December WAR 09

December 2009, World Apple Report Highlights

Second Thoughts on New Varieties
Conventional wisdom in the apple industry is that the best strategy going forward is to find and commercialize the next new, winning variety. This strategy worked well in an era when retailers were expanding their produce offerings and indulgent consumers were seeking new taste treats. Neither retailers nor consumers are any longer in an expansionist mood. Future development of new varieties needs to be more targeted than in the past, for example, towards improving existing varieties to make them more appealing, or towards specific segments of consumers, major retailers seeking a unique product, or major export markets in developing countries. The apple industry does not need more varieties that simply cannibalize the market share of existing varieties. It needs new products that can expand the total demand for fresh apples and apple products.

All Discounters Now
The global economic slowdown has precipitated an avalanche of discounting in the food distribution system as consumers have become more thrifty, either out of necessity or out of increased caution about their finances. Specialized discounters such as Aldi and Lidl have made rapid gains in their share of consumer food purchases. Major competitors, such as Tesco, Walmart and Kroger, that could more easily switch their focus back to discounting a wide range of products, have already done so. Even upscale chains such as Whole Foods have introduced lower-priced lines. Mainstream retailers such as Safeway and Supervalu have belatedly joined the discounting frenzy. Discount battles could continue as long as consumers feel poorer. This will have the effect of putting even greater pressure on suppliers to cut their delivered prices and of squeezing the profitability of many retail chains. Many suppliers and retailers could go under if the discounting cycle is prolonged.

Has Recession Changed Key Price Signals?
This article argues that the widespread global slowdown has dramatically changed consumers' perceptions about price and value. For the prior twenty years, marketers of consumer goods continued to add premium and luxury items in each category and helped move up consumers' perceptions of what was normal value. However, under pressure of widespread recession, the top of the price range in many products has collapsed. Consumers of luxury items are switching to more basic products and consumers of basic products are switching to discounted items. The effect of this phenomenon is likely to become more noticeable in the 2009-10 apple crop and subsequent apple crops. Apple marketers can expect to face more resistance in selling their premium products, and greater compression of values between the highest and lowest priced items.

Special Statistics

EU-27: Imports of Fresh Apples, February-July, 2008 and 2009 (table).
United States: Imports of Fresh Apples, February-August, 2008 and 2009 (table).

The authoritative guide to the world apple business today.

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