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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



Changes in us consumption 1978 1998 l.jpg
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%








Prices changes 1977 1997 l.jpg
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%


Inflation adjusted price changes 1977 1997 l.jpg
Inflation Adjusted Price Changes: 1977-1997

  • Fresh: -34.7%

  • Processed: -45.4%

    • Canned: -41.3%

    • Juice: -48.6%

    • Frozen: -37.3%

    • Dried: -52.9%


Us apple production 5 year rolling averages l.jpg
US Apple Production (5-Year Rolling Averages)





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Marketing Challenges

  • Raw product supply

  • Mature markets for finished products

  • Environmental concerns

  • International competition

  • Consolidation

  • Profitability

  • Labor





Evidence of consolidation wholesalers l.jpg
EVIDENCE OF CONSOLIDATIONWHOLESALERS

Sources: 1Private Label, March/April 1999

2 Food 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 System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

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


Marketing economic analysis objectives l.jpg

Economic analysis System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

New production systems

Marketing analysis

Marketing opportunities

Consumer acceptance of new products

Marketing &Economic Analysis Objectives


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Economic Questions System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

  • 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 System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

  • 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 System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

  • How do current consumer trends affect the industry?

  • What do consumers want in new processed apple products?


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Recent Marketing Research System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

  • Industry overview

  • Competitive analysis

  • Processor survey

  • Universe of products

  • Consumer trends

  • New product evaluation

  • Advisory Council


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Marketing Research Plan System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

  • Focus Groups

    • Consumers

      • New products

      • Preferences

    • Chefs

  • Surveys

    • Retail food buyers

    • School foodservice


Marketing research plan32 l.jpg
Marketing Research Plan System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

  • Foreign markets

  • Costs of production

  • Case studies/Benchmarking

    • Apple industry

    • Other industries


Processor survey l.jpg
Processor Survey System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

  • Interviewed 21 processors, July to September, 1999

    • 15 from New York State

    • 2 from Pennsylvania

    • 1 from Massachusetts

    • 2 from Virginia

    • 1 from Vermont


Processor products l.jpg

Apple Products System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

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 System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

  • 34.6 million bushels purchased per year

  • 12.4 million bushels purchased from NYS growers per year


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Processors’ Customers System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

  • Retail food chains (10)

  • Brokers/wholesalers (9)

  • Foodservice (5)

  • Independent retail stores (3)

  • Direct marketing (3)

  • Bakeries (3)

  • Food processors (3)

  • Government (3)


Processors purchasing activity l.jpg
Processors’ Purchasing Activity System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

  • 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


Preferred suppliers l.jpg
Preferred Suppliers System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

  • Long-term relationships

  • Loyalty

  • Honesty

  • Dependability

  • Quality

  • Pesticide records


New york state factors l.jpg
New York State Factors System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

  • Electric rates

  • Proximity to growers

  • Freight

  • Size of crop

  • Long-term relationships

  • High acid?


Major strategic challenges l.jpg
Major Strategic Challenges System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

  • 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 System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

  • “Nothing revolutionary on the horizon”

  • Packaging innovation

  • Need for better storage to support year round operation


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Processors’ Outlook System for Production and Marketing of Value Added Processing Apple Products in the Northeastern United States

  • 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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