Image provided by: University of Oregon Libraries; Eugene, OR
About Capital press. (Salem, OR) 19??-current | View Entire Issue (Dec. 28, 2018)
Friday, December 28, 2018 CapitalPress.com 9 Views differ on promoting Cosmic Crisp By DAN WHEAT Capital Press A year from now Wash- ington State University’s new Cosmic Crisp apple will be in the marketplace and “if consumers love it all will be well” and if not “this could all be a disaster,” says Desmond O’Rourke, retired WSU agricultural economist and apple market analyst. The new apple, touted as the best yet by promoters, will enter a crowded market of more than half a dozen big-volume, main varieties from Washington and some 36 small-volume proprietary varieties, also called club or managed varieties. A lot of newer variet- ies as well as Cosmic Crisp have Honeycrisp as one of their parents, thus compet- ing with similar character- istics such as flavor. Cosmic Crisp rated excellent in con- sumer taste tests in the Seat- tle area. That’s not represen- tative of the U.S. market, O’Rourke said. Retail volume will quickly accelerate from just under 200,000, 40-pound boxes of apples in 2019 to 2.2 million for 2020, 6.2 million in 2021 and to 22 million by 2026, accord- ing to Proprietary Variety Managment, a Yakima com- pany hired by WSU to man- age commercialization of Cosmic Crisp. Lynnell Brandt, PVM president, says Cosmic Crisp can be priced high because it’s an “extremely high-quality apple.” But O’Rourke says he doesn’t see how “you can put 6.2 million boxes on a crowded market and get a big premium.” In a panel discussion at the Washington State Tree Fruit Association annual meeting the first week of December, Brian Focht, manager of the Washing- ton Apple Marketing Asso- ciation, said Cosmic Crisp Dan Wheat/Capital Press Washington’s Cosmic Crisp apple. needs to start at a reasonable price. “A lot of retailers are see- ing price deflation on Hon- eycrisp and want to see an apple back at a higher level. I would not advise that. Too high a price will be tougher to launch. This is really an important launch so you need a reasonable price the first couple years and drive demand from the back side,” Focht said. Asked later about that, Brandt said Honeycrisp proved that wrong. “We are in a very much marketing promotional game as opposed to a sales game. Once you have a low price, it is harder to build up a higher price,” Brandt said. “We think there is demand for a good quality apple that eats well. We’ve seen that by Honeycrisp. We have a brand promise of an extremely high quality apple with a high shelf life and is worth a lot more.” O’Rourke agreed with Focht and said Honeycrisp, Pink Lady and other vari- eties started at reasonable prices and moved up in price as demand grew. “You have the same thing at the start of every sales season,” O’Rourke said. “If you price too high, move- ment slows and you get a glut. It happened in 2008. If you price too low you’re giving money away. So it’s a fine line to hit the right price at the start of a season, and for a new variety it’s even trickier.” Previously, Robert Ker- shaw, president of Domex Superfresh Growers, of Yakima, expressed opti- mism about Cosmic Crisp while calling it a $500 mil- lion gamble. Brandt said he conserva- tively estimates the indus- try is investing $537 mil- lion in planting 11,940 acres at $45,000 per acre and that he’s been told $55,000 to 49-4-3/HOU $60,000 per acre is a truer cost. O’Rourke is also critical of the management model. Cosmic Crisp can be grown, packed and sold by any Washington companies under license from PVM. That’s more open than pro- prietary varieties that are grown, packed and sold exclusively by one company. The Washington Tree Fruit Research Commission wanted Cosmic Crisp avail- able to all growers and pack- ers because grower money supported its breeding. After an initial five- year, $10.5 million promo- tional push by WSU and PVM, Cosmic Crisp promo- tions will be up to individual companies. O’Rourke foresees large companies undercutting each other in price to steal each other’s customers. “They didn’t think this whole thing through. Mak- ing it available to anybody to grow, pack and market was a mistake because no single large company has a unique interest in seeing its success. The whole modus operandi of new varieties is to get a strong sponsor to push it as a top priority,” O’Rourke said. WSU would have done better, he said, to auction Cosmic Crisp rights to the highest bidder to have one strong sponsor. But Brandt said the defin- ing advantage of Cosmic Crisp will be critical mass. That unlike proprietary vari- eties it will have enough vol- ume for year-round market presence and that taste and quality will drive demand. “It’s a unique model that has never been tried before and it will work,” he said. The model incentiv- izes everyone to work for the best returns for growers and all stakeholders and the companies will collectively spend much more in promo- tions than the initial $10.5 million by WSU and PVM once it is done, he said. Promotions will dwarf those of competing varieties and Cosmic Crisp will make a bigger market impact than any competitor, he said. “There is always a risk to anything you do in agri- culture, but we have an extremely good product. We believe in it. We have a good program and will have criti- cal mass and an industry that does this routinely,” Brandt said. “The industry needs a new flagship and this does that. We are striving to make a global brand and are in the best position to capture that with the product we have and the plan we have.” WSU and PVM, on a 70-30 split, plan to provide the initial, five-year promo- tion budget of $10.5 million from royalties received from sales of trees and fruit. A $1 royalty per tree sold is split 65 percent to WSU and 35 percent to PVM and Northwest Nurs- ery Improvement Institute. A 4.75 percent royalty is collected on every box of apples sold at $20 or more with 75 percent to WSU and 25 percent to PVM. At the WSTFA annual meeting, several grow- ers asked if royalties could be lowered. Scot Hulbert, an interim associate dean at WSU, said he didn’t think so. Brandt said they shouldn’t be and are com- petitive with royalties own- ers of proprietary varieties receive. Growers also asked about access to PVM’s market- ing plan. Brandt said details cannot be made public with- out giving competitors too much information. Later, he said he’s care- ful about how much infor- mation he shares even with Washington companies on an advisory committee, that they have signed confidenti- ality agreements and that it is in their interests to market Cosmic Crisp as well as they do other varieties. On Nov. 9, PVM won a temporary restraining order in Whitman County Supe- rior Court preventing WSU from releasing details of its marketing plan to a free- lance journalist. A court hearing is set for Jan. 16 to consider an injunction to the same effect. WSU Board of Regents has postponed funding Cos- mic Crisp promotions pend- ing the outcome of the case. 52-2/100
