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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 l.jpg

Value Added Apple Products: A Marketing Study

Agribusiness Economic Outlook Conference

December 14, 1999

Modified by Georgia Agriculture Education Curriculum Office

June, 2002


Overview l.jpg

Overview

  • Background

  • Inter-departmental Research Project

  • Marketing and Economic Analysis Research Plan

  • Processor Survey Results


Us per capita apple consumption 3 year averages 1978 1998 l.jpg

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


Us per capita processed apple product consumption 3 year averages 1978 1998 l.jpg

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


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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%


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US Per Capita Consumption: Canned Apples and Fruit


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US Per Capita Consumption: Apple and Fruit Juice


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US Per Capita Consumption: Frozen Apples and Fruit


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US Per Capita Consumption: Dried Apples and Fruit


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Apple Prices, 3-Year Averages: 1977-1997


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


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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%


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Inflation Adjusted Price Changes: 1977-1997

  • Fresh:-34.7%

  • Processed: -45.4%

    • Canned: -41.3%

    • Juice: -48.6%

    • Frozen: -37.3%

    • Dried: -52.9%


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US Apple Production (5-Year Rolling Averages)


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Apple Production: US, China, World


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Processing Apple Production


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Apple Utilization: US and NY, 1997


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Marketing Challenges

  • Raw product supply

  • Mature markets for finished products

  • Environmental concerns

  • International competition

  • Consolidation

  • Profitability

  • Labor


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MARKET SHARES FOR U.S. GROCERY CHAINS


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TOP 10 GROCERY DEALS IN 1998


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TOP GROCERY DEALS IN 1999


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EVIDENCE OF CONSOLIDATIONWHOLESALERS

Sources:1Private Label, March/April 1999

2Food Distributors International


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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


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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


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Economic analysis

New production systems

Marketing analysis

Marketing opportunities

Consumer acceptance of new products

Marketing &Economic Analysis Objectives


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Economic Questions

  • What are the costs of the new production systems?

  • Are the new production systems economically feasible in the processed apple industry?


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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?


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Marketing Questions

  • How do current consumer trends affect the industry?

  • What do consumers want in new processed apple products?


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Recent Marketing Research

  • Industry overview

  • Competitive analysis

  • Processor survey

  • Universe of products

  • Consumer trends

  • New product evaluation

  • Advisory Council


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Marketing Research Plan

  • Focus Groups

    • Consumers

      • New products

      • Preferences

    • Chefs

  • Surveys

    • Retail food buyers

    • School foodservice


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Marketing Research Plan

  • Foreign markets

  • Costs of production

  • Case studies/Benchmarking

    • Apple industry

    • Other industries


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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


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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


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Processor Apple Purchases

  • 34.6 million bushels purchased per year

  • 12.4 million bushels purchased from NYS growers per year


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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)


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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


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Preferred Suppliers

  • Long-term relationships

  • Loyalty

  • Honesty

  • Dependability

  • Quality

  • Pesticide records


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New York State Factors

  • Electric rates

  • Proximity to growers

  • Freight

  • Size of crop

  • Long-term relationships

  • High acid?


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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


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Technology

  • “Nothing revolutionary on the horizon”

  • Packaging innovation

  • Need for better storage to support year round operation


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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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