There is plenty of room for growth in the apple category at retail, Steve Lutz says.

Speaking Aug. 19 at the U.S. Apple marketing conference, Lutz, executive vice president of The Perishables Group, West Dundee, Ill., said the supermarket performance of apples varies greatly.

For example, in the fourth quarter of 2009 apples accounted for 11% of Cub Foods produce sales, while the lowest-
performing chains tracked by Nielsen reported only a 4% contribution for apples.

Of more than 100 retailers measured in the fourth quarter of 2009, the top 15 performing chains average 9% contribution compared to the bottom 15 that averaged 6%. For about a third of the retailers, apple contributed less
than 7% of produce department sales in the fourth quarter.

“Surely there is room for growth in understanding what causes some of these chains, some of which are in apple country, to perform at a very low level on a key category at the peak of the apple season,” he said. “Your job is to make it easy for retailers to make money from your crop.”

Many retailers have latched on to the Honeycrisp variety as a way to generate sales.

In fact, the most important apple item to retail volume and sales in the fourth quarter of 2009 was the Honeycrisp variety, accounting for 8.5% of apple volume and 13% of sales, with an average price of $1.99 per pound.

The category average was $1.34 per pound, which Lutz said makes the performance of Honeycrisp that much more remarkable.

“You have Honeycrisp about a 40% premium for the category and it is No. 1,” he said.

Consumers are clearly willing to reward a product that they have concluded is wonderful to eat and delivers against the cost.

While the Honeycrisp is now a heavyweight for produce department managers, Suzanne Wolter, marketing director for Rainier Fruit Co., Selah, Wash., said retailers need to be careful not to focus so much on Honeycrisp that they lose other promotion opportunities.

Sales and volume of other varieties can be cannibalized by the Honeycrisp in part of the third quarter, the fourth quarter and the beginning of the first.

“You don’t want to focus so much emphasis on that one variety, you are taking away dollar sales and volume,” she said.

Retailers may be better off focusing promotions on multiple varieties of reds, galas, fujis and golden delicious.
While the job is complex, Lutz said marketers need to be prepared to advise growers on what varieties perform best in various communities.

Key to a strong quarter is determining the optimal formulas for pricing and assortment of varieties featured.
Loren Queen, marketing and communications manager for Domex Superfresh Growers, Yakima, Wash., said the company tries to communicate opportunity with facts.

“That’s what will win you consumers and their dollars day in and day out, selling what they need and want,” he said.
Roger Pepperl, marketing director for Stemilt Growers Inc., Wenatchee, Wash., said retailers are looking for supply partners who can help them.

“They want idea generation, products that will make them successful. They are depending on us,” he said.
He said retailers and suppliers set up early plans in August and then reassess those plans by October at the Produce Marketing Association’s Fresh Summit and adjust them if necessary.

Retailers may appreciate the lowest price, but Mac Riggan, vice president of marketing for Chelan Fresh Marketing, Chelan, Wash., said retail buyers also know that quality and availability are essential to their success.

“They don’t rip for having good quality and the shelves full. They get ripped for having poor quality and being out of stock,” he said.