December WAR 08

December 2008, World Apple Report Highlights

Consumers Capitulate
In country after country around the world, consumers are admitting that the era of easy credit and easy spending is over. The capitulation came earliest in the United Kingdom, then in other European countries like Spain, Ireland and Italy, and finally to the United States in late 2008. The capitulation came first among lower income groups that were hardest hit by rises in food and energy costs. However, it has now affected many rich people as the housing and financial markets have collapsed. The apple industry will be affected both by reduced spending by consumers and by pressure from retailers seeking to offer price relief to their customers.

Will Bailouts Help Food Demand?
Countries around the world have been introducing massive bailout plans and stimulus packages to rescue threatened banks and businesses and to get consumers spending again. This raises two major questions. Will these bailouts work? And, how will demand for food, especially fruit, be affected? There has been much stumbling and bumbling in implementing the various rescue packages. In addition, consumer confidence is unlikely to be restored while house prices are still falling, credit tightening, pension values shrinking and layoffs increasing. Demand for apples and other food is more likely to be affected at the margins than across the board. However, the supply of apples has been above pre-harvest expectations, so profitable marketing will be a challenge in 2008-09.

Sales of Fresh Apple Slices Expand
Sales of fresh apples slices in the United States were first reported separately in the 2004 season. They rose by 81% and 95% in the next two seasons. In the 2007 season, they reached 215.4 million lbs, but the rate of increase dropped to 13%. Fresh apple slices now account for 3.5% of the volume, but only 1.2% of the value of all fresh apples, largely because the grower price has fallen to 34.5% of the average grower price for all fresh apples. Sales of these value-added products may face more difficult marketing conditions during the on-going recession and will need an additional push to regain the upward momentum of sales.

Special Statistics

United States: Fresh Apple Slices, 2004-2007 (table).
Table 1. Weekly Average Number of Stores with Ads for Fresh Fruits and Fresh Vegetables.
Table 2. Weekly Average Number of Stores with Ads for Key Fruits and Vegetables.
Selected Countries: Mortgage Indebtedness Relative to Household Disposable Income, 1996-2007 (chart).
United States Struggles to Maintain Fruit Consumption (chart).

The authoritative guide to the world apple business today.

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