The company primarily sells to foodservice and club store accounts, using Pink Ladies, galas and granny smith apples. The company markets fresh-cut apples in packages ranging in size from 2 ounces to 24 ounces.
The apple industry has not experienced this type of unbalanced crop since the 1940s, said Jim Allen, president of the Fishers-based New York Apple Association,
“I think the processing market will be very, very strong,” he said.
With typical processing prices 9 to 13 cents per pound back to the grower, Allen said price this year for processing fruit is expected to be in the 24- to 25-cents per-pound range.
“It will certainly give growers a heckuva of an alternative if there is any question of what their packout might be,” Allen said.
Being able to sell fruit from at more than 20 cents per pound from the bin will be enticing, he said.
Allen said all processors — of fresh-cut slices, juice and applesauce — are very aggressive in the market.
“They are coming out with forward pricing, which typically never happens until September,” Allen said. “They are out there trying to procure and line up everything they can.”
Freytag said Crunch Pak made some adjustments in their pricing in the spring, but those adjustments didn’t take into account the shorter national crop picture. With continued pressure on supply, he said price increases appear to be likely in the fall, Freytag said.
The company has some agreements in place to buy product from growers, while other fruit is bought on an open basis in the market.
Rough patch ahead?
The category for fresh-cut apple slices has been in a strong growth mode, Freytag said, with Crunch Pak’s own growth well into double digits for the past two years. He predicted sales growth this year, but not at the pace of recent years because of higher prices could have a dampening effect on consumer demand.
“The nice part about it is that it is a well-established category, so it is not something where people will say we are just not going to (carry) them,” he said.
Dygert said he believes any disruption the fresh-cut apple business in the 2012-13 season will be only a bump in the road to long-term growth.
“I think volume be, at a minimum, maintained. There is a lot of processors for the McDonald’s (business) and they have to grow to keep that business maintained.”