Western innovators: Experiments slice open industry
'It's an additional and good revenue source for apple growers'
By DAN WHEAT
CASHMERE, Wash. -- Tony Freytag hoped to create a whole new product category when he began experimenting with sliced pears in his Medford, Ore., home 15 years ago.
He also knew it would take a lot of work by a lot of people to bring the new product to market.
Freytag, 61, is now senior vice president of sales and marketing of Crunch Pak, the first successful and leading supplier of fresh, ready-to-eat, sliced apples in the world.
The company has averaged double-digit percentage growth annually for 12 years, now producing more than 2 billion apple slices per year at its plants in Cashmere, Wash., and Reading, Pa. It employs more than 700 people and, based on percentages of industry business, grosses about $80 million to $100 million annually.
The Nielsen Co. estimates Crunch Pak has 42 percent of sliced apple distribution, which is valued at $250 million annually. Crunch Pak is sold in more than 16,000 U.S. stores.
Crunch Pak also has 20 to 30 percent of the $150 million sliced apple distribution to schools and restaurants. Major customers include Publix, Kroger, Costco, Walmart, Sam's Club, Target, Albertsons, Ahold, Food Lion, Arby's, Wendy's, Chick-fil-A and Bob Evans.
In 2006, Crunch Pak became the first produce company to co-brand products with Disney.
Crunch Pak also packages grapes and carrots. This fall it introduced flavored apple slices -- grape, peach-mango and strawberry cream, and it released Tropical and Waldorf flavor apple salad kits in 2,000 stores.
Chiquita, Dippin Stix and Mott's Fresh Apples -- at 16 percent, 16 percent and 4 percent of the retail sliced apple market -- are the nearest competitors.
The category was slowed by the recession in 2009 but rebounded faster than some other value-added produce items. It uses about 4 percent of the annual U.S. apple crop.
"It's an additional and good revenue source for apple growers," Freytag said.
In Washington, it has even led to its own "slicer grade" of apple, above juice and peeler processing grades for juice and baked ingredients and below fresh-packed grades.
Crunch Pak began in 600-square-foot room in a Naumes plant in Wenatchee in 2000. It now has 69,000 square feet of production and shipping space in Cashmere and 10,000 square feet at its Pennsylvania location.
The company is owned by the Carson family and others. Along with the late Craig Carson and John Graden, formerly with Dovex Fruit Co., Freytag was one of its founders.
He comes from a family of entrepreneurial spirit.
"There's a certain can-do attitude. We all run things. If you want someone to be at the front of the boat, we'd probably all be there," Freytag said of his two brothers and two sisters.
He believes one of his strongest assets is being a good communicator. He took marketing and communications classes at the University of Texas but instead of finishing college went to work for a television station and then on political campaigns. He built his own product design, development and marketing strategy consulting firm in Dallas for more than 20 years. Customers included high-end retailers Neiman Marcus and Saks Fifth Avenue and development giant Trammell Crow.
In 1997, Freytag became marketing and product development director at Naumes Inc., a Medford, Ore., pear packer. The move was precipitated by his wife, Leslie, now CEO of Butter London Co., a cosmetics firm, in Seattle, taking a division manager job at Harry & David gourmet gifts in Medford.
At Naumes, Freytag began experimenting with sliced pears and quickly migrated to apples because they are easier to slice and treat and there's more of them.
Other companies in California and Yakima had tried sliced apples but could never get consistent flavor. Citric acid to prevent browning left an undesired aftertaste. Freytag turned to a vitamin C and calcium formula offered by NatureSeal because it had no taste, allowing the apple flavor to come through.
Naumes and Dovex Fruit Co., Wenatchee, had begun some joint marketing of apples and pears. Freytag began discussing sliced apples, with Craig Carson, Dovex general manager and John Graden, the company's vice president.
They figured they had a winner from reactions they received when handing out baggies of sliced apples at ball games.
"I asked one of the moms if she would be willing to pay $2.49 a pound for them and she said yes. I asked why and she said she'd rather be attending the game than home slicing apples," Freytag said.
Steps in success were establishing a foothold in the Southeast early on with Publix as a customer, being a supplier for the 2002 Winter Olympics in Salt Lake City and using value-added produce brokers instead of trying to sell through fresh-packed apple marketers.
Diane Carson, chairwoman of the Crunch Pak board, said Freytag is dedicated to the company and lives and breathes it.
"He's always looking for new ways to promote our product," she said. "He's passionate about what he does."
Her husband, Craig Carson, Crunch Pak's first president, died of lung cancer in 2007. Graden is now president.
"I see this as a legacy company," she said. "My fondest wish is that one day my great-granddaughter would run this company and that we would continue to grow carefully and prudently and be good community members."
Born and raised: Austin, Texas
Family: Wife, Leslie, CEO of Butter London Co. in Seattle; children, and two children.
Education: Graduate of Reagan High School, Austin, Texas, 1969; attended University of Texas in marketing and communications.
Occupation: Senior vice president of sales and marketing, Crunch Pak, Cashmere, Wash.
Quote: "Very few companies can claim they helped launch a completely new concept to the marketplace that has become an international success."
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