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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

Value Added Apple Products: A Marketing Study

Agribusiness Economic Outlook Conference

December 14, 1999

Modified by Georgia Agriculture Education Curriculum Office

June, 2002

overview
Overview
  • Background
  • Inter-departmental Research Project
  • Marketing and Economic Analysis Research Plan
  • Processor Survey Results
changes in us consumption 1978 1998
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
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
Inflation Adjusted Price Changes: 1977-1997
  • Fresh: -34.7%
  • Processed: -45.4%
    • Canned: -41.3%
    • Juice: -48.6%
    • Frozen: -37.3%
    • Dried: -52.9%
marketing challenges
Marketing Challenges
  • Raw product supply
  • Mature markets for finished products
  • Environmental concerns
  • International competition
  • Consolidation
  • Profitability
  • Labor
evidence of consolidation wholesalers
EVIDENCE OF CONSOLIDATIONWHOLESALERS

Sources: 1Private Label, March/April 1999

2 Food Distributors International

slide24

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
project participants
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
marketing economic analysis objectives
Economic analysis

New production systems

Marketing analysis

Marketing opportunities

Consumer acceptance of new products

Marketing &Economic Analysis Objectives
economic questions
Economic Questions
  • What are the costs of the new production systems?
  • Are the new production systems economically feasible in the processed apple industry?
marketing questions
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?
marketing questions29
Marketing Questions
  • How do current consumer trends affect the industry?
  • What do consumers want in new processed apple products?
recent marketing research
Recent Marketing Research
  • Industry overview
  • Competitive analysis
  • Processor survey
  • Universe of products
  • Consumer trends
  • New product evaluation
  • Advisory Council
marketing research plan
Marketing Research Plan
  • Focus Groups
    • Consumers
      • New products
      • Preferences
    • Chefs
  • Surveys
    • Retail food buyers
    • School foodservice
marketing research plan32
Marketing Research Plan
  • Foreign markets
  • Costs of production
  • Case studies/Benchmarking
    • Apple industry
    • Other industries
processor survey
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
processor products
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
processor apple purchases
Processor Apple Purchases
  • 34.6 million bushels purchased per year
  • 12.4 million bushels purchased from NYS growers per year
processors customers
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)
processors purchasing activity
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
preferred suppliers
Preferred Suppliers
  • Long-term relationships
  • Loyalty
  • Honesty
  • Dependability
  • Quality
  • Pesticide records
new york state factors
New York State Factors
  • Electric rates
  • Proximity to growers
  • Freight
  • Size of crop
  • Long-term relationships
  • High acid?
major strategic challenges
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
technology
Technology
  • “Nothing revolutionary on the horizon”
  • Packaging innovation
  • Need for better storage to support year round operation
processors outlook
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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