Marketers expect to move plenty of apples through pandemic
Washington apple suppliers say they will survive the COVID-19 pandemic, but getting through it has required some adjustments.
“The pandemic will continue to create challenges through the remainder of the year. However, COVID is not known to be transferred through food, and we have seen an increase in demand for fresh produce, and more specifically, packaged product since March,” said Chuck Sinks, president of sales and marketing with Yakima, Wash.-based grower-shipper Sage Fruit Co.
Packaged items provide less exposure to other shoppers when on the retail shelf, Sinks noted.
“They are also easy for grab-and-go and make for a simple online purchase for those that are participating in grocery pick-up or delivery.”
Foodservice — a sector the pandemic has hit perhaps the hardest — could continue to struggle for the rest of 2020, Sinks said.
“With parts of the country not having in-person schooling and restaurants being limited in their capacities, the demand is not the same as in previous years,” he said.
Apple sales were down significantly at the onset of all the news surrounding COVID-19, specifically for foodservice and wholesale distributors nationwide, while retail specifically recognized a spike in sales, said Marcus Hartmann, vice president of operations at Bellevue, Wash.-based Pacificpro Inc. However, he noted the U.S. Department of Agriculture stepped in to help blunt the effects.
“After a few weeks of being on lockdown, the USDA stepped in to fund the Farmers to Families Food Box program, which injected significant capital toward purchases of 3-pound and 5-pound bag apples, which have contributed to above-average sales volume and shipments out of the Pacific Northwest for this time of year,” he said, adding that demand remained “excellent” in late August.
Retail apple sales have continued apace, George Harter, vice president of operations with Wenatchee, Wash.-based CMI Orchards.
“Apple sales continue without much interruption due to COVID,” he said.
Indeed, retail sales have increased during the crisis, said Roger Pepperl, marketing director with Wenatchee-based grower-shipper Stemilt Growers LLC.
“Apple sales are great and increasing during the pandemic; we are seeing an uptick on both conventional and organic,” he said.
Sales accelerated during August, said Roger Aguirre, apple and pear director with Vancouver, British Columbia-based The Oppenheimer Group.
“The past few weeks have seen very strong sales, but we’ve also had a surplus on the majority of the Washington crop, so the market is at this precarious point, where we need to see an uptick in sales in order to make this sustainable for our growers,” he said.?
“With COVID-19, some of the pricing we’re seeing is not necessarily viable in terms of safeguarding the future for growers.”
Hartmann said foodservice business — including schools — remained “very fluid,” but apple shipments in that channel since March 2020 had fallen “significantly.”?
“We are now beginning to see an uptick in demand for the return of schools nationally including ‘student feeding programs’ for those districts not returning to school for in-person classroom learning,” Hartmann said.
Supply chain recovers
The pandemic had not hobbled supply lines, Hartmann said.
Supplies were “very good statewide,” though some were experiencing reduced inventories on small apples, with prices increasing because of increased demand for 3- and 5-pound bagged product, plus school and USDA contract demands, Hartmann said.
“We always begin to see a reduction in volume availability July-September, as shippers manage inventories while the state transitions from storage-crop 2019 into new-crop 2020 harvest,” Hartmann said.?
“Many suppliers — grower/shippers — are experiencing gaps in their manifests, but Pacificpro maintains access to almost the entire state crop, allowing us the ability to procure for customers most all varieties, grades and sizes.”
Supply lines took an early hit from the pandemic, but they recovered quickly, Stemilt’s Pepperl said.
“This issue has gone away as the hoarding has lessened in the stores,” he said.?
“Our automated distribution system has helped us fill trucks with many items at a faster rate and allowed us to get trucks out on apples during the crunch times that existed. Our ARS Distribution center continues to deliver a competitive advantage to Stemilt for loading.”
Impacts of COVID-19 likely are more painful on the supply side than on the demand side, said Mark Powers, president of the Yakima, Wash.-based Northwest Horticultural Council.
“On the supply side, all of our packers are geared up and have been doing great work to protect their workers and to keep people safe, shutting down when they need to sanitize,” Powers said. “Overall, there could be periodic impacts to individual companies, but on an industry level, supply will be there.”
Transportation has been an issue, said Matt Roberts, sales manager with Mount Vernon, Wash.-based organic fruit shipper Viva Tierra Organic Inc. He did not say it was connected to the pandemic, however.
“It’s been an interesting summer,” he said.?
“Trucking has been much more expensive. It’s amazing how much it fluctuates between different areas. We’re already seeing record rates out of California going east.”
Labor issues pop up
The pandemic has churned up labor concerns, Roberts said.
“I think it will probably make it harder to get workers in the fields, but a lot of these H-2A workers are here to make a good living, so they’re pretty driven to work,” he said.
“I think they’re getting pretty good control over it. You’re not hearing about as many cases as during cherry season. Packinghouse has been quiet, but there’s concern, for sure.”
Labor availability has been a problem for Viva Tierra in California, but perhaps not so much in Washington, Roberts said.
“H-2A makes it easier,” he said. “Washington in general has gone that way. It’s still a challenge with the housing, so you’re not spreading germs, but those workers are pretty driven to still work, where other places that are depending on migrant labor, they may not show up.”
In some cases, retailers narrowed their variety requirements, and labor may have played a role, Roberts said.
“I think retailers are trying to tighten SKUs (stock-keeping units), because they don’t have enough labor,” he said. “The home delivery people are looking for whatever varieties you can get them. And that might loosen up as we get into the season, at retail. Once again, it comes down to labor and how much you have, at the store level too.”
Retailers did cut back on varietal choice for a limited time, said Tim Evans, manager of domestic and export sales with Chelan, Wash.-based Chelan Fresh.
“Some retailers dialed back their SKU count in the apple category in order to focus on ‘core’ volume drivers like gala and Honeycrisp versus the ‘emerging’ new varieties, but that only lasted for a few weeks and we are now finding more interest from buyers back on toward items that can bring excitement back to the category, like Rockit apples, which are now available year-round,” Evans said.
The COVID-19 crisis has taken a big bite out of foodservice sales, although retail business has compensated, to some degree, the Northwest Horticultural Council’s Powers said.
“Hopefully on the positive side, we like to think the trends toward eating at home are gonna continue to strengthen retail sales, and we see some evidence of that occurring,” he said.?
The USDA buying programs have helped, Powers said.
“I anticipate that will likely continue, so those folks that are without employment and in need of food will still be able to get our apples and pears through those USDA buy programs and donation programs,” he said.
The beginning of a new school year should be a boost for foodservice sales, said John Long, director of Raleigh, N.C.-based L&M Co.’s Washington unit in Union Gap.
“Schools are opening and supplying lunches, but the wholesale business overall for apples would be down if not for the USDA, which has come up with some very big buying, feeding programs,” he said.?
“We’re seeing 15-20% of our business per week go in that direction.”
Chelan Fresh’s Evans praised USDA for having “filled the void for lack of the foodservice business” during the pandemic.
“The Farm to Family Food Box program has been good alternative in the short term,” he said.?
“The USDA has been doing a fantastic job of engaging the Washington apple and pear growers to help our farmers through these tough times.”
All told, apple sales volumes should be comparable to a year ago, said Blake Belknap, vice president of sales with Selah, Wash.-based Rainier Fruit Co.
“Though the pandemic will certainly bring new challenges to growing and packing, Rainier anticipates volume comparable to last season’s, thanks to a mild spring and early summer,” he said.?
Consumers “rushed retail supplies” and stocked up on apples and other items early during the pandemic, and that helped the apple category, Chelan Fresh’s Evans noted.
“As consumers responded to COVID-19 with stock-up trips, the fresh apple category moved from a position of being negative in tonnage and dollars to prior year to having steady and maintained growth,” he said.?
It also has benefited sales of bagged apples, to a degree, Evans said.
“There has been a little more volume done in bags — 43% of pounds versus 41% — but bulk is still the primary way shoppers are purchasing fresh apples,” he said.?