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Marketing Apples in a Global Environment: Challenges and Opportunities

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Title: Marketing Apples in a Global Environment: Challenges and Opportunities


1
Marketing Apples in a Global Environment
Challenges and Opportunities by Dr. Roberta
Cook University of California Davis March 2003
2
Overview of Presentation
  • US apple situation
  • Area and Production
  • Trade
  • Consumption
  • Global apple production
  • Emphasis on China
  • Global apple trade patterns
  • Global consumption patterns
  • Marketing issues

3
US Apple Acreage and Change in 90-92 and 00-02
State Shares
40
31
7
7
Down 11
Down 8
168,785 hectares
Source USDA/NASS Jan. 03 and ERS
4
Apple Acreage in Washington
2001 Fruit Survey Current Estimate
Reds 82,000 66,709
Goldens 27,000 25,324
Granny Smith 17,600 16,669
Fuji 24,400 22,537
Gala 25,500 23,775
Other 15,500 13,227
Total 192,000 168,241
Washington Agricultural Statistics ServiceTom Shotzko Washington Agricultural Statistics ServiceTom Shotzko Washington Agricultural Statistics ServiceTom Shotzko
Area peaked in 99 at 210,000
5
Total Acres by Size of Apple Orchard - Washington
1987 1992 1997
Acres Acres Acres
? 25 AC 25-50 AC 50-100 AC gt100 AC TOTAL Less than 25 AC Over 100 AC 28,249 27,716 33,126 73,519 162,610 17.4 45.2 23,664 25,216 30,382 89,846 169,108 14.0 53.1 20,518 22,233 34,690 127,234 204,675 10.0 62.2
Source Census of Agriculture, as reported by Tom
Shotzko
6
Apple Acreage, by Variety in California and
Washington, 2002
California Fresh Current WA Estimate
Reds NA 66,709
Goldens NA 25,324
Granny Smith 6,200 16,669
Fuji 5,146 22,537
Gala Pink Lady 3,788 1,267 23,775 NA
Other 2,302 13,227
Total 18,703 168,241
CAC and Tom Shotzko CAC and Tom Shotzko CAC and Tom Shotzko
Likely 22,000 total acres in Ca. including
processing, and fresh area of 20,250 in 2000, CAC
7
Apple Production, U.S. and Selected States,
1990-2002, in million metric tons
Source USDA
8
U.S. Apple Production and Selected State Shares,
1990-2002
Source ERS and NASS, Jan/03
00-02 State Shares . . . . . . . .
State Avg Metric Tons 00-02 90-92 Change
WA 2,428,142 56 46 17 NY 408,460 9 11 -16 MI
344,927 8 9 -16 CA 252,630 6 8 -31 PA 204,5
39 5 5 -5 Other States 690,872 16 21 -29 US
4,329,569 100 100 -4
9
California Fresh Apple Production, by Variety,
42 lb. Cartons
2002/03 2001/02
Granny Smith 2,235,993 2,437,835
Fuji 649,120 1,060,491
Gala Pink Lady 1,015,111 266,877 1,102,086 239,581
Other 96,660 111,462
Total 4,263,761 4,951,455
Source California Apple Commission, as of Dec. 1, 2002 Source California Apple Commission, as of Dec. 1, 2002 Source California Apple Commission, as of Dec. 1, 2002
WA Fujis down to 9 million boxes in 02/03 and
Pink Ladies down to 500,000 WAC
10
Western U.S. Fuji Production in 1000 42-lb units
Source U.S. Apple Association, Aug.2003 update
11
Western U.S. Fuji Production in metric tons
Forecast prior to frost
2002 Revised Wa. and Ca.
Source US Apples and 2002 revision from the WAC
12
US Utilization of Apples 1977-2002
In Million Metric Tons
Update 4,237,100 total Short tons in 2002
2002 fresh/ proc. shares estimated
PROCESSED
FRESH
Sources thru 01 ERS/USDA, 10-02 NASS Jan. 03
for 2002
77 80 85 90 95 02
13
Ave. Item Number in the Ave. US Fresh Produce
Department
400
345
350
300
250
173
200
150
100
50
0
Pma study 574 SKUs in 2001
Number of items
Source Supermarket Business, Oct. 1999
1987
1998
14
U.S. Per Capita Consumption of Fresh Apples and
Pears
kg
12 10 8 6 4 2 0
87/88
97/98
APPLES
7.2
PEARS
1.4
77/78........................92/93......97/98..01/
02
Source ERS, USDA
15
US Per Capita Utilization of Apples in pounds
Source USDA/ERS
16
US PER CAPITA FRUIT CONSUMPTION, POUNDS 1977-2001
273
269
90
118
85
Pounds per capita
71
24
26
74
54
Total for 2001 reaches 279 including some
berries and olives.
Source USDA/ERS, Oct. 2002
17
US PER CAPITA VEGETABLE CONSUMPTION, POUNDS,
1976-2001
441
359
123
125
93
Pounds per capita
77
47
178
50
147
115
Source USDA/ERS, Vegetables and Specialties
Yearbook, July 2002
18
Fresh Apples U.S. Imports Exports by Key
Country
1992
1997
2002
2001
1000 metric tons
IMP EXP IMP EXP IMP EXP IMP EXP
Source ERS, USDA
19
US Fresh Apple Imports, by Country, 1990-2002
In Thousand Metric Tons
Source Census Bureau, US Dept. of Commerce
20
US Fresh Apple Exports, by Country, 1990-2002
In Thousand Metric Tons
Other
Indonesia
Hong Kong
Canada
Source Bureau of the Census, US Dept. of
Commerce
Taiwan
Mexico
21
Monthly US Imports of Fresh Apples by Country of
Origin in 2002
Source US DOC
Thousand Metric Tons
Months
22
Monthly US Imports of Fresh Apples by Country of
Origin in 2001
Source US DOC
Thousand Metric Tons
Months
23
Monthly US Imports of Fresh Apples by Country of
Origin in 2000
Source US DOC
Thousand Metric Tons
Months
24
Monthly US Exports of Fresh Apples by Country of
Destination in 2002
Thousand Metric Tons
Source US DOC
25
World Apple Production Key Trends
  • China can now provide over 1/3 of all world apple
    production vs. 11 in 89/91, but area has
    stabilized.
  • The shares of production coming from N.A., Former
    Soviet Union, Other Asia and Europe shrank in the
    90s, but Europe increased in absolute volume.
  • The share of S. American suppliers slipped only
    slightly in the 90s as production grew about 1
    million metric tons to 3.4 million share changed
    to 5.6 in 2001 from 6.1 in 89/91.
  • Recent adjustments downward in US, European, and
    possibly Chinese production for 2002/03 will
    likely boost Southern Hemisphere exports in 2003.

26
World Apple Production by Region ( total)
Avg Avg Avg Region 79-81 89-91 98-00
Europe (exc FSU) 38.7 33.0 23.9 North
America 13.0 13.6 10.2 South America 4.2 6.1 5.4
Africa 1.5 2.3 2.6 Oceania
1.5 1.7 1.5 F.S.U. 18.2 13.7 5.8 China
8.0 11.1 34.8 Other Asia (exc FSU)
14.9 18.6 16.5 World 100.0 100.0 100.0
Source World Apple Report 2002
27
Global Pear and Apple Production, Million Metric
Tons
Country Apples (2002) Pears (2000)
China 20 8.5
USA 4 .877
Chile 1 .333
New Zealand .462 .42
Argentina 1 .5
Australia .328 .156
Europe 14 3.9
World 60 16.9
Sources FAO and FAS
28
World Per Capita Fresh Apple Supplies 1990-2001,
kilograms per person
Production grew by 50 vs. 15 growth in world
population.
Source World Apple Review 2002
29
Apples Total Production Net Fresh
Production, in million metric tons, Key Selected
Countries
Total
Total
Total
Fresh
Fresh
Fresh
99/00... 00/01... 2002...
Source FAS, USDA
30
Chinese Apples Total Production, Net Fresh
Production, Fresh Imports Exports, in million
metric tons
25 20 15 10 5 0
Source FAS, USDA
99/00
00/01
01/02
02/03f
31
China's Fresh Apple Imports, By Country of
Origin, MY 2001 (July-June), Metric Tons
Source FAS
32
N. Hemisphere Net Fresh Apple Production, Key
Countries Excluding China,in million metric tons
18 15 12 9 6 3 0
99/00 00/01 01/02 02/03f
Source FAS, USDA
33
Southern Hemisphere Big Six Long-term Upward
Trend Broken
Source World Apple Review 2002 and FAS for 2001
and 2002, updated in 2003
metric tons
34
Yantai North
Andre Juice Co.,Ltd
Apple Production in China, 1997-03, Metric Tons
Area in 2000 of 2,254,100 hectares vs. 2,986,900
in 1996. 50 are Fujis, 12-15 are Red Delicious.
35
Yantai North Andre Juice Co.,Ltd
APPLE PRICES IN CHINA
Guo Guang
Fuji
36
Yantai
North Andre Juice Co.,Ltd
Chinese Apple Production, Distribution by
Province, 1997-03, metric tons
Projection of 27,605,000 to 31,000,000 Metric
tons by 2010 Desmond ORourke
37
Yantai North Andre Juice
Co.,Ltd
Chinese Fruit Production, of Total by Type
OTHER
GRAPES
Banana
PEARS
CITRUS
APPLES
38
Yantai North Andre Juice
Co.,Ltd
4.UF
2.Evaporator
1.Belt Press
5.Lab
3.Apple Silo
  • Close Belt Pressing System for Hygienic
    Application
  • 5-Effect Evaporator
  • Storage in Apple Silo
  • Ultra Filtration system
  • RD/Quality Assurance Center

39
1997 2001 Chinese AJC Export, by Country
Unit kg
Projection of 400,000,000 kg by 2010 Desmond
ORourke
Yantai North Andre Juice Co.,Ltd
40
US Apple Juice Imports, by Country, 1997-2001
In 1,000 KL
Tariff code 200970
Source Census Bureau, US Dept. of Commerce
41
World Fresh Apple Trade by Key Selected Country
in million metric tons
EXP
EXP
EXP
IMP
IMP
IMP
99/00
00/01
2002
Source FAS, USDA
42
Chilean Apple Exports Changes in Market Share
by Destination
Country 92-93 97-98 00-01 01-02
Europe 46 35 32 32 U.S.A. 7 8 12 12 L.
America Caribbean 19 37 36 39 Other 28 20
19 18 Grand Total 100 100 100 100 Source
Chilean Fruit Exporter's Association
43
Chilean Apple Exports by Destination in million
cartons (18 kg)
Other
L. America Caribbean
USA
Europe
Source Chilean Fruit Exporter's Association
44
Estimated European Per Capita Fresh Apple
Consumption
kilograms per capita Source World Apple Review
2002
45
Estimated Per Capita Fresh Apple Consumption
Other Major Producing Countries
kilograms per capita Source World Apple Review
2002
46
US and EU Trend in Grower Selling Prices for
Fresh Apples
Indexed to 1985 base 100
Source World Apple Review 2002
47
United States Annual Average Retail Price of
Fresh Red Delicious Apples 1980-2001
cents/lb - current deflated Source World Apple
Review 2002
48
WHAT a DOLLAR SPENT for FOOD PAID FOR in 2000 in
the USA
Labor - 38
Packaging - 8.0
Transportation - 4.0
Business taxes - 3.5
Depreciation 3.5
Advertising - 4.0
Other costs - 4.0
Repairs - 1.5
Interest - 2.5
Energy - 3.5
Profits - 4.5
Rent - 4.0
19
Marketing bill 81
Source ERS/USDA
Farm value 19
49
U.S. Producer Price Indexes 1991-2001 for Fresh
Granny Smith and McIntosh Apples
Calendar Years, Base, Dec. 1991 100
Source World Apple Review 2002
50
Washington State Relative FOB Prices of New
Varieties - 1990-2001
Average price all varieties in each crop year
100
Source World Apple Review 2002
51
World Apple Variety Trends, Excluding China
  • Red Delicious and Golden Delicious will lose
    market share but remain in first and second place
  • Gala/Royal Gala will be the principal winners,
    growing by 50 over the next decade, reaching
    third place
  • Fuji will knock Granny Smith out of fourth place
  • Combined volume of Jonagold and Jonagored will
    approach that of Granny Smith

Source World Apple Review 2002
52
World Apple Variety Trends, Excluding China
  • Idared keeps growing, especially in Eastern
    Europe
  • Braeburn follows in 8th place
  • McIntosh, Elstar, Cortland, Coxs Orange and
    Empire will be stable
  • Pink Lady production will triple between 2000 and
    2010, but it wont surpass 1 of production in
    the principal producing countries
  • Other growth varieties Cameo, Honeycrisp,
    Pacific Rose, Fiesta and Sundowner

Source World Apple Review 2002
53
France Apple export destinations volumes,
1998 2000, 1000 metric tons
light 1998 dark 2000 Totals 1998 - 766,207
tons 2000 847,833 tons
54
Italy Apple export destinations volumes, 1998
2000, 1000 metric tons
light 1998 dark 2000 Totals 1998 - 540,138
tons 2000 - 579,053 tons
55
Netherlands Apple export destinations
volumes, 1998 2000, 1000 metric tons
light 1998 dark 2000 Totals 1998 - 376,870
tons 2000 294,356 tons
56
Belgium Luxembourg Apple export destinations
volumes, 1998 2000, 1000 metric tons
light 1998 dark 2000 Totals 1998 - 338,621
tons 2000 - 364,033 tons
57
TOP 2001 GLOBAL FOOD RETAILERS
sales grocery rank sales company (
billion) sales
1 Supercenters U.S.
217.80 40 2 Carrefour/Promodès France
62.29 71 3 Holland
59.70 92 4 U.S. 50.10 91 5
Germany/Switz. 44.37 50 6
U.S.
38.30 90 7 Kmart U.S. 34.62 37 8 Safeway
U.S. 34.30 92
30 grocery retailers account for 10 of global
food retail sales.
58
TOP 2001 GLOBAL FOOD RETAILERS

sales grocery rank sales company (
billion) sales
9 CostCo U.S. 34.14 41 10
U.K. 34.09 90 11 Germany
33.66 70 12 ALDI Markt Germany
29.05 84 13 ITM Entreprises France
28.60 82 14 J. Sainsbury U.K.
26.64 90 15 Ito - Yokado Japan
26.53 47 16 Edeka/AVA Germany 25.13 75
Source The Food Institute Report, June 17, 2002
59
TOP 2001 GLOBAL FOOD RETAILERS
sales grocery rank sales company (
billion) sales
17 Aeon/Jusco Japan 23.90 44 18
Tenelmann Germany 23.01 75 19 Auchan
France 22.86 70 20 IGA (Supervalu)
U.S. 20.91 76 21 Daiei Japan
20.60 40 22 Casino France 19.71 85 23 E.
Leclerc France 19.26 52 24 Delhaize
Le Lion Belgium 19.18 92 25 Schwarz-Group
(Lidl) Ger. 16.68 84

Source The Food Institute Report, June 17, 2002
60
Building Retail Partnerships
  • Roles and Responsibilities
  • Category Development
  • Best Practices
  • Store-level Research
  • Purchase Triggers
  • Consumer Drivers
  • Long view
  • Effective Tactics
  • Shopper Savvy
  • Loyalty Card
  • Better Systems
  • Results-driven
  • Tracking Focus
  • Dept. Profitability
  • Strategic Approach
  • Fact-based Selling
  • Innovative Marketing/ Merchandising
  • Efficient Practices
  • Category vs. Item Perspective

Source Adapted from The Perishables Group
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