WENATCHEE, WA - I don’t know about you, but around this time of year, my sweet tooth kicks in. With all of the holiday staples that graced Thanksgiving tables and are now slated for Christmas, the apple category always helps to add that fresh, sweet, and healthy element to any consumer wish list.
With the start of December, three months of selling the North American apple crop is now complete, Steve Lutz, Vice President of Marketing at CMI Orchards and former Executive Vice President of Nielsen Perishables Group, tells me. Steve took a few minutes out of his busy day to share with me the latest and greatest on apple category performance so far this season and what we can learn from the scan data results.
Q: So far this season, what’s the report card on the apple category for retailers?
Steve Lutz: Based on the Nielsen national scan data, apple category performance for retailers this season has been outstanding. Season to date, apple category dollars vs. the same period last year are up 4.7 percent for the total U.S., with volume up 1.8 percent. We have a big apple crop in Washington State and nationally, so it’s great to see retailers jumping on the apple category and driving performance. So far this season, the apple category is delivering 6.8 percent of total produce department sales, up slightly from 6.7 percent last year. So that’s really great news for everyone.
Q: Why do you think retailers are so successful with apples so far this season?
SL: I think it’s pretty simple. Apple size is up significantly this year, so most retailers have shifted up to carry larger sizes. When consumers buy larger sizes it drives more weight per transaction, which drives both dollars and volume at the store level.
Q: So, if size is driving growth in the apple category, what do you see as you drill down on the data?
SL: First, we’re seeing retailers generating growth this season with several key mainline apple varieties. These include Gala, Honeycrisp, Fuji, and Granny Smith. These four apples alone drive 70 percent of category dollars, so building sales with just these four apples can easily lift the entire category. Second, emerging branded apples are on fire. Just a few examples, so far this season, retailers have generated significant dollar and volume increases in apples like Kanzi (864 percent), Pacific Rose (115 percent), Jazz (48 percent), Envy (26 percent), and Sweetango (22 percent). There are many others in addition to these and nearly all are doing extremely well. The third area is organics. Organics apple dollars are up nearly 11 percent already this season.
Q: Have there been any surprises?
SL: One major surprise is that New England states are seeing category growth in apples at double the rate of the total U.S. That’s surprising given that regional apple production in the northeast is down by 26 percent due to the drought. It appears we are seeing a repeat of 2012—the last time there was a significant shortfall in Northeast apple production. When this happens, retailers cut promotion and shelf space dedicated to local varieties. These are invariably apples with very low retail price points. Instead, retailers stock a greater selection of varieties from the West, which carry higher retail prices. This shift drives significant dollar gains for supermarkets. But more interesting, the shift also drives increases in volume. Apple category volume in the Northeast is up nearly 4 percent so far this season compared to only 2 percent for the total U.S.
Q: What should retailers be putting in their apple plans going into next year?
SL: I think “success” is pretty straight-forward and what we’ve seen so far this season provides a great blue print to launch into 2017. First, retailers should continue to focus on moving up to larger sizes. We know fruit size will continue to run larger than normal. Retailers that insist on only selling size 88s or 100s will have a sinking category. Retailers willing to move up in size will drive both volume and overall transaction size. Secondly, retailers really need to be aggressive to get their piece of the branded apple explosion. The most successful retailers have the strongest branded apple sales. These new apples are fabulous and carry high retail prices. When consumers make the shift from commodity apples to branded apples, transaction size increases even if volume remains constant. Finally, organic apples are ready for center stage. There was a big increase in organic apple production this year—particularly in mainline varieties. Organics sell at a 50 percent price premium over conventional apples. It’s a big win for retailers when they shift consumers to organic apples. With our increased supply in organics this year retailers can really get serious about implementing programs and promotions that focus on organic apples.
Thank you, Steve, for all of your insights and sharing an analysis of recent category data from Nielsen for CMI Orchards. Stay tuned to AndNowUKnow for continued news and updates on the apple category.
