CHICAGO — If selling apples was a game of poker, Steve Lutz would advise grower-shippers not to overplay their hand.
High f.o.b.s at the end of the 2010-11 apple season may set back sales momentum for the start of the 2011-12 season, said Lutz, executive vice president of the West Dundee, Ill.-based Perishables Group.
Speaking at the U.S. Apple Association annual conference Aug. 18, Lutz said shippers need to aggressively seek retail promotions and shelf space for the just-starting 2011 crop. Providing consistent f.o.b. pricing that retailers can promote against in the fourth quarter of 2011 will be key.
“When you miss sales in October, November or December, you don’t make it up later,” he said.
Lutz sees the potential for a profitable year for Washington growers, as the low value of the dollar will support exports of apples. But there is historical precedent for concern.
In 2008, tight supplies at the beginning of the season caused U.S. average retail prices for red delicious to climb $1.58 per pound in September. The market then steadily fell to a low of $1.14 per pound the following May, dragging f.o.b. prices lower as well.
This year, red delicious prices at retail were climbing in the late summer, reaching $1.37 per pound in July, up from $1.29 per pound in July 2010. Likewise, premium quality red delicious apples were well over the $30 per carton level on Aug. 24, compared with about $20 per carton the same time last year.
Lutz said he sees the potential for the 2011 season to start out with high apple prices that are unattractive to promote for retailers. Retailers may then choose to promote other items like grapes instead of apples in September and October. That could cause the apple industry to play catch up the rest of the season, he said.
Washington apple marketers need to be competitive with regional apple suppliers, Lutz said.
“When regional suppliers can capture shelf space and can deliver a good product, they tend to stay,” he said. The late harvest start for Washington apples could present an opportunity for Michigan and New York growers to have a strong run in the fall, he said.