The Core Problems of the Apple Industry...and Potential Solutions
The apple industry has faced no shortage of challenges over the past ten years. The largest looming problem is the continued decline of sales across the commodity. Following a peak in 2015, the apple category has declined or stayed flat every year, with the exception of 2020 due to the COVID-19 pandemic grocery spike. For most, this does not come as a shock. But you’re probably struggling to understand why it’s happening and what can be done to reverse this trend? We don’t have a crystal ball, but we do have insights.
Randy Riley has been in the produce industry for 25+ years starting and building a robust career at Kroger and now leading GoldenSun Insights as their co-owner. He’s seen the decline of the category firsthand. Riley attributes the decrease to variety proliferation, greater availability and favorable perception of other produce items, and product quality and consistency. “One of the biggest challenges to the industry is the rise in different varieties,” says Riley, “Consumers have difficulty understanding, and remembering the different varieties of apples. This leads to confusion when the consumer goes to make a purchase.” Another explanation for the category’s decline can be found in quality consistency. Consumers on average like crunchy and crisp apples. But when they don’t get a quality apple experience, they (perhaps unfairly) tie it to the entire apple category. The other problem comes from increased competition at the shelf. Twenty years ago, apples were one of the only commodities to be available year-round. Now, products like grapes, berries and more are available 52 weeks a year and are favored more by younger generations. The stark competition is illustrated by the fact that 2021 was the first year that grapes nipped at the coattails of apples USDA total volume data at 5.7 million units produced.
There is no one solution to the complicated problems we outlined. But the foundation of a new future lies with improved marketing and branding, innovation, and secondary apple market exploration.
Marketing and Branding
When looking at the success of berries, citrus, and grapes in the past several years, a clear trend emerges: the power of brands. Berries have Driscoll’s. Melons have Dulcinea. Citrus has Cuties and Halos. Grapes have the Grapery and Welch’s, among others. All of these brands have a high level of household recognition and are known for both quality and their 52-week supply. Some seasonal proprietary varieties of apples, such as Opal Apples, are already branding their product with significant results. The combination of a unique proprietary varietal and strong, consistent branding has made Opal an in-demand varietal. However, when you look at the full catalog of major apple growers, many go without a cohesive brand experience for their apples and often present disjointed brands across their SKUs. For apples to gain back relevance, they need to focus on the branding and marketing for their full apple SKU set and find a way to create brand continuity across a unified story. Most growers have a good baseline they can build on for this. For example, FirstFruits Farms of Washington, the exclusive grower of Opal Apples, has a strong history of philanthropy and employee relationships tied to its company. It would be natural to construct an entire branded apple experience out of those elements. Don’t believe a strong apple brand with multiple varieties can be successful? Look to the grape industry, a space with many brands that cross different and unique varietals.
It’s easy to say the apple industry needs to innovate. It’s much harder to say what that looks like. Innovation doesn’t come by just sitting and thinking. It comes through strategic planning, creative brainstorming, stepping outside of your industry and most of all imagination. It can be big, like discovering a new business model. Or, it can be a small innovation, like offering a new pack size or finding a new sales model.
Secondary Apple Market
10 years ago, few would have projected how big the apple cider market would become when Angry Orchard first hit the scene. But now, it’s a multimillion-dollar industry that continues to proliferate in the portfolios of national and local brands. Apple growers looking to diversify their portfolio and stem the tide of declining sales should embrace these secondary markets and innovate new paths format. Going down this path involves a clever combination of innovation and marketing. But think about the possibilities to reach Millennial and Generation Z items. Maybe it’s reviving and putting a twist on candy apples? Maybe it’s a dried apple trail mix? Maybe it’s an apple distillery? Whatever the new or emerging market, it can help amplify apple sales and repurpose their use.
We hope this article helped you to think about the apple industry in a different light.