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2 CapitalPress.com February 26, 2016 People & Places Marketer gives apples an edge Steve Lutz helps pioneer how grocery retailers sell fresh produce Western Innovator Steve Lutz Age: 60 Family: Wife, Jan, former executive director of Wenatchee Wine Country, community volunteer. Three sons. Education: Bachelor’s degree in advertising, Washington State University, 1979; master’s in business administration, City Univer- sity, Seattle, 1989. Capital Press WENATCHEE, Wash. — When Steve Lutz built his home in the upscale Fancher Heights subdivision over- looking Wenatchee in 2004, he added a putting green on the edge of the bluff even though he isn’t a golfer. “I like to chip. But the real reason is someone — when we sell this house — some golf fanatic is going to see that and have to have it. In the meantime, I like looking at it,” Lutz says. Always thinking about marketing, huh? “That’s what it is. Packag- ing, man,” Lutz replies. It’s not the only example of Lutz, former Washington Apple Commission president, marketing consultant and avid triathlete, looking for a com- petitive edge. Social skills Fresh out of Washington State University in 1979 with a bachelor’s degree in adver- tising, Lutz won a slot at the American Advertising Feder- ation Student College Com- petition in Washington, D.C. He wanted his presentation to stand out, so Lutz got a box of apples. “I was riding up the ele- vator with my box of apples and this girl from a northern Illinois team said, ‘Those are Washington apples’ and that she once lived in Olympia,” Lutz recalled. His props helped him place ifth out of 14 in the compe- tition but, more importantly, they were a conversation start- er with Jan Zander, who three years later became Jan Lutz. “I gave him a hard time about brown-nosing the judg- es,” Jan Lutz says about the competition. “But his presen- tation was great. He was elo- quent, comfortable and witty, unlike me, when I get tongue- tied and nervous.” Steve Lutz says his par- ents instilled a good work ethic in him and that he de- termined — while helping his father develop orchards in East Wenatchee in the 1960s — that there must be an easier way to make a living. His Wenatchee High School debate coach, Sher- ry Schreck, remembers Lutz being “blessed with a reso- nate, wonderfully persuasive voice” and that he knew how to use it. He had good social skills and was liked by students and faculty, she says. Lutz considered pre-law in college, but opted for broad- cast journalism and then ad- vertising and marketing at Washington State University. Upon graduation, Lutz be- came public relations manag- er for the Washington Apple Calendar To submit an event go to the Community Events calendar on the home page of our website at www. capitalpress.com and click on “Sub- mit an Event.” Calendar items can also be mailed to Capital Press, 1400 Broadway St. NE, Salem, OR 97301. Saturday, Feb. 27 Mid-Valley Winter Ag Fest, Polk County Fairgrounds, Rickreall, Ore., 503-428-8224. Events will promote local ag commerce and education and provide an environ- ment that is fun and informative for the entire family. mvwagfest.com/ Sunday, Feb. 28 Mid-Valley Winter Ag Fest, Polk County Fairgrounds, Rickreall, Ore., 503-428-8224. Events will promote local ag commerce and education and provide an environ- ment that is fun and informative for the entire family. mvwagfest.com/ Tuesday, March 1 Fruit Ripening & Ethylene Management Workshop, Post- harvest Technology Center, University of California-Davis. http://postharvest.ucdavis.edu/ Wednesday, March 2 Fruit Ripening & Ethylene Man- agement Workshop, Postharvest Occupation: Vice president of marketing, Columbia Marketing International, Wenatchee. Work History: Washington Apple Commission, 1979-1985; Cole & Weber advertising, 1986-1991; Apple Commission, 1991-2000; The Perishables Group, 2000-2013; Columbia Marketing Interna- tional, 2013 to present. Dan Wheat/Capital Press Steve Lutz, vice president of marketing at Columbia Marketing International in Wenatchee, Wash., holds Kanzi apples on a Columbia Fruit Packers packing line Feb. 4. Lutz is an innovator in marketing fresh foods. Commission in Wenatchee. He became retail marketing director for the commission, then worked for Cole & We- ber, a Seattle advertising agency. Lutz returned to the com- mission as director of domes- tic marketing in 1991 and was president from 1995 to 2000. created success on the retail shelf than the retailer did,” Lutz says. “We care about apples. The retailer has hun- dreds of items, so the only ones driving apples are those who sell them.” At the commission At Cole & Weber, he saw that the wine industry had an “incredibly rich” system of sales data and igured a sim- ilar system could help the ap- ple industry. “We were still competing heavily with Midwestern and Eastern apples and needed to quantify inancial beneits for retailers to change old habits,” he says. Retailers regarded apples as fall and winter produce. Lutz researched and devel- oped data to show them they were leaving dollars on the ta- ble, that if they carried apples longer and offered two sizes of Red Delicious they could gain sales. This was 1993 and 1994. Category management — the collection and analysis of sales data by product category to aid marketing strategy — was used by Chiquita in ba- nanas, Dole in pineapples and Tanimura and Antle in lettuce and vegetables. It wasn’t done with apples. By using data to under- stand what drives sales, a marketer can become more valuable to a retailer and help determine the right mix, shelf space and timing of products. “It was hard for a lot of people in the apple industry to accept that we could know more about the elements that He had “quite a sales job” to convince Apple Commis- sion board members that spending $200,000 on re- search and analytics could be just as valuable as a $2 mil- lion ad buy. Lutz won over a majori- ty of the board and pursued development of category management with the help of Bruce Axtman, a partner in Willard Bishop Consulting of Chicago. However, some in the Washington apple industry to this day view category man- agement as a waste of time, and for them it is, Lutz says, if their business model is selling volume at the lowest price. “That’s a valid model,” he says. At the commission, Lutz was able to convince retail- ers that Red Delicious was king of the apple market and get them to give it prominent display in two sizes, all to the chagrin of Midwest and East- ern competitors. By the late 1990s, over- supply of Red Delicious was causing apple prices to fall. Lutz igured the industry might look for a scapegoat. Several large companies, as they still do today, were holding back inventory to ill the gap between old and new crop, hopefully at good pric- es, but quality suffered. “This was 1997 or 1998. We had a big crop and bad Technology Center, University of California-Davis. http://postharvest. ucdavis.edu/ State University Extension and the Yamhill County Master Gardeners Association. Friday, March 4 Friday, March 18 Genesis of an idea Paciic Northwest Christmas Tree Association 2016 Short Course, 8:30 a.m.-4:10 p.m., Holi- day Inn Portland South, Wilsonville, Ore. http://www.pnwcta.org/ Ag Chemical Collection Event, Redwood Transfer Station, Grants Pass, Ore., 541-690-9983. Pre-reg- istration is required by Feb. 18. www.rogueriverwc.org/ Saturday, March 5 Ag Chemical Collection Event, Rogue Disposal Transfer Station, White City, Ore., 541-690-9983. Pre-registration is required by Feb. 18. www.rogueriverwc.org/ Thursday, March 10 2016 Idaho Nutrient Manage- ment Conference, Best Western Sawtooth Inn, Jerome, 208-736- 3605. Saturday, March 12 Spring into Gardening, Mc- Minnville Community Center, Mc- Minnville, Ore., 503-434-7517. This year’s theme will be Home Landscaping: Small Changes, Big Impact. Presented by Oregon 2016 Oregon FFA State Con- vention, Oregon State University, Corvallis. http://www.oregonffa.com Northwest Horse Fair & Expo 2016, Linn County Fair and Expo Center, Albany, Ore. The largest equine expo in the Northwest will feature fancy dancing horses, strut- ting stallions, clinics by world-class horse trainers and riders, breed and stallion review demos, equine en- tertainment and a trade show. http:// equinepromotions.net/ Saturday, March 19 Women in Agriculture Confer- ence, 8:30 a.m.-3:30 p.m. Paciic time, 31 locations across the re- gion. The 2016 Women in Agricul- ture Conference will offer women in Washington, Idaho, Oregon, Montana and Alaska a unique opportunity to gather in 31 loca- tions for a one-day event featuring knowledgeable speakers, inspir- ing stories, networking with other producers and practical advice for learning new skills. http://wome- ninag.wsu.edu/ 2016 Oregon FFA State Con- vention, Oregon State University, condition. A lot of fruit was going to market that shouldn’t have gone. Apples were soft when they were shipped. They were trying to help growers get paid in the short term. But it kills consumers from com- ing back and hurts everyone in the long run,” Lutz says. Several on the commission asked Lutz to speak out about the need to maintain quality. He did. “Some in the industry didn’t want to hear that and they let me know it, and some didn’t like the advertising we were doing,” he says. The Perishables Group In 2000, Axtman wanted to expand category management and bought part of Willard Bishop from his partners to form The Perishables Group in Chicago, offering market- ing consulting, communi- cations, consumer research and performance analysis. Lutz left the commission and joined Axtman as a part- ner, working out of his East Wenatchee home. Legal woes that would bring down the Apple Com- mission’s large domestic mar- keting program in 2003 were on the horizon as the U.S. Supreme Court was hearing cases on the legality of com- modity commissions. Lutz was accused anon- ymously of violating state ethics by going to work for a company that beneited from Apple Commission contracts. A state ethics board dismissed the complaints because there had been no contract between The Perishables Group and the Apple Commission when Lutz was still at the commis- sion. Lutz agreed not to par- ticipate in new contracts be- tween The Perishables Group and the commission for one year. Seven Washington apple companies hired The Perish- ables Group to continue cat- egory management. Six con- tinue today, after the sale of Perishables Group to the Niel- sen Co. The six are: Stemilt Growers, Columbia Market- ing International and Oneo- nta Starr Ranch Growers, all of Wenatchee, and Sage Fruit Co., First Fruits Marketing of Washington and Rainier Fruit Co., of Yakima and Selah. The Perishables Group ex- panded into other produce and Corvallis. http://www.oregonffa.com Northwest Horse Fair & Expo 2016, Linn County Fair and Expo Center, Albany, Ore. The largest equine expo in the Northwest will feature fancy dancing horses, strut- ting stallions, clinics by world-class horse trainers and riders, breed and stallion review demos, equine en- tertainment and a trade show. http:// equinepromotions.net/ Sunday, March 20 2016 Oregon FFA State Con- vention, Oregon State University, Corvallis. http://www.oregonffa.com Northwest Horse Fair & Expo 2016, Linn County Fair and Expo Center, Albany, Ore. The largest equine expo in the Northwest will feature fancy dancing horses, strut- ting stallions, clinics by world-class horse trainers and riders, breed and stallion review demos, equine en- tertainment and a trade show. http:// equinepromotions.net/ Monday, March 21 2016 Oregon FFA State Con- vention, Oregon State University, Corvallis. http://www.oregonffa.com California Fresh Fruit Associa- tion Annual Meeting, Resort at Peli- can Hill, Newport Coast. http://www. cafreshfruit.org Established 1928 Board of directors Mike Forrester ..........................President Steve Forrester Kathryn Brown Sid Freeman .................. Outside director Mike Omeg .................... Outside director Corporate oficer John Perry Chief operating oficer Born and raised: Wenatchee, Wash. By DAN WHEAT Capital Press eventually into fresh meat, fresh seafood, fresh bakery and all fresh food. Retailers helped drive it. They asked meat, seafood and bakery companies why they weren’t doing it, Lutz says. The company was tracking 2.3 million items in 19,000 grocery stores with a staff of 60 people. Since 2006, the Perishables Group had been getting its raw fresh food data from Nielsen as a byproduct of Nielsen’s data collection for Budweiser and other non- fresh food companies. “We had an elaborate sys- tem. Nielsen had the data but not the software and program for organizing it,” Lutz says. In 2012, Nielsen offered to buy the Perishables Group because retailers, noting more than half their proits come from fresh foods, wanted one source of category manage- ment information. “If Nielsen turned off our faucet, we weren’t viable, so they offered us a fair price and it all made sense,” Lutz says. The company is now Nielsen Perish- able Group and still in Chicago. Greater need Lutz became vice presi- dent of marketing for Colum- bia Marketing International, a major apple marketer in Wenatchee in 2013. As the industry produces a proliferation of new apple va- rieties, category management becomes even more vital, he says. “If three products generate 90 percent of your sales there is only so much you can do with analytics. But 40 variet- ies become more dificult to track. There’s more ways for retailers to get it wrong and leave dollars on the table,” Lutz says. “We’ve seen that with Am- brosia (a McDougall & Sons variety). It’s the 10th-best- selling apple in the U.S, but retailers didn’t know. They had other niches of older va- rieties,” he says. At the industry’s annual meeting in December, Lutz warned that newer varieties will continue to eat into shelf space of older varieties unless retailers are able to increase their income from apple space and then increase that space. That happens, Lutz says, as well-packaged popular newer varieties at higher prices out- sell older varieties. Tuesday, March 22 California Fresh Fruit Associa- tion Annual Meeting, Resort at Peli- can Hill, Newport Coast. http://www. cafreshfruit.org Wednesday, April 6 Idaho FFA State Leadership Conference, College of Southern Idaho, Twin Falls. idahoffa.org/ Thursday, April 7 Idaho FFA State Leadership Conference, College of Southern Idaho, Twin Falls. idahoffa.org/ Capital Press Managers Mike O’Brien .............................Publisher Joe Beach ..................................... Editor Elizabeth Yutzie Sell .... Advertising Director Carl Sampson ................Managing Editor Barbara Nipp ......... Production Manager Samantha McLaren .... Circulation Manager Entire contents copyright © 2016 EO Media Group dba Capital Press An independent newspaper published every Friday. Capital Press (ISSN 0740-3704) is published weekly by EO Media Group, 1400 Broadway St. NE, Salem OR 97301. Periodicals postage paid at Portland, OR, and at additional mailing ofices. 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