Desmond O'Rourke

WAPATO, Wash. — Brett Valicoff, president of Valicoff Fruit Co. in Wapato, is renewing his call for the Washington apple industry to resume collective domestic promotions aimed at increasing brand awareness and consumer demand.

The industry has experienced poor returns in recent years due to too many apples, higher production costs and more competition from other fruits. U.S. per capita consumption of apples has been stagnant or declining for years.

Valicoff says consumption and demand could increase and producers and retailers would benefit from a collective industry social media program educating people on the health benefits and quality of apples, the differences among varieties and industry costs and good stewardship.

Two industry observers with years of experience, Steve Lutz and Desmond O’Rourke, agree collective domestic promotions are needed but say it would be difficult and that the industry doesn’t see enough benefit.

“We are doing something wrong if we can’t increase sales of a healthy, affordable and safe product during a (COVID-19) pandemic,” Valicoff wrote to the Washington Apple Commission on May 1.

He spoke at the commission’s virtual meetings on May 21 and Dec. 15.

Commissioners, most of whom are executives of larger companies, were noncommittal.

Valicoff later said individual company marketing programs are aimed at retailers and lack a strong appeal to consumers.

“We need to do both. We are missing the integral link to build consumer demand,” Valicoff said.

“We pay the highest minimum wages and have the best infrastructure, controlled-atmosphere technology and are top of the line in food safety but nobody knows that,” he said.

Consumers need to be educated about the quality of the industry and its product, he said.

The commission promotes export sales and has not engaged in collective domestic promotions since 2003.

In May, Todd Fryhover, the commission president, said the commission supports the idea but that he knew of three large-volume companies that are opposed and one threatening to sue to prevent mandatory assessments to pay for a program.

Valicoff said a program could start with voluntary assessments and, if successful, perhaps become mandatory.

Steve Lutz, a former Apple Commission president and an analyst of produce consumer data and trends for the past 20 years, said a consumer-based program is needed to build long-term demand but that larger industry players don’t see enough value in it because they think they are doing relatively well with their own retail-based marketing over which they have greater control.

“Historically, the Apple Commission was dedicated to convincing consumers to eat apples but also to pick Washington over New York or Michigan apples. It was a share battle,” Lutz said. “The companies can fight their own share battles now, but the issue is convincing consumers to grab an apple over a mandarin. We used to own the shelf between January and March, but not anymore. It’s a mandarin play.”

U.S. per capita consumption of apples averaged over 18 pounds per person in the 1980s and 1990s but has averaged less than that since 2000, said Lutz, senior vice president of Category Partners in Idaho Falls and formerly a regional vice president of the Produce Marketing Association.

Big companies with their own orchards own most of the fruit and there are a lot more varieties, which makes collective promotions more challenging, he said.

“Back in the day, you could run Red Delicious promotions hitting 75% of the buying public. That doesn’t exist anymore. There are a lot more varieties and a pretty narrow core user base,” he said.

About 80% of households will buy apples at some point during the year but repeat purchasing is declining, he said.

The amazing thing, he said, is that while consumption is declining, companies are planting more apple trees.

“It seems like every organization is planting around the expectation of increased sales. So where is the market coming from to absorb that product? That to me is the important question,” Lutz said. “We’re pretty dramatically increasing production, so we need to be building demand.”

Des O’Rourke, a retired Washington State University agricultural economist, has been an industry observer for more than 40 years. He spent seven years in advertising early in his career.

“It was generally accepted that advertising was most effective when a lot of money was spent on a single theme like “Budweiser, the King of Beers,” or “Wheaties, the Breakfast of Champions,” O’Rourke said.

Statista, a German market and consumer data company, estimates $263 billion was spent advertising to U.S. consumers in 2020, so it takes a sizable program to be heard, he said.

“A complication for the Washington apple industry is that different firms are planting trees because they see different profit opportunities in different products, such as organic apples, mainstream varieties, proprietary varieties whose supply is limited, company brands, organic brands, etc.,” O’Rourke said. “Finding a common advertising theme would be difficult. And, allocating advertising spending across these different product types would be a challenge for any advertising agency.

“However, if nothing is done, the apple industry will shrink further and be displaced by other fruits that have a coherent marketing strategy.”