Marketing Apples in a Global
Environment: Challenges and
Opportunities
by
Dr. Roberta Cook
University of California Davis
March 2003
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
US Apple Acreage and Change in 9092 and 00-02 State Shares
State
90-92
average
00-02
average
WA
31% 139,056 40% 167,333
NY
55,689
40,667
MI
53,055
45,000
7% 32,346 7% 28,667
CA
PA
24,343
23,000
Other
147,596
112,400
452,086
417,067
US Total
Source: USDA/NASS Jan. 03 and ERS
Down 11%
Down 8%
=168,785 hectares
Apple Acreage in Washington
2001 Fruit
Current
Survey*
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
Total
192,000
*Washington Agricultural
Service;**Tom Shotzko
Statistics
13,227 Area peaked
168,241 in ’99 at
210,000
Total Acres by Size of Apple
Orchard - Washington
1987
 25 AC 28,249
25-50 AC 27,716
50-100 AC 33,126
>100 AC 73,519
TOTAL 162,610
%
Less than 25
AC
17.4
Over 100 AC
45.2
1992
Acres
23,664
25,216
30,382
89,846
169,108
%
14.0
53.1
1997
20,518
22,233
34,690
127,234
204,675
%
10.0
62.2
Source: Census of Agriculture, as reported by Tom Shotzko
Apple Acreage, by Variety in
California and Washington, 2002
Reds
Goldens
Granny Smith
Fuji
Gala
Pink Lady
Other
Total
California
Fresh*
NA
NA
6,200
5,146
3,788
1,267
2,302
18,703
Current WA
Estimate**
66,709
25,324
16,669
22,537
23,775
NA
13,227
168,241
*CAC and **Tom Shotzko
Likely 22,000 total acres in Ca. including processing, and fresh area of 20,250 in 2000, CAC
Apple Production, U.S. and Selected
States, 1990-2002, in million metric tons
6
5
4
3
2
1
0
90 92 94 96 98 00 02
Other
PA
CA
MI
NY
WA
Source: USDA
U.S. Apple Production and Selected State
Shares, 1990-2002
Source: ERS and NASS, Jan/03
State
00-02
State Shares . . . . . . . .
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
204,539
5%
5%
-5%
Other States
690,872
16%
21%
-29%
4,329,569 100%
100%
-4%
US
California Fresh Apple Production, by Variety,
42 lb. Cartons
2002/03
Granny Smith
2001/02
2,235,993
2,437,835
Fuji
649,120
1,060,491
Gala
1,015,111
1,102,086
266,877
239,581
96,660
111,462
4,263,761
4,951,455
Pink Lady
Other
Total
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
Western U.S. Fuji Production in 1000
42-lb units
25,000
20,000
15,000
10,000
5,000
0
1998 1999 2000 2001 2002 2003
Source: U.S. Apple Association, Aug.2003 update (f)
Western U.S. Fuji Production in
metric tons
500,000
Forecast prior to frost
400,000
300,000
200,000
100,000
0
1998
2000
2002(f) 2002 Revised
Wa. and Ca.
Source: US Apples and 2002 revision from the WAC
US Utilization of Apples 1977-2002
6 In Million Metric Tons
5
4
PROCESSED
3
2
FRESH
1
0‘77 ‘80 ‘85
‘90
‘95
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
Update:
4,237,100 total
Short tons in
2002; 2002
fresh/
proc. shares
estimated
Sources: thru
01 ERS/USDA,
10-02; NASS
Jan. 03 for
2002
0
1
’02*
2
Ave. Item Number in the Ave. US Fresh
Produce Department
400
350
300
250
200
150
100
50
0
Pma study:
574 SKU’s in 2001
345
173
Number of items
1987
1998
Source: Supermarket
Business, Oct. 1999
kg
12
U.S. Per Capita Consumption
of Fresh Apples and Pears
10
87/88
97/98
8
6
4
2
0
APPLES
7.2
PEARS
1.4
77/78........................92/93......97/98..01/02
Source: ERS, USDA
US Per Capita Utilization of Apples
in pounds
60
50
Processed,
excl juice
40
Fresh
30
20
Juice
10
Source:
USDA/ERS
0
76 79 82 85 88 91 94 97 00
US PER CAPITA FRUIT CONSUMPTION,
POUNDS 1977-2001
Pounds per capita
300
269
250
200
150
90
118
85
71
100
50
273
26
54
24
74
Processed
Citrus
Processed
Noncitrus
Fresh
Citrus
Fresh
Noncitrus
0
1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001
Total for 2001 reaches 279
Source: USDA/ERS, Oct. 2002 including some berries and olives.
Pounds per capita
US PER CAPITA VEGETABLE CONSUMPTION,
POUNDS, 1976-2001
450
400
350
300
250
441
359
123
125
93
200
77
150
50
100
115
47
178
147
0
1987
1989
Processed
Potatoes
Fresh
Potatoes
Fresh
Vegetables
50
1976
Processed
Vegetables
1991
1993
1995
1997
1999
2001
Source: USDA/ERS, Vegetables and Specialties Yearbook, July 2002
Fresh Apples: U.S. Imports &
Exports by Key Country
1000 metric tons
1992
700
600
500
400
300
200
100
0 IMP EXP
Source: ERS, USDA
1997
2001
2002
IMP EXP IMP EXP IMP EXP
Others
Hong Kong
Indonesia
Taiwan
Mexico
Japan
Australia
Argentina
South Africa
Canada
New Zealand
Chile
US Fresh Apple Imports, by Country, 1990-2002
200
175
150
125
100
75
50
25
In Thousand Metric Tons
South
Africa
Others
Canada
New
Zealand
Chile
0
90 91 92 93 94 95 96 97 98 99 00 01 02
Source:
Census
Bureau,
US
Dept. of
Commerce
US Fresh Apple Exports, by Country,
800
700
600
500
400
300
200
100
0
90
1990-2002
In Thousand Metric Tons
Other
Mexico
92
94
Indonesia
Hong Kong
Canada
Taiwan
96
98
00
02
Source:
Bureau
of the Census,
US Dept. of
Commerce
Monthly US Imports of Fresh Apples
by Country of Origin in 2002
Source: US DOC
40
Thousand
Metric Tons
S. Africa
N. Zealand
Australia
Japan
China
Argentina
Chile
Canada
30
20
10
0
1
2
3
4
5
Months
6
7
8
9
10 11 12
Monthly US Imports of Fresh Apples
by Country of Origin in 2001
Source: US DOC
40
Thousand
Metric Tons
S. Africa
N. Zealand
30
Argentina
20
Chile
Canada
10
0
1
2
3
4
5
Months
6
7
8
9 10 11 12
Monthly US Imports of Fresh Apples
by Country of Origin in 2000
Source: US DOC
40
Thousand
Metric Tons
S. Africa
N. Zealand
Argentina
Uruguay
Brazil
Chile
Canada
30
20
10
0
1
2
3
4
5
Months
6
7
8
9 10 11 12
Monthly US Exports of Fresh Apples
by Country of Destination in 2002
80
Thousand Metric Tons
Other
Taiwan
China/Hong Kong
60
Southeast Asia
Middle East
40
Europe/Russia
U.K.
South America
20
C. America/Caribbean
Mexico
0
Canada
1 2 3 4 5 6 7 8 9 10 11 12
Source: US DOC
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.
World Apple Production by Region (% total)
Region
(exc FSU)
World
Avg
89-91
Avg
98-00
38.7
13.0
4.2
1.5
1.5
18.2
8.0
33.0
13.6
6.1
2.3
1.7
13.7
11.1
23.9
10.2
5.4
2.6
1.5
5.8
34.8
14.9
100.0
18.6
100.0
16.5
100.0
Source: World Apple Report
2002
Europe (exc FSU)
North America
South America
Africa
Oceania
F.S.U.
China
Other Asia
Avg
79-81
Global Pear and Apple Production, Million
Metric Tons
Country
Apples (2002)
China
USA
20
4
Chile
New Zealand
Argentina
Australia
Europe
1
.462
1
.328
14
World
60
Sources: FAO and FAS
Pears (2000)
8.5
.877
.333
.42
.5
.156
3.9
16.9
World Per Capita Fresh Apple Supplies
1990-2001, kilograms per person
20
16
Production grew by 50% vs. 15% growth
in world population.
12
8
4
China
0
90
91
92
93
94
Source: World Apple Review 2002
Rest of World
95
96
97
98
99
00
01
Apples: Total Production & Net Fresh Production,
in million metric tons, Key Selected Countries
50
Total
Total
Fresh
Total
Fresh
Fresh
40
30
20
10
0
99/00... 00/01... 2002...
South Africa
Chile
Brazil
Argentina
Aust/NZealand
China
Other
E. Eur/Russia
U.S.
Turkey
Japan
France/Germany
Benelux
Source: FAS, USDA
Chinese Apples – Total Production, Net Fresh
Production, Fresh Imports & Exports,
in million metric tons
25
20
Production
Net Fresh
Imports
Exports
Source: FAS, USDA
15
10
5
0
99/00
00/01
01/02
02/03f
China's Fresh Apple Imports, By
Country of Origin, MY 2001 (July-June),
Metric Tons
50,000
40,000
Thailand/Japan
30,000
Chile
20,000
New Zealand
10,000
0
USA
Jul- Oct- Jan- Apr- Total
Sep
Dec
Mar
Jun
Source: FAS
N. Hemisphere Net Fresh Apple Production, Key
Countries Excluding China,in million metric tons
18
15
12
Other
Russian Fed.
U.S.
9
6
3
0
Turkey
Japan
France/Germany
Benelux
99/00 00/01 01/02 02/03f
Source: FAS, USDA
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
5,000
4,000
3,000
2,000
1,000
0
90
92
94
96
98
'00
'02
Apple Production in China, 1997-03, Metric Tons
25000000
20000000
15000000
Tot al Cr op.
10000000
5000000
0
1997/ 1998
1998/ 1999
1999/ 2000
2000/ 2001
2001/ 2002
2002/ 2003F
Area in 2000 of 2,254,100 hectares vs. 2,986,900 in 1996. 50% are Fujis,
12-15% are Red Delicious.
Yantai North Andre Juice Co.,Ltd
APPLE PRICES IN CHINA
Guo Guang
Fuji
Yantai North Andre Juice Co.,Ltd
Chinese Apple Production, Distribution by Province, 199703, metric tons
7,000,000
6,000,000
5,000,000
Shandong
4,000,000
3,000,000
Shaanxi
Hebei
Shanxi
Henan
Li angni ng
2,000,000
1,000,000
0
1997/ 1998
1998/ 1999
1999/ 2000
2000/ 2001
2001/ 2002
2002/ 2003F
Projection of 27,605,000 to 31,000,000 Metric tons by
2010; Desmond O’Rourke
Yantai North Andre Juice Co.,Ltd
Chinese Fruit Production, % of Total by Type
OTHER
GRAPES
Banana
PEARS
CITRUS
APPLES
Yantai North Andre Juice Co.,Ltd
4.UF
2.Evaporator
1.Belt Press
5.Lab
1.
2.
3.
4.
5.
3.Apple Silo
Close Belt Pressing System for Hygienic
Application
5-Effect Evaporator
Storage in Apple Silo
Ultra Filtration system
R&D/Quality Assurance Center
Yantai North Andre Juice Co.,Ltd
1997 – 2001 Chinese AJC Export, by Country
Unit : kg
USA
1997
1998
1999
2000
2001
HOLLAND JAPAN
AUSTRALIA RUSSIA CANADA OTHERS TOTAL
14,539,895 40,000
8,395,469
2,220,300
71,000
208,020
7,976,109
45,931,936 603,240
6,998,836
6,187,716
75,840
4,467,945
16,332,980 80,598,493
20,593,445 20,355,941 12,322,173 8,566,585
491,660
5,232,918
31,136,914 98,699,636
39,747,133 24,000,098 19,434,619 11,519,230
4,288,130
7,189,964
36,135,419 142,314,593
4,785,919
16,892,435 16,232,325 46,792,769 228,393,771
42,154,122 40,102,144 18,361,057
33,450,793
Projection of 400,000,000 kg by 2010; Desmond O’Rourke
Yantai North Andre Juice Co.,Ltd
US Apple Juice Imports, by Country, 1997-2001
In 1,000 KL
1,500
Other
TURKEY
HUNGARY
ITALY
GERMANY
CHINA
CHILE
ARGENTINA
1,000
500
0
1997
1998
1999
2000
Source: Census Bureau, US Dept. of Commerce
2001
Tariff code: 200970
World Fresh Apple Trade by Key Selected
Country
in million metric tons
6
5
4
3
EXP
EXP
IMP
EXP
IMP
IMP
2
1
0
99/00 00/01 2002
Other
South Africa
Chile
Brazil
Argentina
Australia & N. Zeal.
E. Europe & Russia
United States
Turkey
Japan
France & Germany
Benelux
Source: FAS, USDA
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%
100%
100%
Grand Total
100% 100%
Source: Chilean Fruit Exporter's Association
Chilean Apple Exports by Destination
in million cartons (18 kg)
35
30
25
20
15
Other
L. America
& Caribbean
10
5
0
USA
Europe
92
93
94
95
96
97
98
99
00
01
-9
-9
-9
-9
-9
-9
-9
-0
-0
-0
3
4
5
6
7
8
9
0
1
2
Source: Chilean Fruit Exporter's Association
Estimated European Per Capita
Fresh Apple Consumption
kilograms per capita
35
Source: World Apple Review 2002
30
25
20
15
10
France
Germany
5
EU-11
Other Europe
0
91 92 93 94 95 96 97 98 99 00 01
Estimated Per Capita Fresh Apple Consumption:
Other Major Producing Countries
18
S.Hemisphere
15
Asia
N.America
12
Russia
9
6
3
0
kilograms per capita
Source: World Apple Review 2002
91
92
93 94
95
96 97
98 99
00 01p
US and EU: Trend in Grower
Selling Prices for Fresh Apples
Indexed to 1985 base = 100
150
Source: World
Apple Review 2002
125
100
75
50
25
U.S.
EU
0
84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01
United States: Annual Average Retail Price
of Fresh Red Delicious Apples 1980-2001
100
90
80
70
60
50
40
30
20
10
0
cents/lb - current & deflated
Source: World Apple Review 2002
Actual
80
82
84 86
Deflated
88
90
92
94
96
98
00
WHAT a DOLLAR SPENT for FOOD
PAID FOR in 2000 in the USA
19¢
Farm value 19¢
Marketing bill 81¢
Source: ERS/USDA
U.S.: Producer Price Indexes 1991-2001 for
Fresh Granny Smith and McIntosh Apples
125
Calendar Years, Base, Dec. 1991 = 100
Source: World
Apple Review
2002
100
75
Granny
Smith
50
McIntosh
25
0
91 92 93 94 95 96 97 98 99 00 01
Washington State: Relative FOB Prices of
New Varieties - 1990-2001
400
350
300
250
200
150
100
50
0
Average price all varieties in each crop year = 100
Fuji
Braeburn
Gala
All
Source: World Apple Review 2002
90 91 92 93 94 95 96 97 98 99 00 01p
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
World Apple Variety Trends,
Excluding China
• Idared keeps growing, especially in Eastern
Europe
• Braeburn follows in 8th place
• McIntosh, Elstar, Cortland, Cox’s Orange and
Empire will be stable
• Pink Lady production will triple between 2000
and 2010, but it won’t surpass 1% of
production in the principal producing countries
• Other growth varieties: Cameo, Honeycrisp,
Pacific Rose, Fiesta and Sundowner
Source: World Apple Review 2002
France: Apple export destinations
& volumes, 1998 & 2000, 1000 metric tons
UK/Ireland
Spain/Portugal
Benelux
Other
light = 1998
dark = 2000
Totals:
1998 - 766,207 tons
2000 – 847,833 tons
Scandinavia
Germany/Austria
Former USSR
0
50
100
150
200
250
Italy: Apple export destinations
& volumes, 1998 & 2000, 1000 metric tons
Germany/Austria
Other
Scandinavia
UK/Ireland
light = 1998
dark = 2000
Totals:
1998 - 540,138 tons
2000 - 579,053 tons
Spain/Portugal
Benelux
Former USSR
France
0
100
200
300
400
Netherlands: Apple export destinations
& volumes, 1998 & 2000, 1000 metric tons
Germany/Austria
Former USSR
Scandinavia
UK/Ireland
light = 1998
dark = 2000
Totals:
1998 - 376,870 tons
2000 – 294,356 tons
Other
Benelux
France
Spain/Portugal
0
50
100
150
200
Belgium & Luxembourg: Apple export destinations
& volumes, 1998 & 2000, 1000 metric tons
Germany/Austria
Former USSR
Benelux
France
light = 1998
dark = 2000
Totals:
1998 - 338,621 tons
2000 - 364,033 tons
Other
UK/Ireland
Spain/Portugal
Scandinavia
0
40
80
120
160
TOP 2001 GLOBAL FOOD RETAILERS
rank
sales
% grocery
($ billion)
sales
sales company
1
2
Supercenters U.S.
Carrefour/Promodès France
3
Holland
4
U.S.
5
Germany/Switz.
6
U.S.
7
Kmart
8
Safeway
U.S.
U.S.
$217.80
40%
$62.29
71%
$59.70
92%
$50.10
91%
$44.37
50%
$38.30
90%
$34.62
37%
$34.30
92%
30 grocery retailers account for 10% of global food retail sales.
TOP 2001 GLOBAL FOOD RETAILERS
rank
sales company
9
10
CostCo
%
sales
% grocery
($ billion)
sales
U.S.
U.K.
11
Germany
$34.14
$34.09
41%
90%
$33.66
70%
$29.05
84%
$28.60
82%
12
ALDI Markt
13
ITM Entreprises
14
J. Sainsbury
U.K.
$26.64
90%
15
Ito - Yokado
Japan
$26.53
47%
16
Edeka/AVA
Germany
$25.13
75%
Germany
France
Source: The Food Institute Report, June 17, 2002
TOP 2001 GLOBAL FOOD RETAILERS
rank
sales company
sales
% grocery
($ billion)
sales
17
18
19
20
21
22
23
24
25
Aeon/Jusco Japan
Tenelmann Germany
Auchan France
IGA (Supervalu) U.S.
Daiei Japan
Casino France
E. Leclerc
France
Delhaize “Le Lion” Belgium
Schwarz-Group (Lidl) Ger.
$23.90
$23.01
$22.86
$20.91
$20.60
$19.71
$19.26
$19.18
$16.68
Source: The Food Institute Report, June 17, 2002
44%
75%
70%
76%
40%
85%
52%
92%
84%
Building Retail Partnerships
• Roles and Responsibilities
Retailer/ Wholesaler
Effective Tactics
Shopper Savvy
Loyalty Card
Better Systems
Results-driven
Tracking Focus
Dept. Profitability
Strategic Approach
Grower/Shipper
 Fact-based Selling
 Innovative
Marketing/
Merchandising
 Efficient Practices
 “Category” vs.
“Item” Perspective
Source: Adapted from The Perishables Group
Boards/Commissions
Category Development
Best Practices
Store-level
Research
Purchase Triggers
Consumer Drivers
Long view