Originally printed in the November 2018 issue of Produce Business.
With demand rising and new varieties hitting the market, there’s no better time to upsell.
Autumn is the season for apples. More and more of those crispy and tasty fruits — consumed in pies, on sticks dipped in caramel or eaten out-of-hand — are organic.
“Sales of organic apples are continuing to grow as their popularity among consumers increases,” says Toni Lynn Adams, communications outreach coordinator for the Washington Apple Commission, based in Wenatchee, WA. “In the 2017-2018 season, organic production was just over 13 million boxes. It is forecasted organic apple production will increase in the 2018-19 season by 40 percent, with a total of 18.9 million boxes.”
Catherine Gipe-Stewart, communications manager for Domex Superfresh Growers, based in Yakima, WA, says organic apples account for about 10 percent of apple dollar share and 8 percent of volume. And at 20 percent of the organic fruit dollar share, they’re the second-most popular organic fruit in the U.S.
“Our Organic Autumn Glory apple continues to rise in popularity,” says Gipe-Stewart. “As consumers look for high-flavor varieties, the natural caramel and cinnamon notes deliver a unique eating experience.”
MORE THAN A TREND
It’s tempting to continue referring to the growth of organic as a trend, but all signs point to organic being here to stay and getting bigger.
“Volume continues to grow, and we will see more rapid growth in organic apple volume as more orchards transition from conventional to organic,” says Gipe-Stewart. “Superfresh Growers has plans to nearly double organic apple volume over the next 10 years.”
Millennials are a driving force behind the strength of organic produce, partly because they grew up with organic foods being offered in stores, and they have now become shoppers in their own right.
Roger Pepperl, marketing director for Stemilt Growers, based in Wenatchee, WA, attributes the growth in organic, in part, to Millennials stepping up and becoming important consumers.
“Organic lifestyle is growing rapidly with the Millennial generation now having families, and the availability of organic foods being everywhere in mainstream supermarkets now,” says Pepperl. “Organic apples continue to grow at a rapid pace, with supply and demand still seeking to find each other.”
That growth, Pepperl says, is being fueled by the rapid transitions of apple orchards to organic, a process that takes three years. That’s being done to meet the rapidly growing demand for organic apples.
“They are now 10 percent of the apple category and growing,” he says. “The only funnel on sales is the supply, which will continue to expand in the next five years. Overall percentages of increase may begin to slow in the future, but the overall volume of pounds or tons will be growing numbers for the foreseeable future.”
Chuck Sinks, president of sales and marketing for Sage Fruit Company in Yakima, WA, concurs and says, “Not only are we planting new acreage of organic orchards, but we are actively transitioning our conventional orchards as well. Currently, organic apples make up about 15 to 18 percent of our total apple volume.”
JOIN THE ORGANIC MOVEMENT
A growing number of people prefer organic fruits, including apples, because of their perceived health benefits and the belief that organic crops are gentler on the land.
“Many of the reasons are not scientifically sound, but remember it is the perception that drives people to lifestyle decisions,” says Pepperl. “Organic brands have really grown as most consumers want to have transparency with [the farm that] grew the product and have a personal connection with the farms or family through the labels and digital support for the brands.
“Stemilt has packed under the Artisan Organic label for almost two decades and has been growing organic apples for close to 30 years. We have established a relationship with our consumers through our digital channels.”
It’s only natural that the increased demand for organic fruits will affect the sales of their conventional counterparts.
“However, you have to remember that most of the product growth was due to conversion from conventional orchards to organic orchards,” says Pepperl. “Organic lifestyle growth has created a market that can’t be ignored, and the organic sales are welcome to help sell more apples. This is a positive, not a negative, switch.”
In addition to health benefits, Gipe-Stewart says a lot of consumers believe organic fruits are superior in quality.
“Consumers are also demanding more transparency within the supply chain, and a third-party organic certification often satisfies this demand,” says Gipe-Stewart.
Adams adds that a recent barrier to purchase study by Superfresh Growers found that consumers desire high color and high flavor in their fruit, and that 28 percent of consumers look for organic signage and labeling when shopping for apples, and that nearly half of Millennials with children are looking for organic produce.
Adams says Washington State leads the apple industry because of its combination of good soil, plentiful water, cool nights and warm days.
“Washington’s growing regions have dry climates, so the pest-and-disease complex is very low,” she says. “The result is quality, healthy apples with good sizing and color.”
She also says growers in the state are progressive in their horticulture practices and technology, which makes them prepared to meet demand and consumer trends.
“The organic market is largely domestic; about 90 percent of organic production is domestic,” says Adams. “About 60 percent of Washington organic apples exports are directed to Canada, making it our biggest organic export market. The ease of access, being neighboring countries, and short transportation period make it a great market for organics.”
To be certified organic, growers need to undergo a certification program to transition from conventional to organic.
Adams says the transition process requires extensive paperwork and inspections.
“The growers see a huge potential with this select market and are anticipating the trend to continue growing,” says Adams. “They are applying those progressive horticulture practices to be ahead of the curve and bring in the highest yields possible.”
ADD A LITTLE VARIETY TO YOUR LIFE
The popularity of apple varieties depends on which kinds of apples are being grown organically. “Organic Honeycrsip is the big growth item. Fuji, Gala, Granny Smith and Pink Lady really fuel the category,” says Pepperl. “Not too many years ago, Red Delicious and Golden Delicious were the volume items, and that just isn’t the case anymore.”
He adds that the other growth area is in trademarked apple varieties.
“At Stemilt, we have 40 percent of our Piñata and SweeTango crop being organic,” he says. “The organic shopper wants the new and different items and is willing to pay for them, just like they do on organic Honeycrisp.”
Gipe-Stewart says Honeycrisp apple sales are up 58 percent and 76 percent on volume year over year.
“Nationally, organic Gala apples are top dog in dollar and volume share, followed by Honeycrisp, Fuji, Granny Smith and Pink Lady,” she says.
MARKETING ORGANIC APPLES
Marketing and promotion is always important, but Pepperl says there’s potential for big sales with organic fruits and vegetables, largely because of the people who buy them.
“Organic shoppers are our best produce shopper in volume and dollar purchasing, and that is a great opportunity,” he says.
In regard to organic apples, he suggests paying attention to volume size when offering bagged apples.
“The organic shopper wants more produce than the conventional shopper, so don’t sell them a smaller bag size,” says Pepperl. “Stemilt sells a variety of organic bag sizes in pounds but always recommends the 3-pound Lil Snapper kids-size fruit organic pouch bag for its organic bag program. Some retailers are selling 2-pound organic apple bags and missing a huge opportunity to sell them the extra pound — that is 33 percent more fruit. Remember that conventional shoppers’ bag size of choice is 3-pound by far. Don’t sell your organic shopper less produce.”
“The organic shopper wants more produce than the conventional shopper, so don’t sell them a smaller bag size.”
— Roger Pepperl, Stemilt
When it comes to displaying organic apples, Pepperl says the million-dollar question is whether organic apples should be sold near conventional apples or in a section devoted to organic produce.
“I would tell you that both can work,” he says. “If you have an organic section, it can’t look like a specialty or a section for the very few. It needs to have presence and selection. Also, the transitional shopper who buys both organic and conventional, which is a huge segment, can’t have made the purchase decision already and have the apples already in their cart when they get to the organic section. Big mistake.”
When merchandising organic apples, Sinks of Sage Fruit Company says, “The best way is to build an eye-catching display highlighting the different varieties, and to also make sure they are refrigerated. Unrefrigerated apples begin to show moisture loss and can be less appealing to consumers. By keeping them refrigerated, they stay crisp and juicy. Since organic apples are not waxed, their appearance is not as shiny as conventional apples, so any additional effort made to ensure the quality of fruit will help with sales.”
Gipe-Stewart says organic and conventional apples complement each other, and that a lot of shoppers will simply buy the best quality apple they can find.
“Consumers look for quality, texture, taste, and price,” she says. “Consumers prefer having a choice, and when both options are carried, the category sales go up.”
Mac Riggan, director of marketing for Chelan Fresh, headquartered in Chelan, WA, notes that some stores have a whole organic section, while others have a mix of organic and conventional apples.
“I think one of the best things retailers can do is educate people that they have organic apples available, though the organic shopper is pretty savvy anyway,” he says. “As far as merchandising them, you can make them a destination place all their own or you can mix them in so people can get both.”
He has seen the popularity of organic apples increase in recent years and it’s one of the reasons the company has invested in growing its organic segment, though Chelan Fresh will always offer both, giving consumers a choice.
“They are equally healthy for you from a nutritional value, and I just want people eating more apples,” Riggan says.
PROMOTION AND PRICING
Gipe-Stewart says there are four keys to marketing organic apples — promotion, placement, price, and creating a destination.
She suggests holding organic promotions for both organic and conventional apples. “Show shoppers they have a choice,” says Gipe-Stewart.
In regard to placement, she suggests ads and cross-promotions with other organic foods, such as cheese, yogurts and nut butters. “Breakfast is the time of day most fruit is eaten; keep that in mind when creating promotions and cross-promotions,” she says.
Lastly, she recommends creating a destination through an organic area to make it easy for shoppers to find organic produce.
Pepperl says that the price different between organic and conventional apples has narrowed, but that a gap is necessary.
“We think that a 50-cent retail difference will be close to what is needed,” he says. “It may be as high as a dollar-a-pound more on some late-season apples like Honeycrisp when the packouts are lower. Organic farming is riskier and costlier and will need a price spread going forward. Otherwise, it will convert back to conventional long term.”
AN APPLE A DAY…
Apples are known for their health benefits, including their ability to strengthen bone health. Catherine Gipe-Stewart, communications manager for Domex Superfresh Growers, Yakima, WA, notes a study by the American Journal of Clinical Nutrition that suggests older women who eat fruits, including apples and apple-based products, can lower their chance of bone fractures.
Another study, by the University of Massachusetts, indicates that apples and apple juice can improve brain health and diminish symptoms of Alzheimer’s disease.
“With a balanced diet, apple and apple juice consumption may protect against oxidative brain damage that can lead to memory loss,” says Gipe-Stewart.
Lastly, she says apples strengthen muscles through a natural compound, known as ursolic acid, found in apple skin, which may prevent muscle waste from aging and illness.