Lagging U.S. Apple Category is Ripe with Opportunity

FMCG and Retail | 10-12-2018

Within the U.S., peak apple harvest season begins in August and runs through early spring. While freshly grown apples are readily available year round at grocery stores nationwide, for many, apples are the fruit of fall. Despite seasonal cravings, the apple category as a whole has struggled, contracting by 5% in dollar sales and 8% in unit sales over the latest 52 weeks. In fact, aside from the week ended Sept. 15, 2018, the past month has seen consecutive weekly declines for apples.

This decline in sales aligns with that of other whole fruits that are struggling relative to naturally snack-sized options like mandarins and cherries, a trend we reported in our most recent Total Consumer Report. But despite overall challenges in produce, it’s clear that category performance among various fruits has been a mixed bag. Among the top 20 categories in fruits, 10 have shown growth, while grapes, bananas and apples are among those reporting declines.

Specific to the apple category, there are a number of factors contributing to the slowdown in sales.

APPLE VARIETIES ARE VAST

Nielsen currently tracks 45 different apple types that are available to consumers today, and seven of them generate more than $100 million in sales annually. In the hope of creating the next Honeycrisp, now the highest selling apple type, new varieties enter the market every year. In fact, in just the past two years, the apple varieties offered in stores have increased 11%, as retailers mix staples with seasonal or new options. But with as many as seven different varieties of apples lining shelves on any given week, have stores over-extended apples and created the paradox of choice where consumers are overwhelmed by options and thus choose none of them? Sometimes more does not always equate better.

APPLE PRICES ARE FLAT, BUT HAVE A MORE SUBTLE IMPACT ON SALES

Apple prices within the U.S. have remained relatively stable year-over-year, but two key factors could be contributing to soft sales. The first is the promotional strategy employed for the category. The share of dollars when sold on promotion has increased over the past several years. This could indicate that consumers are either motivated by promotions and willing to switch the variety they buy once in store depending on what’s on sale, or they are trained to only purchase their favorite variety when its on sale.  

A second potential factor in falling apple sales could be attributed to the final price a shopper pays for their apples. While the average price per pound hovers around a manageable $1.65, eating one apple a day could easily mean buying 2.5 pounds each week. But prices vary by variety, and if a shopper’s variety of choice was the Honeycrisp apple, which is currently the most popular variety in the country and sells for an average of $2.85 per pound, the transaction could suddenly cost the shopper between $7-$8 for their apples. Similarly, the effect compounds when purchasing organic apples, which retail for an average of 40% higher price per pound than the conventional variety. Suddenly this makes apples a more expensive fruit option to the shopper.

HEALTHY IS NO LONGER ENOUGH

Even as shoppers increasingly seek nutritional information in their product selections, apples have fallen short. Shoppers’ demands for transparency and guidance in meeting specific dietary concerns have driven some of the recent movement in the produce department from its reliance on loose, bulk produce to more packaged items that can communicate these health concerns. In fact, packaged products now account for the majority of all produce sales. Yet apples have not followed suit—nearly two-thirds of all apple sales are bought by bulk.

But those apple products touting claims have managed to buck the decline of sales experienced by the total category. In the week ended Oct. 6, 2018, apples have seen impressive sales growth where they claim to be organic (+5%), free from genetic modification (+56%), and free from preservatives (+71%). While a shift to packaged may not be the answer as people still like to choose the amount right for their household and hand-select the quality of apples, increasing signage and education around the health benefits of apples could go a long way to reinvigorating the category.  

Some insights from this article were fueled by Nielsen Friday morning data delivery, the earliest FMCG market read available.  Learn more about Friday morning data delivery.

*Friday morning data represents all Nielsen-measured channels excluding convenience.

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