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Value Added Apple Products: A Marketing Study

Value Added Apple Products: A Marketing Study. Agribusiness Economic Outlook Conference December 14, 1999. Modified by Georgia Agriculture Education Curriculum Office June, 2002. Overview. Background Inter-departmental Research Project Marketing and Economic Analysis Research Plan

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Value Added Apple Products: A Marketing Study

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  1. Value Added Apple Products: A Marketing Study Agribusiness Economic Outlook Conference December 14, 1999 Modified by Georgia Agriculture Education Curriculum Office June, 2002

  2. Overview • Background • Inter-departmental Research Project • Marketing and Economic Analysis Research Plan • Processor Survey Results

  3. US Per Capita Apple Consumption: 3-Year Averages -- 1978-1998

  4. US Per Capita Processed Apple Product Consumption: 3-Year Averages -- 1978-1998

  5. Changes in US Consumption: 1978-1998 • Fresh Apples: +9.4% • Processed Apples: +60.8% • Juice: +109.7% • Canned: -3.9% • Dried: +11.7% • Frozen: +52.0%

  6. US Per Capita Consumption: Canned Apples and Fruit

  7. US Per Capita Consumption: Apple and Fruit Juice

  8. US Per Capita Consumption: Frozen Apples and Fruit

  9. US Per Capita Consumption: Dried Apples and Fruit

  10. Apple Prices, 3-Year Averages: 1977-1997

  11. Processing Apple Prices, 3-Year Averages: 1977-1997

  12. Prices Changes: 1977-1997 • Fresh: +55.4% • Processing: +30.1% • Canned: +39.7% • Juice: +17.0% • Frozen: +49.2% • Dried: +12.1% • Inflation: +138.1%

  13. Inflation Adjusted Price Changes: 1977-1997 • Fresh: -34.7% • Processed: -45.4% • Canned: -41.3% • Juice: -48.6% • Frozen: -37.3% • Dried: -52.9%

  14. US Apple Production (5-Year Rolling Averages)

  15. Apple Production: US, China, World

  16. Processing Apple Production

  17. Apple Utilization: US and NY, 1997

  18. Marketing Challenges • Raw product supply • Mature markets for finished products • Environmental concerns • International competition • Consolidation • Profitability • Labor

  19. MARKET SHARES FOR U.S. GROCERY CHAINS

  20. TOP 10 GROCERY DEALS IN 1998

  21. TOP GROCERY DEALS IN 1999

  22. EVIDENCE OF CONSOLIDATIONWHOLESALERS Sources: 1Private Label, March/April 1999 2 Food Distributors International

  23. Development of an Environmentally Sound, More Profitable System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States Project Goals • Develop a more environmentally sound, cost-effective apple production and pest management system • Stimulate growth of apple processing industry with new technologies that support commercial production of diversified, high value apple products • Assess economic impacts, marketing potential, and consumer reactions to new products

  24. Entomology Harvey Reissig Art Agnello Plant Pathology Wayne Wilcox Horticulture Terence Robinson Steve Hoying Food Science Cy Lee John Roberts Agricultural Economics Brian Henehan Jerry White Kristin Rowles Project Participants

  25. Economic analysis New production systems Marketing analysis Marketing opportunities Consumer acceptance of new products Marketing &Economic Analysis Objectives

  26. Economic Questions • What are the costs of the new production systems? • Are the new production systems economically feasible in the processed apple industry?

  27. Marketing Questions • What is the condition of current markets for processed apple products? • Where are the best, new marketing opportunities for processed apple products? • What are the characteristics of industry vitality?

  28. Marketing Questions • How do current consumer trends affect the industry? • What do consumers want in new processed apple products?

  29. Recent Marketing Research • Industry overview • Competitive analysis • Processor survey • Universe of products • Consumer trends • New product evaluation • Advisory Council

  30. Marketing Research Plan • Focus Groups • Consumers • New products • Preferences • Chefs • Surveys • Retail food buyers • School foodservice

  31. Marketing Research Plan • Foreign markets • Costs of production • Case studies/Benchmarking • Apple industry • Other industries

  32. Processor Survey • Interviewed 21 processors, July to September, 1999 • 15 from New York State • 2 from Pennsylvania • 1 from Massachusetts • 2 from Virginia • 1 from Vermont

  33. Apple Products Applesauce Apple Juice Cider Hard Cider Frozen Apples Cider Vinegar Pie Filling Canned Apples Apple Butter Dried Apples Baby Food Other Products Juice drinks/ades Spring water Iced tea Frozen fruit Fresh fruit Processor Products

  34. Processor Apple Purchases • 34.6 million bushels purchased per year • 12.4 million bushels purchased from NYS growers per year

  35. Processors’ Customers • Retail food chains (10) • Brokers/wholesalers (9) • Foodservice (5) • Independent retail stores (3) • Direct marketing (3) • Bakeries (3) • Food processors (3) • Government (3)

  36. Processors’ Purchasing Activity • Direct from growers (15) • Use brokers (6) • Co-op (2) • Other factors • Buy in bulk trailers only • Track pesticide records • Diverse geographic range • Grow our own apples • West Coast apple prices • Year round

  37. Preferred Suppliers • Long-term relationships • Loyalty • Honesty • Dependability • Quality • Pesticide records

  38. New York State Factors • Electric rates • Proximity to growers • Freight • Size of crop • Long-term relationships • High acid?

  39. Major Strategic Challenges • International trade • West Coast competition • Labor availability • Loss of growers and processors • Lack of investment in marketing • Consolidation of customers • Oversupply • Environmental regulation

  40. Technology • “Nothing revolutionary on the horizon” • Packaging innovation • Need for better storage to support year round operation

  41. Processors’ Outlook • 8 Negative, 4 Neutral, 2 Positive • Concerns for future • Profitability • Oversupply • Foreign competition • Lack of innovation • Stiff price competition • Consolidation • Productivity

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