 percent of shoppers at one major retail chain but buys just 3 percent of the apples. When they think of healthy choices, they opt for blueberries and avocados.

“That’s sobering,” said Steve Clement, CEO of Sage Fruit Co., during a talk about declining apple consumption at the Washington State Tree Fruit Association annual meeting in December. 

Most American households buy apples, he said, but consumption is declining. Produce consumption in general is down 10 percent over the past 18 years, but consumers report eating fruits such as grapes, berries and citrus more in recent years, while they eat raisins, peaches, cantaloupe and apples less often. 

“Apples being in decline concerns me greatly,” Clement said. “I would like to ask this industry to consider advertising our product. When are we going to fight back?”

Clement isn’t the only one asking that question. This winter, industry leaders began meeting for an informal discussion about how a new approach to consumer marketing could be designed. It’s still the early days, according to participants, with a long, steep road ahead. Collective marketing became a persona non grata 20 years ago with the lawsuit that ended the Washington Apple Commission’s domestic program, and the trends toward brand marketing and consolidation at play since then have only intensified. (The commission’s international marketing continues.) 

“No one is talking to consumers about the health benefits of apples,” said Julie DeJarnatt, brand manager at Chelan Fresh. She was inspired by conversations at the International Fresh Produce Association meeting last fall inviting industry leaders to discussions about apple advertising for the modern era. 

No one is proposing reviving the Washington Apple Commission of yore, she stressed. Instead, she envisions — with participation from across the U.S. — an “umbrella campaign” that can rebuild consumer awareness of the advantages of apples and be done strategically on a small budget with today’s sophisticated marketing tools. How to get a competitive industry on board with this sort of collective effort remains unclear. 

“I don’t have the answers, I am just trying to get the right people at the table to have the conversation,” she said. “I want to give growers hope that chainsaws aren’t the only option.”

Meanwhile, some industry leaders think a better balance could be found by addressing the supply side of the apple equation rather than the demand. 

“Could we improve the strength of the messaging if we spent more money on it? Yes. However, what is going to create better pricing for us as growers is the most linear mechanism — we need to reduce the supply of certain varieties to a level that matches the current demand profile of our global customers,” said West Mathison, president of Stemilt Growers. “The volume of certain varieties has increased too rapidly and exceeded the demand that we’ve created.”

The industry can work on both, said Eric Borton, director of business development at Borton Fruit. And it needs to, despite the lingering politics from the past. 

“It’s a different time, it’s a different category, and we have different competition,” he said. “We need to get everyone on the same page that we have a consumption issue and it would benefit us all to solve it.”

Not your father’s apple marketing

When the Washington Apple Commission and other commodity commissions faced legal challenges from growers against mandatory assessments for generic promotions in the early 2000s, the motivations were both philosophical (why should I support my competitors?) and practical (these assessments are expensive, and we don’t know if we are getting a return on our investment).

As for the latter, today’s marketing tools have created new opportunities for narrowly targeting customers and measuring impacts of campaigns, DeJarnatt said. 

“You can look at the proprietary brands we all run now. Everyone is doing really sophisticated consumer marketing,” she said. “But they don’t have the scale to move the needle” for the category. 

Doing more with less is definitely possible, said Steve Lutz, vice president of retail insight firm Category Partners. Take the successful introduction of Cosmic Crisp, for example. 

“When you think about it, here’s a relatively small budget — and look at the consumer awareness that was created over a couple of years,” said Lutz. “People say it can’t be done, but it was done. It’s effectively been on the market for what, five years, and has consumer awareness approaching Pink Lady, which has been on the market for 20.”

But even a small campaign requires a budget. DeJarnatt said a subcommittee is looking at funding opportunities, including grants and support from the apple industry’s public and private-sector partners who also depend on strong demand for their success. 

“We’re still looking at something that would be voluntary,” she said, adding that she believes it can be done without any additional assessment on growers. 

DeJarnatt urged growers who support the idea of collective marketing to reach out to their warehouses and sales desks.

She’s also looking for support from across the U.S.

Brenda Briggs, vice president of sales and marketing at Rice Fruit in Pennsylvania, said she is encouraged by the new conversation and glad to be a part of it.

“We have an iconic fruit. It’s healthy and convenient, but as I look backwards, perhaps we have sat on our laurels a bit,” she said. “The industry has an opportunity to educate consumers about the health and wellness and convenience of apples … but (the conversation) is very much in its infancy.” 

Meanwhile Diane Smith, director of the Michigan Apple Committee, is working with other apple states to apply for grant funding to support pro-apple digital marketing as well.

Categorywide consumption

After Washington dropped collective promotions, the domestic market enjoyed continued growth as it expanded varietal options and year-round availability.

“That’s all exhausted now. There is no more shelf space, there are no more months of the year to add,” said Lutz. 

“The latest USDA data I saw indicated that U.S. per capita apple consumption is at or near the lowest it’s been in 50 years,” Lutz said. “Now combine that with the fact that the diversity and quality of the product we are giving to consumers has never been higher. So how do you square those two factors?”

The newer, better apples have not bolstered the category, displacing their predecessors instead of growing consumption. 

That’s good news for the growers of those varieties, sure, just not for the category overall. But given the competitive, consolidated nature of the industry, the economic incentive for individual shippers lies in competing for a bigger slice of the pie, rather than growing it, Lutz said. 

“I tip my hat to the people who are trying to find a path forward,” he said. “It’s hard because the marketer-retailer relationship is not designed to drive overall consumption.” 

Reducing supply to raise prices pushes the industry toward a war of attrition, Borton said. 

“As the Borton family, of course we are competitive, … but I’d much rather improve consumption and create a bigger pie for everyone,” he said.

Clement said the other commodities that collectively promote, such as potatoes or blueberries, have grappled with the same forces but concluded that they can have more impact together. “It’s largely about critical mass,” he said in a follow-up interview. “I think we’ll get it done.”

Consider the fact that raising per capita consumption by just a few apples a year — 1.6 pounds per person would be a 10 percent increase — would “make this 140-million-box crop seem like a 125-million-box crop,” he said. “What if we could get 125-million-box pricing on 140 million boxes?” 

—by Kate Prengaman