Growers in Michigan and other top produce states face a difficult retail environment into 2012, with consumers under pressure from high unemployment and inflating food and gasoline costs that are complicating supermarket efforts to promote apples and other items.
While U.S. consumers continue to emerge from the 2008-09 recession, gasoline “seems stuck at relatively high levels,” Steve Lutz, executive vice president with market researcher Perishables Group, West Dundee, Ill., said during an Aug. 18 presentation at the U.S. Apple Association’s annual conference in Chicago.
During the 52 weeks ending June 25, U.S. retail apple sales totaled $1.65 billion, up 3.2% from the same period a year earlier, according to Perishables Group data. But sales volume for the same period fell 0.9%.
While apple promotions in ad count terms rose 2.4%, promoted prices were up 6.3%.
“Promoted prices are higher, meaning the promotions are not as hot and consequently do not drive as much lift” to sales, Lutz said.
“It is possible that rising prices caused retailers to be less aggressive on apple promotions. However, we’re seeing a similar trend across all fresh categories.”
Retailers are shifting promotional focus toward increasingly popular apple varieties, such as gala and Jazz, while de-emphasizing mainstream varieties, such as red delicious, Lutz said.
With the 2011 harvest accelerating, the apple industry needs to refocus on retail promotions and shelf space, Lutz said, according to slides from his presentation. Early lost sales are “never recovered,” he said.
Apples are an extremely complex retail produce category because of the large number of varieties and unique items, Lutz added. During the final three months of the year, the typical grocery store has 29 unique apple items, he said.
“That is a huge amount of space dedicated to apples with multiple opportunities for retailers to either drive sales or miss badly in execution,” Lutz said in the e-mail.
“Getting it right at retail — not leaving dollars on the table — is more challenging than ever.”