Commodity apples still account for the bulk of U.S. apple sales, but organics and new varieties are responsible for a lot of new growth. Growers with premium programs see much potential in new apples and organics because those varieties are exploding in popularity and they command high prices. “If you look at varieties like Honeycrisp, Ambrosia, Jazz, Envy, Kiku and Kanzi, and you total those up with organics, that’s the sales growth of the apple category in the United States,” said Steve Lutz with Columbia Marketing International. “Conventional and commodity apples are actually losing dollars in retail, so consumers are shifting to higher value apples.”
Keeping up with that trend, CMI's organic production will increase by 60 percent this year, and Lutz believes they will sustain that growth in the coming years. That growth is profitable, since organic apples can command up to a 50 percent retail price premium over prices for conventional varieties.
“The question is if as organic volume increases we will rely on customers who are more price sensitive,” noted Lutz. “We don't know the answer to that, but, as it is, we're relying on customers who are very willing to pay a premium for organic apples.” Incorporating new varieties is also a strategy to differentiate oneself in a crowded apple market. CMI provides customers with a robust commodity apple program along with popular new varieties, organics and branded apples. It’s working very well for our growers and our retail partners.
“It's a very competitive industry and we have strong neighbors,” said Lutz. “The money makers are high-coloring apples and Honeycrisps, and we have those. From there, the focus shifts to the branded apples, like Ambrosia, which cracked the top 10 in U.S. retail sales last year. For CMI, it’s our ability to overlay our strong commodity apples with fast-growing branded and organic apples that we’re using to create a competitive advantage for our retail partners.”
Upcoming crop looks promising
Though this year's apple harvest in Washington is still several weeks away, Lutz said early signs point to a good crop. Last year's production was light, so growers expect a rebound of about 20 percent this season.
“Fruit quality looks good and sizing is outstanding,” said Lutz. “The cherry crop often gives us a glimpse of what we can expect in the apple crop, and this year's cherry crop had spectacular flavor.”
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Steve Lutz
Columbia Marketing International