The US apple industry has undergone huge changes over the past few years. Consolidation in the US retail industry, rationalisation and a rise in competition from overseas producers, most notably China, have affected all US apple operators resulting in a huge wave of activity earlier this decade.
But in recent years US apple growers have been keeping their cool. They are moving forward by focusing on key varieties as well as concentrating on arguably the most important trend in recent years - organics.
Last season, exports to the UK increased a significant 30 per cent, according to the Washington Apple Commission (WAC).
“The growth in 2004/05 can primarily be attributed to added sales of Pink Lady during the first quarter of 2005 and overall increases in Red Delicious,” says George Smith, WAC European representative.
Surprisingly, organic sales remained static in 2004/05 due to challenges in finding the right sizes for the UK consumer. However, Smith is optimistic about the coming season and believes that the industry is looking at a more balanced crop in terms of overall volume and available varieties.
This season’s estimate puts the Washington State crop at 94.9m cartons - a more manageable size than last year’s bumper volumes, agree exporters.
“This will give us enough selection to offer each of the primary customers the spread needed to grow our business in the UK further,” Smith says, adding that growers need to create their own opportunities.
They are certainly doing that with organics and according to Smith, Washington State is the leading organic apple supplier to the UK.
He reckons that approximately 5.6m UK consumers buy organics - an increase of 800,000 consumers in the past 12 months alone.
One producer that is striding ahead with its organic programme is L&M Companies Inc. The company expects shipments to exceed 100,000 cases this season and will offer its organic apples under the brand Nature’s Delight Organics.
L&M will represent 15 organic growers this season and Pink Lady and Gala comprise its main export varieties. “We have three primary growers that make up nearly 75 per cent of our total production,” says Andy Tudor, sales director, adding that the producer has been working on an organic framework for over three years.
“The organic grower community has matured in terms of its volume of very high quality fruit produce and retail demographics are also indicating demand for organics,” he says.
Rainier Fruit is another firm that is hoping for a buoyant organic market. “Our main opportunities seem to be in organics and since our production will be increasing steadily over the next several years, we hope to see this trend continue,” says Suzanne Wolter, Rainier Fruit’s marketing director.
Apple giant Stemilt Growers Inc claims that its organic supply accounts for a large percentage of Washington State’s production. “We also have the largest state-of-the-art dedicated organic packing facility in Washington, which incorporates packing lines and Controlled Atmosphere (CA) storage,” claims Roger Pepperl, Stemilt’s marketing director.
In terms of conventional apples, Stemilt produces a whopping 11-13 per cent of the Washington State crop and ships the varieties Pink Lady, Red Delicious, Gala, Golden Delicious, Braeburn, Fuji and Cameo to the UK.
Harvesting kicked off in early August with Gala and according to Pepperl, size really does matter. While the US market prefers the larger sizes of counts 80, the UK looks for counts 113 and smaller.
This presented some challenges last season, when the bumper US crop largely produced big sizes. However, Pepperl notes that because of the scale of Stemilt’s operations, it’s usually able to accommodate different specifications.
While European producers have freight and logistical advantages over their US rivals, Pepperl believes that US growers are also armed with useful weapons.
One of the most recent successes has been the Pink Lady variety. This remains one to watch and a number of older varieties have been uprooted to make way for this sweet but slightly tart apple. Many US shippers are big supporters of this variety and have reported increasing shipments year-on-year.
“Washington State accounts for more than 20 per cent of all Pink Lady apples consumed in the UK,” says Smith. “This high-value product can be grown in Washington with excellent skin finish and colouration.”
According to Wolter, growers are still working on balancing the right mix of varieties to meet consumer demand. “Varietal preferences are changing everywhere and growers are responding to those changes with shifts in planting,” she says.
“The main challenge is to stay several steps ahead of the pack and to this end Washington growers have planted extensively in new varieties like Honeycrisp, Cameo and Ginger Gold,” confirms Smith.
Pepperl believes that more trademarked varieties will be introduced into the marketplace over the next five to 10 years.
“Trade marking will help control supplies and keep over-production from raising its ugly head,” he notes. “It will also provide niche opportunities for retailers who are looking for something different.”
Without technological advances, it is debatable whether US shippers would have been able to keep such a strong hold on the UK market.
Both Stemilt and Rainier are big supporters of technology which controls ethylene output. “SmartFresh technology has been a tremendous asset to those storage operations making the investment,” says Wolter. “It helps maintain the harvest fresh qualities of the apple and has extended our season.”
According to Pepperl, SmartFresh technology has become a mainstay in the Washington apple industry.
“I’m excited about opportunities for storing apples, we had a lot of success with end of season fruit,” confirms Rebecca Baerveldt, WAC export marketing manager. “In the past, towards the end of the season Red Delicious had a tendency to go mushy, but it’s been different this year, they’ve been sweet and crisp.”
Indeed, Smith believes that Red Delicious - once written off by the UK buyers - has enjoyed a small renaissance during the past four years. “The fruit is able to be stored and shipped all season with no breakdown of eating quality,” he claims.
With competition continuing to intensify, a number of challenges still face US apple shippers and many believe only the best will survive.
“We see that eight shippers may be all that survive in the end,” predicts Pepperl. “This will help the marketing match up better with the consolidating customer base on the receiving end.”
Washington will always be the most expensive apple suppliers to the UK due to increasing freight rates and import duties, notes Smith. “Because of this, category managers work closely with exporters to ensure what is shipped is the best that can be grown. Most importantly, apples have to deliver on their promise, it’s no use having eye appeal and no crunch or taste.”
The UK market is notorious for its strict specifications but Wenatchee-based producer Dovex believes that shipping apples to the UK has bolstered its operations.
“UK consumers are amongst the most discerning and savvy in the world when it comes to eating quality and presentation,” says Dovex’s Tracy King. “Plus, packaging demands are unique and complicated, while maintaining the cold chain over long distances is a challenge. In short, as top-fruit exporters, if we can succeed in the UK market, I would like to think we could succeed just about anywhere.”
Similarly to other apple producers, Dovex has made recent investments in its facilities. The firm has completed a brand new packing line, which can now pack up to 14,000 cartons in eight hours, as well as deal with the myriad packaging requirements required by retailers.
“We also have 34 more CA rooms and a huge new state-of-the-art loading facility that can deal with most trucks in an hour or less,” King says.
Stemilt is also continuing to upgrade its facilities. “New baggers that form a colour coded net bag (green for Granny Smith and pink for Pink Lady) is the newest rage in packaging,” Pepperl explains. “It is quickly becoming the bag of choice and Stemilt has put in a good number of this machinery.”
Pepperl further notes that brix detection has continued to evolve, which is enabling Stemilt to raise the bar on flavour. Furthermore, a new robotic palletiser is now in full use.
Rainier has recently overhauled its pre-size line. “Originally installed in 1998, the only equipment not replaced were the flumes which carry the apples,” Wolter says.
The company has increased capacity by 25 per cent, added new bin dumps for improved/gentler fruit handling and claims its new electronic sorting equipment will be better able to sort defects and offer more consistent colour sorting and sizing.
“Although not the first in the country of its kind, it’s certainly the largest,” Rainier claims. “The new technology was developed in New Zealand specifically for apples.”
With promotional campaigns due to run throughout the last quarter of the year, coupled with a smaller crop and favourable exchange rates, US shippers are hoping for a strong performance in the UK.
WAC REBOUNDS TO STABILITY
It Is to its credit that the Washington Apple Commission (WAC) has managed to put a turbulent past behind it and is moving forward with an extensive export strategy in place.
The company’s troubles began in 2001 when the WAC filed a lawsuit against Washington State’s apple growers to determine the constitutionality of levy assessments on each carton of apples to fund marketing programmes.
The commission eventually lost its challenge in 2003 when district judge Edward Shea ruled that the WAC violated first amendment protections of free speech.
Having your budget slashed and losing more than half your staff is obviously going to hurt a company and the WAC was ready to close its doors in April 2003.
However, an 11th hour settlement allowed the WAC to remain in business, albeit with much reduced responsibilities and a smaller budget. Growers were ordered to pay an assessment of 3.5 cents per 42lb box of apples, a huge fall compared to the previous 25 cents per carton.
Fast forward to 2005 and the WAC is inevitably much different to how it was five years ago.
“The last few years have seen great changes,” says Rebecca Baerveldt, export marketing manager for the WAC. “We’ve refocused our operations and are concentrating on promoting our apples overseas.”
Indeed, the WAC has retained a number of its overseas representatives which promote Washington apples in 14 different countries. “By and large, our shippers feel that the WAC is still performing on the export side,” Baerveldt says.
She further notes that many of the former WAC employees who were handling domestic programmes are now using their experience working for apple companies in the Washington State area.
“I feel confident we’ve turned a corner and are moving forward,” Baerveldt says. “We have new strategies in place and things are looking brighter.”
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