(Aug. 24) CHICAGO — There was a time when red delicious, golden delicious and granny smith defined the bulk of the apple category.

Today, the next big thing — and the leading edge of grower efforts to remain profitable — may come in the form of managed or “club”
varieties, some apple industry leaders said at an Aug. 18 workshop at the U.S. Apple Association’s Outlook 2006 conference.

The session — “New Apple Varieties: Future and Implications” — was moderated by Lindsay Buckner, senior vice president of field services for Tree Top Inc., Selah, Wash.

PASSING TREND

Buckner said the company does periodic surveys of growers on their variety preferences.

Twenty years ago, those surveys showed a preponderance of red and golden delicious trees, complemented by expanding interest in granny smith.

In the past 20 years, Buckner said, Washington has experienced the rise of varieties like gala and fuji, which are now the mainstay varieties. Varieties rising in popularity now include cameo and honeycrisp, he said.

Beyond new varieties that capture the imagination of growers on a widespread scale, Buckner said, a new economic model for growers is being developed that seeks to exploit new varieties in a controlled way.

He said club varieties — such as Enza’s Jazz and Pacific Rose — are increasingly seen as a way to limit supply and support prices.

THE NEXT BIG THING

Dennis Courtier, owner and chief executive officer of Pepin Heights Orchards, Lake City, Minn., explained his firm’s experience in introducing the honeycrisp to the market and his vision for future variety introductions.

In response to the lessons learned from development of the honeycrisp, he said, Pepin Heights believes a managed approach to varieties may be the way to control quality and drive up consumption over the long haul.

Courtier said University of Minnesota variety development scientists — creators of the honeycrisp — are releasing new apple varieties.

The university has selected Pepin Heights as a licensing partner for one of the varieties.

Growers and marketers are awarded the license to grow the new varieties, and the university receives a royalty on the tree and the fruit produced, Courtier said. That is a win for the university, which can plow those funds back into the breeding program, he said.

For Pepin Heights, he said, the next step in developing the numbered variety — not yet named by Pepin Heights — was the creation of a grower-owned cooperative called the The Next Big Thing to exploit the new variety and manage its growth.

To this point, the grower cooperative has 45 growers across the country who will agree to strict quality standards and volume limits, Courtier said.

NICHE MARKETING

Courtier said Pepin Heights, in the southeast corner of Minnesota, markets its apples to higher-end retailers. He said the decision to pursue that market with niche varieties is nothing new and is an economic necessity.

“We are not smart enough, and no one is smart enough, to grow, market and ship varieties for $12-15 per carton,” he said.

While the firm has long marketed to higher-end retailers, the success of the Minnesota-developed honeycrisp variety in the late 1990s until now has been remarkable, he said. Prices pushing $50 per carton in recent years have testified to its popularity.

However, he said, the rapid success of the honeycrisp variety, like many varieties before it, could be undone by overplanting.

“The profit lifecycle (for honeycrisp) is almost over,” he said. Honeycrisp trees that were planted this spring will certainly not see the $50-per-carton prices the variety has enjoyed in recent years, he said.

LESSONS LEARNED

The example of the honeycrisp is instructive to growers, Courtier said.

“Lesson No. 1 is that retailer price elasticity is much greater than we tell ourselves,” he said, noting that demand for honeycrisp was strong at even $2.99 per pound.

He said retailers and consumers will pay top dollar if the variety is worth it.

“We have one chain last year that sold more dollars of honeycrisp than Butterball turkeys,” he said.

Another lesson the honeycrisp teaches is that good apples sell other good apples, Courtier said, noting examples of retailers who invite consumers to taste Jazz using a tease that says “If you like honeycrisp, you will love this apple.”

The real competition apple shippers face is not with each other but other foods, he said.

“Snickers are my competition, but none of this matters if you don’t nail the quality every time,” he said.