The Washington and U.S. apple industry should focus on Generation Y at home rather than China for market expansion, a demographer, futurist and generational marketing specialist says.
China is appealing in the short run because of a growing middle class that can afford high-quality apples but that middle class isn’t sustainable because of the nation’s one-child-per-couple policy in place since 1979, says Kenneth W. Gronbach, Haddam, Conn. His latest book, “Demographic Destiny,” is due out next spring.
“In the last 34 years, they’ve prevented 500 million live births. That’s a State Department-verified number, so the under 34-year-old market drops off like a stone and never recovers,” Gronbach told Capital Press. He delivered a similar message at the U.S. Apple Association’s annual crop outlook conference in Chicago in August.
China aspires to become a market economy but has reduced its fertility rate 60 to 70 percent in the last 34 years and will be reducing its labor, consumer and tax base by that amount, Gronbach said. That’s unsustainable and China’s economy will “tank,” he said.
“He’s right if you go out 10 to 20 years,” but the middle class with ability to buy quality food is growing right now in China and much of Asia, said Desmond O’Rourke, a retired Washington State University agricultural economist who has studied the apple industry for decades. O’Rourke issued a report about a year ago concluding China and India will triple their apple imports in the next 10 years if their per capita income continues to increase at the same rate it has during the past 10 years.
To allow Chinese apples into the U.S. in exchange for full-varietal U.S. apple access into China is “extremely short-sighted because the Chinese will be getting the better deal,” Gronbach said.
China remains a godless, Marxist nation that doesn’t have the same ethics we do and wants to control our food, he said.
“Their manufacturing quality is deplorable,” he said. “They would poison baby food if they could profit from it. If the apple folks look at China and think it’s their future, they have rocks in their heads.”
A greater opportunity, Gronbach said, is growing what’s been relatively flat domestic apple consumption with the 83 million U.S. citizens born between 1985 and 2004 that makes up Generation Y. That’s almost 5 million more people than the 78.3 million baby boomers born between 1945 and 1964 and 14 million more than the 69.5 million of Gen X born from 1965 to 1984, he said.
So far, he said, it looks like Gen Y will be more vegan and driven by nutrition in its food choices, partly in reaction to obesity concerns. Prepared nutritious foods and fruits and vegetables should do very well, he said.
But O’Rourke said 20 years of evidence has been very weak regarding young people turning to fruit.
“Getting them to eat an apple a day or two a day would be a cataclysmic change in business,” Gronbach said.
The apple industry needs to put aside differences, work together in hiring the best advertising agency it can afford and figure out how to reach Gen Y, he said.
“Apple guys need to do something unusual, different. For Gen Y the most prominent brand is Apple computers. If I were a big apple grower, I would sit down with the Apple folks and say, ‘Hey, we have the same name, what can we do together?’” Gronbach said.