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Slide 1: 

Marketing Apples in a Global Environment: Challenges and Opportunities by Dr. Roberta Cook University of California Davis March 2003

Overview of Presentation : 

Overview of Presentation US apple situation Area and Production Trade Consumption Global apple production Emphasis on China Global apple trade patterns Global consumption patterns Marketing issues

Slide 3: 

US Apple Acreage and Change in 90-92 and 00-02 State Shares Source: USDA/NASS Jan. 03 and ERS 7% 7% 40% 31% =168,785 hectares Down 8% Down 11%

Apple Acreage in Washington : 

Apple Acreage in Washington Area peaked in ’99 at 210,000

Total Acres by Size of Apple Orchard - Washington : 

Total Acres by Size of Apple Orchard - Washington Source: Census of Agriculture, as reported by Tom Shotzko

Apple Acreage, by Variety in California and Washington, 2002 : 

Apple Acreage, by Variety in California and Washington, 2002 Likely 22,000 total acres in Ca. including processing, and fresh area of 20,250 in 2000, CAC

Apple Production, U.S. and Selected States, 1990-2002, in million metric tons : 

Apple Production, U.S. and Selected States, 1990-2002, in million metric tons Source: USDA

U.S. Apple Production and Selected State Shares, 1990-2002 : 

U.S. Apple Production and Selected State Shares, 1990-2002 WA 2,428,142 56% 46% 17% NY 408,460 9% 11% -16% MI 344,927 8% 9% -16% CA 252,630 6% 8% -31% PA 204,539 5% 5% -5% Other States 690,872 16% 21% -29% US 4,329,569 100% 100% -4% Source: ERS and NASS, Jan/03 00-02 State Shares . . . . . . . . State Avg Metric Tons 00-02 90-92 % Change

California Fresh Apple Production, by Variety, 42 lb. Cartons : 

California Fresh Apple Production, by Variety, 42 lb. Cartons WA Fujis down to 9 million boxes in 02/03 and Pink Ladies down to 500,000; WAC

Slide 10: 

Western U.S. Fuji Production in 1000 42-lb units Source: U.S. Apple Association, Aug.2003 update

Slide 11: 

Western U.S. Fuji Production in metric tons Forecast prior to frost 2002 Revised Wa. and Ca. Source: US Apples and 2002 revision from the WAC

Slide 12: 

US Utilization of Apples 1977-2002 FRESH PROCESSED In Million Metric Tons ‘77 ‘80 ‘85 ‘90 ‘95 ’02* Update: 4,237,100 total Short tons in 2002; 2002 fresh/ proc. shares estimated Sources: thru 01 ERS/USDA, 10-02; NASS Jan. 03 for 2002

Ave. Item Number in the Ave. US Fresh Produce Department : 

Ave. Item Number in the Ave. US Fresh Produce Department 173 345 0 50 100 150 200 250 300 350 400 Number of items 1987 1998 Source: Supermarket Business, Oct. 1999 Pma study: 574 SKU’s in 2001

U.S. Per Capita Consumption of Fresh Apples and Pears : 

U.S. Per Capita Consumption of Fresh Apples and Pears 12 10 8 6 4 2 0 77/78........................92/93......97/98..01/02 Source: ERS, USDA kg 87/88 97/98 APPLES PEARS 1.4 7.2

US Per Capita Utilization of Apples in pounds : 

US Per Capita Utilization of Apples in pounds Source: USDA/ERS

US PER CAPITA FRUIT CONSUMPTION, POUNDS 1977-2001 : 

US PER CAPITA FRUIT CONSUMPTION, POUNDS 1977-2001 Source: USDA/ERS, Oct. 2002 Pounds per capita 273 90 85 24 74 269 54 26 71 118 Total for 2001 reaches 279 including some berries and olives.

US PER CAPITA VEGETABLE CONSUMPTION, POUNDS, 1976-2001 : 

US PER CAPITA VEGETABLE CONSUMPTION, POUNDS, 1976-2001 Source: USDA/ERS, Vegetables and Specialties Yearbook, July 2002 Pounds per capita 178 47 93 123 441 359 115 147 125 77 50

Fresh Apples: U.S. Imports & Exports by Key Country : 

Fresh Apples: U.S. Imports & Exports by Key Country 1000 metric tons 1992 1997 IMP EXP IMP EXP IMP EXP IMP EXP 2002 Source: ERS, USDA 2001

Slide 19: 

US Fresh Apple Imports, by Country, 1990-2002 In Thousand Metric Tons Source: Census Bureau, US Dept. of Commerce

Slide 20: 

Indonesia Source: Bureau of the Census, US Dept. of Commerce US Fresh Apple Exports, by Country, 1990-2002 In Thousand Metric Tons Other Mexico Taiwan Canada Hong Kong

Slide 21: 

Monthly US Imports of Fresh Apples by Country of Origin in 2002 Source: US DOC Thousand Metric Tons Months

Slide 22: 

Monthly US Imports of Fresh Apples by Country of Origin in 2001 Source: US DOC Thousand Metric Tons Months

Slide 23: 

Monthly US Imports of Fresh Apples by Country of Origin in 2000 Source: US DOC Thousand Metric Tons Months

Slide 24: 

Monthly US Exports of Fresh Apples by Country of Destination in 2002 Source: US DOC Thousand Metric Tons

World Apple Production: Key Trends : 

World Apple Production: Key Trends China can now provide over 1/3 of all world apple production vs. 11% in 89/91, but area has stabilized. The shares of production coming from N.A., Former Soviet Union, Other Asia and Europe shrank in the 90s, but Europe increased in absolute volume. The share of S. American suppliers slipped only slightly in the 90s as production grew about 1 million metric tons to 3.4 million; share changed to 5.6% in 2001 from 6.1% in 89/91. Recent adjustments downward in US, European, and possibly Chinese production for 2002/03 will likely boost Southern Hemisphere exports in 2003.

World Apple Production by Region (% total) : 

World Apple Production by Region (% total) Source: World Apple Report 2002 Europe (exc FSU) 38.7 33.0 23.9 North America 13.0 13.6 10.2 South America 4.2 6.1 5.4 Africa 1.5 2.3 2.6 Oceania 1.5 1.7 1.5 F.S.U. 18.2 13.7 5.8 China 8.0 11.1 34.8 Other Asia (exc FSU) 14.9 18.6 16.5 World 100.0 100.0 100.0 Avg Avg Avg Region 79-81 89-91 98-00

Global Pear and Apple Production, Million Metric Tons : 

Global Pear and Apple Production, Million Metric Tons Sources: FAO and FAS

World Per Capita Fresh Apple Supplies 1990-2001, kilograms per person : 

World Per Capita Fresh Apple Supplies 1990-2001, kilograms per person Production grew by 50% vs. 15% growth in world population. Source: World Apple Review 2002

Slide 29: 

Source: FAS, USDA Apples: Total Production & Net Fresh Production,in million metric tons, Key Selected Countries 99/00... 00/01... 2002... Fresh Fresh Fresh Total Total Total

Slide 30: 

Chinese Apples – Total Production, Net Fresh Production, Fresh Imports & Exports,in million metric tons Source: FAS, USDA 25 20 15 10 5 0 99/00 00/01 01/02 02/03f

China's Fresh Apple Imports, By Country of Origin, MY 2001 (July-June), Metric Tons : 

China's Fresh Apple Imports, By Country of Origin, MY 2001 (July-June), Metric Tons Source: FAS

Slide 32: 

N. Hemisphere Net Fresh Apple Production, Key Countries Excluding China,in million metric tons 18 15 12 9 6 3 0 99/00 00/01 01/02 02/03f Source: FAS, USDA

Southern Hemisphere Big Six: Long-term Upward Trend Broken : 

Southern Hemisphere Big Six: Long-term Upward Trend Broken metric tons Source: World Apple Review 2002 and FAS for 2001 and 2002, updated in 2003

Yantai North Andre Juice Co.,Ltd : 

Yantai North Andre Juice Co.,Ltd Apple Production in China, 1997-03, Metric Tons Area in 2000 of 2,254,100 hectares vs. 2,986,900 in 1996. 50% are Fujis, 12-15% are Red Delicious.

Yantai North Andre Juice Co.,Ltd : 

Yantai North Andre Juice Co.,Ltd Guo Guang Fuji APPLE PRICES IN CHINA

Yantai North Andre Juice Co.,Ltd : 

Yantai North Andre Juice Co.,Ltd Chinese Apple Production, Distribution by Province, 1997-03, metric tons Projection of 27,605,000 to 31,000,000 Metric tons by 2010; Desmond O’Rourke

Yantai North Andre Juice Co.,Ltd : 

Yantai North Andre Juice Co.,Ltd OTHER APPLES CITRUS PEARS Banana GRAPES Chinese Fruit Production, % of Total by Type

Yantai North Andre Juice Co.,Ltd : 

Yantai North Andre Juice Co.,Ltd Close Belt Pressing System for Hygienic Application 5-Effect Evaporator Storage in Apple Silo Ultra Filtration system R&D/Quality Assurance Center 2.Evaporator 3.Apple Silo 4.UF 5.Lab 1.Belt Press

Slide 39: 

1997 – 2001 Chinese AJC Export, by Country Unit : kg Yantai North Andre Juice Co.,Ltd Projection of 400,000,000 kg by 2010; Desmond O’Rourke

Slide 40: 

US Apple Juice Imports, by Country, 1997-2001 In 1,000 KL Source: Census Bureau, US Dept. of Commerce Tariff code: 200970

Slide 41: 

World Fresh Apple Trade by Key Selected Country Source: FAS, USDA 99/00 00/01 2002 in million metric tons IMP IMP IMP EXP EXP EXP

Chilean Apple Exports: Changes in Market Share by Destination : 

Chilean Apple Exports: Changes in Market Share by Destination Europe 46% 35% 32% 32% U.S.A. 7% 8% 12% 12% L. America & Caribbean 19% 37% 36% 39% Other 28% 20% 19% 18% Grand Total 100% 100% 100% 100% Source: Chilean Fruit Exporter's Association Country 92-93 97-98 00-01 01-02

Chilean Apple Exports by Destinationin million cartons (18 kg) : 

Chilean Apple Exports by Destinationin million cartons (18 kg) Europe Other L. America & Caribbean USA Source: Chilean Fruit Exporter's Association

Estimated European Per Capita Fresh Apple Consumption : 

Estimated European Per Capita Fresh Apple Consumption kilograms per capita Source: World Apple Review 2002

Estimated Per Capita Fresh Apple Consumption: Other Major Producing Countries : 

Estimated Per Capita Fresh Apple Consumption: Other Major Producing Countries kilograms per capita Source: World Apple Review 2002

US and EU: Trend in Grower Selling Prices for Fresh Apples : 

US and EU: Trend in Grower Selling Prices for Fresh Apples Source: World Apple Review 2002 Indexed to 1985 base = 100

United States: Annual Average Retail Price of Fresh Red Delicious Apples 1980-2001 : 

United States: Annual Average Retail Price of Fresh Red Delicious Apples 1980-2001 cents/lb - current & deflated Source: World Apple Review 2002

WHAT a DOLLAR SPENT for FOOD PAID FOR in 2000 in the USA : 

Farm value 19¢ Marketing bill 81¢ 19¢ Other costs - 4.0¢ Business taxes - 3.5¢ Repairs - 1.5¢ Interest - 2.5¢ Rent - 4.0¢ Depreciation – 3.5¢ Advertising - 4.0¢ Profits - 4.5¢ Energy - 3.5¢ Transportation - 4.0¢ Packaging - 8.0¢ Source: ERS/USDA Labor - 38¢ WHAT a DOLLAR SPENT for FOOD PAID FOR in 2000 in the USA

U.S.: Producer Price Indexes 1991-2001 for Fresh Granny Smith and McIntosh Apples : 

U.S.: Producer Price Indexes 1991-2001 for Fresh Granny Smith and McIntosh Apples Calendar Years, Base, Dec. 1991 = 100 Source: World Apple Review 2002

Washington State: Relative FOB Prices of New Varieties - 1990-2001 : 

Washington State: Relative FOB Prices of New Varieties - 1990-2001 Average price all varieties in each crop year = 100 Source: World Apple Review 2002

World Apple Variety Trends, Excluding China : 

World Apple Variety Trends, Excluding China Red Delicious and Golden Delicious will lose market share but remain in first and second place Gala/Royal Gala will be the principal winners, growing by 50% over the next decade, reaching third place Fuji will knock Granny Smith out of fourth place Combined volume of Jonagold and Jonagored will approach that of Granny Smith Source: World Apple Review 2002

World Apple Variety Trends, Excluding China : 

World Apple Variety Trends, Excluding China Idared keeps growing, especially in Eastern Europe Braeburn follows in 8th place McIntosh, Elstar, Cortland, Cox’s Orange and Empire will be stable Pink Lady production will triple between 2000 and 2010, but it won’t surpass 1% of production in the principal producing countries Other growth varieties: Cameo, Honeycrisp, Pacific Rose, Fiesta and Sundowner Source: World Apple Review 2002

France: Apple export destinations & volumes, 1998 & 2000, 1000 metric tons : 

France: Apple export destinations & volumes, 1998 & 2000, 1000 metric tons light = 1998dark = 2000 Totals: 1998 - 766,207 tons 2000 – 847,833 tons

Italy: Apple export destinations & volumes, 1998 & 2000, 1000 metric tons : 

Italy: Apple export destinations & volumes, 1998 & 2000, 1000 metric tons light = 1998dark = 2000 Totals: 1998 - 540,138 tons 2000 - 579,053 tons

Netherlands: Apple export destinations & volumes, 1998 & 2000, 1000 metric tons : 

Netherlands: Apple export destinations & volumes, 1998 & 2000, 1000 metric tons light = 1998dark = 2000 Totals: 1998 - 376,870 tons 2000 – 294,356 tons

Belgium & Luxembourg: Apple export destinations & volumes, 1998 & 2000, 1000 metric tons : 

Belgium & Luxembourg: Apple export destinations & volumes, 1998 & 2000, 1000 metric tons light = 1998dark = 2000 Totals: 1998 - 338,621 tons 2000 - 364,033 tons

TOP 2001 GLOBAL FOOD RETAILERS : 

1 Supercenters U.S. $217.80 40% 2 Carrefour/Promodès France $62.29 71% 3 Holland $59.70 92% 4 U.S. $50.10 91% 5 Germany/Switz. $44.37 50% 6 U.S. $38.30 90% 7 Kmart U.S. $34.62 37% 8 Safeway U.S. $34.30 92% TOP 2001 GLOBAL FOOD RETAILERS sales % grocery rank sales company ($ billion) sales 30 grocery retailers account for 10% of global food retail sales.

TOP 2001 GLOBAL FOOD RETAILERS : 

9 CostCo U.S. $34.14 41% 10 U.K. $34.09 90% 11 Germany $33.66 70% 12 ALDI Markt Germany $29.05 84% 13 ITM Entreprises France $28.60 82% 14 J. Sainsbury U.K. $26.64 90% 15 Ito - Yokado Japan $26.53 47% 16 Edeka/AVA Germany $25.13 75% % TOP 2001 GLOBAL FOOD RETAILERS sales % grocery rank sales company ($ billion) sales Source: The Food Institute Report, June 17, 2002

TOP 2001 GLOBAL FOOD RETAILERS : 

17 Aeon/Jusco Japan $23.90 44% 18 Tenelmann Germany $23.01 75% 19 Auchan France $22.86 70% 20 IGA (Supervalu) U.S. $20.91 76% 21 Daiei Japan $20.60 40% 22 Casino France $19.71 85% 23 E. Leclerc France $19.26 52% 24 Delhaize “Le Lion” Belgium $19.18 92% 25 Schwarz-Group (Lidl) Ger. $16.68 84% TOP 2001 GLOBAL FOOD RETAILERS sales % grocery rank sales company ($ billion) sales Source: The Food Institute Report, June 17, 2002

Building Retail Partnerships : 

Building Retail Partnerships Effective Tactics Shopper Savvy Loyalty Card Better Systems Results-driven Tracking Focus Dept. Profitability Strategic Approach Category Development Best Practices Store-level Research Purchase Triggers Consumer Drivers Long view Fact-based Selling Innovative Marketing/ Merchandising Efficient Practices “Category” vs. “Item” Perspective Roles and Responsibilities Source: Adapted from The Perishables Group