Steve Lutz, senior strategist for CMI Orchards, based in Wenatchee, WA, sees two key themes emerging with this year’s Washington apple crop. 

“The first is the big increase in Honeycrisp production, with estimates calling for a 25 percent increase over last year, which would be a nearly 60 percent increase over the crop of just two years ago,” he said. “That means there will be more Honeycrisp promotions longer into the season than we’ve ever seen.”

The second big theme is the continued increase in the supply of the popular branded apples. These high-flavor apples are driving significant dollar growth in the category and retailers have been clamoring for greater supplies to boost distribution.

“At CMI, we will be up 20 percent in Ambrosia, up 120 percent in Kanzi, up 49 percent in KIKU, up 56 percent in Envy and up 152 percent in Smitten,” Lutz said. “The big increases in the high-flavor, branded apples is great because in previous years we’ve been in an oversold situation. So it will really be an exciting year as retailers have supplies of branded apples to really make an impact on consumers.”

CMI’s Daisy Girl Organics two-pound pouch bags were the best-selling branded organic apple bags in the United States this season.The shift toward branded apples and Honeycrisp is also driving up the average transaction size. When consumers shift to purchasing more expensive apples it drives growth for the entire category even if the change in volume is relatively small. 

“This puts tremendous pressure on the legacy apple varieties which almost universally carry the lowest retail prices in the category,” Lutz said. “What we know definitively is retail chains that use low pricing to focus consumer attention on legacy varieties under-perform in the apple category. It’s really pretty straightforward. Hot pricing on low-cost apples shifts consumer purchases directly into whatever apple is cheap. The result is a decline in category dollars as consumers move out of the more expensive apples they usually buy, substituting the hot promotional item.”

The key, Lutz noted, is to recognize the financial opportunity of dedicating some promotion and merchandising activities directly at shifting consumers up to high-flavor branded apples vs. trading consumers down to commodity apples.  

CMI is predicting an increase in production of about 5 percent overall, driven by the jump in its Honeycrisp and branded apples. It also expects a very normal year in terms of crop timing. 

“However, since Washington state has been very early over the last two seasons, the harvest timing this fall will feel late to most retailers, despite the fact that our harvest timing is right on the 50-year average,” Lutz said.

“Last year we had very large fruit. This year, sizing will be much more toward a normal size distribution with some varieties trending two sizes smaller than normal. That very well may mean that the high demand 88/larger sizes will command a premium for much of the season and the key promotion volume will be in smaller sizes and bags.”

When it comes to packaging, three-, five- or eight-pound poly bags work well for legacy varieties, because Lutz said consumers know these varieties so they are willing to purchase a larger volume package. Retailers do need to be cautious with the very large volume bags at low prices as they often work like a pantry stocking item, removing the shopper from any future purchases for a considerable period of time while they consume the large bag.

“These bags can effectively remove the shopper from category purchases for a month or longer,” he said. “We think the data is completely clear that for most branded apples like Ambrosia, KIKU, Envy, Kanzi, etc., the two-pound pouch is the superior package. A key reason for this is the pouch packaging allows for superior graphics to tell the apple story while the two-pound pack size allows a shelf price that consumers more willingly accept.”

Organic dollar share jumped over 10 percent for the first time this past season and with organic volume continuing to grow, there will be significant growth opportunities for retailers. 

“Retailers should look hard at driving packaged organic apple sales,” Lutz said. “One of the benefits of packaged organics is retailers have complete display flexibility because the co-mingling issue is eliminated. This gives supermarket produce pros the opportunity to place organics up front in more favorable shelf positions to increase consumer awareness and drive sales.”

Based on Nielsen national scan data, CMI’s Daisy Girl Organics two-pound pouch bags were the best-selling branded organic apple bags in the United States, up 22 percent in dollars last season.