CHICAGO — If those who don’t remember the past are destined to repeat it, the apple industry can’t plead memory loss.
Marketers have been reminded about the 2008 season by Steve Lutz.
Lutz, executive vice president of the West Dundee, Ill.-based Perishables Group, thinks he sees potential for another profitable year for Washington growers, since the low value of the dollar will support exports of apples. But there is historical precedent for concern.
In 2008, tight supplies at the beginning of the season caused U.S. average retail prices for red delicious to climb to $1.58 per pound in September.
The market then steadily fell to a low of $1.14 per pound at retail the following May, eventually dragging f.o.b. prices to near the $10 per carton mark for red delicious.
This year, red delicious prices at retail were climbing in the late summer, reaching $1.37 per pound in July, up from $1.29 per pound in July 2010.
Likewise, premium quality red delicious apples were well over the $30 per carton level on Aug. 24, compared with about $20 per carton the same time last year.
Lutz said he sees the potential for the 2011 season to start out with high apple prices that are unattractive to promote for retailers. Retailers may then choose to promote other items like grapes instead of apples in September and October. That could cause the apple industry to play catch-up the rest of the season, he said.
Washington apple marketers need to be competitive with regional apple suppliers in the fourth quarter of the year, Lutz said.
“When regional suppliers can capture shelf space and can deliver a good product, they tend to stay,” he said.
The late harvest start for Washington apples could present an opportunity for Michigan and New York growers to have a strong run in the fall, he said.
For the 52 weeks ending June 25, Perishables Group reported that retail sales of apples were up 3.2%, down 0.9% in volume and up 4.2% in average retail price compared with year-ago numbers.
Lutz said the apple category is much more complex than in the past with many more varieties offered now than 30 years ago.
“I think that forces all of us as marketers to begin to think about stores as opposed to think about chains,” he said.
Lutz said that means marketers need to do a better job of aligning products with consumers in a particular market.
Based on loyalty card data, only 8% of consumers bought two varieties of apples on any one trip.
“We have to do better getting multiple varieties in that shopping basket in every consumer purchase,” he said.
Sales opportunities could come in the form of marketing multiple apple varieties in one package, Lutz said.
“Why can’t we get a variety pack for apples so we can continue to introduce new varieties and encourage consumers to get more than one apple variety?”
With relatively high gas prices and a struggling economy, Lutz said the American shopper remains under pressure. Still, apples will have the advantage of being a prominent part of retail fresh produce departments.
Lutz said apples are the third most purchased fruit behind bananas and strawberries. The average consumer buys apples 5.5 times per year.
Retail promotions in the 2010-11 season were not as aggressive as the previous season, Lutz said. Retailers are not offering as deep of discounts to consumers when they put apples on ad, and he said that is changing the demand those ads generate.
For the 52-week period ending June 25, Lutz said promotional prices were up 6.3% compared with a year ago, compared to a 3.2% gain in average non-promotional prices.
Lutz said marketers must be very diligent to set up focused promotional activities to drive volume.
Meanwhile, Lutz said retailers need to use club or niche varieties as a consumer draw, while relying on core varieties — red delicious, gala, fuji, Honeycrisp — to drive overall volume.
“Core varieties are still going to drive 80% of sales,” he said.
“A retailer can monkey around with club varieties and miss the big picture,” he said.
For the week of Aug. 26, retail promotions for apples were well below last year’s level, according to the U.S. Department of Agriculture.
The USDA said 597 retail stores promoted apples that week at an average price of $1.56 per pound. That compared with 1,340 stores promoting at an average price of $1 per pound the same week a year ago.