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SPEAKERS
GRUPO RIVOIRA Marco Rivoira, CEO
THE EUROPEAN APPLE DECIDES ITS FUTURE Our job, on many occasions, is to learn more about the reality of the sector by interviewing its managers and area managers individually or by sector, however, on this occasion we have achieved something extraordinary, bringing together its European leaders to discuss how to build the future of the sector. Where the companies, competitors but necessarily collaborators, must go to increase apple consumption in Europe, their greatest challenge. FERNANDO PEREA
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VIP VAL VENOSTA Kurt Ratschiller, Commercial Director MELINDA Andrea Fedrizzi, Marketing Director BLUE WHALE Christelle Bertin, Marketing Director VOG Hannes Tauber, Marketing Director PINK LADY Thierry Mellenotte, Managing Director MODERADOR Fernando Perea revista Mercados
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HANNES TAUBER “The sector has a common objective which is to create demand, for which we must initiate a deep dialogue with consumers and understand what they want” ---------------------“Where does the consumer spend their budget? I want them to make it in apples, whether it is Marlene or Pink Lady is secondary, the objective is for them to buy apples and not other products" ---------------------“The sector has made some mistakes in the past when trying to innovate or improve that have not provided value to the consumer.”
Mercados magazine wanted to organize this round table discussion to delve into the marketing and communication of the apple sector in Europe and to unveil the strategy of a leading consumer sector. After several turbulent years, the apple sector is threatened by a general decline in consumption. We begin by delving into the concept of added value in apples, avoiding commoditization and the importance of placing the consumer at the centre of the board. ADDED VALUE AND THE CONSUMER
"The apple knew how to make the transition from a bulk and commodity product to a differentiated product with a value to bring to the consumer", this is how Marco Rivoira, CEO of Grupo Rivoira, began his speech, to exemplify with Ambrosia how this apple has managed to achieve this positioning. To do this, "my idea is to make it easy for the consumer", Rivoira explained, "by offering a product with a constant and similar flavour throughout the campaign", to build consumer loyalty, something that has positioned it among the leaders in the sweet apple segment.
don't change this we will have to close our businesses in the long run, the key now is to listen to the market and offer what it demands", argues Andrea Fedrizzi, Marketing Director at Melinda.
Following Fedrizzi, Kurt Ratschiller, Commercial Director of VIP Val Venosta, agrees that consumer orientation is a very crucial point, but they cannot forget that they are farmer-owned companies, coopFollowing this eratives, so they line, Thierry should not leave Mellenotte, their position in manager of Pink the background. Lady, added that "We all blame "we need to be ourselves bemore focused on THE APPLE HAS A cause apple conthe consumer". MARKET PENETRATION sumption is going And he wonders OF MORE THAN 90%, down, but we if what they need to innovate, are doing is reEVERYONE CAN EAT IT come up with sponding to what new ideas, new the consumer concepts to moexpects from tivate tomorrow's consumers, we can't exthem. From his experience with Pink Lady, pect consumers 50 years from now to still he points out that not only is a matter of be eating apples from 50 years ago", adds perfect product, but consistency, added Ratschiller, who also considers it necessary value and brand development in a territory to explain it to farmers because, in addition are necessary. All of this, again, focused on to selling production, we must make them the consumer. understand the changes in the market. There is no doubt that the consumer is the But how do you create demand? Hannes driving force, but companies are realizing Tauber, Head of Marketing at VOG, believes that they cannot act as they did years ago, that the industry has a common goal, focusing only on doing everything possiwhich is to create demand. To do this, it is ble to sell what farmers produce. "If we
necessary to initiate an in-depth dialogue with consumers and understand what they want, in order to foster an apple culture. One of the biggest challenges faced by apple companies is to explain to the consumer the brand they offer, with which they want to respond to their expectations, but at the same time there is a producer who does not mass produce a standardised commodity, but the climate makes it different every year. "And this is where I think that, for example, Pink Lady opens our eyes on how this communication can work or make it simple like Ambrosia in the sweet segment". Tauber exemplifies this necessary apple culture with the case of the consumer who has 50 euros to spend for his food shopping. "Where do they spend it? I want to encourage them to spend it on apples, whether it's Marlene or Pink Lady is secondary, the goal is to get them to rather buy apples and not other products outside of fruit and vegetable category", he explains. To put this in perspective, it was interesting to have a profile like that of Christelle Bertin, Marketing Director at Blue Whale, who comes from the FMCG (fast-moving consumer goods) retail sector. After a year and a half in the apple world, Bertin agrees with her colleagues, but adds to this value proposition something as obvious as it is necessary: ensure both the apple category profitability of the distribution, that may encourage the customers to develop apMERCADOS Diciembre 2023
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THIERRY MELLENOTTE “We need to be more focused on the consumer” ---------------------“Not only is a perfect product enough, but consistency, added value and brand development are necessary” ---------------------“It has been several years since we increased our apple product category, when innovation occurs it increases the supply, but not the category, we are not managing to create demand”
ples shelves space, as well as the level of consumption of the products . Creating a stronger consumer demand is the big challenge we have to face with in our industry. COMPETITORS
Perhaps another of the keys is that the sector has sought to differentiate itself from other apples, but the question is that its real competitors always have the same flavour, yogurts, are recipes that will always have the same consumer response, because they know that it will not change. Therefore, another conclusion that the industry has come to is to be aware of who it is competing against and how to ensure that continuity of taste to the consumer.
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However, the sector has a strength against its competitors and it is something that must be valued, the apple has a market penetration of more than 90%, at any age, without any limitation, anyone can eat apples. This, compared to other products, is a comparative and quantitative advantage that must be made effective. That is why the youngest should be a priority, in fact, half of apple consumers are over 50 years old, which is a challenge for the future. All agree that a more collaborative, more synergistic sector will produce better results and cope with crises in a stronger way.
sumer's needs? Perhaps they want a blue apple or maybe one that tastes like a tangerine. These are exaggerated examples, but they lead to bringing something new to the category, to know how to expand it through innovation. In this sense, Marco Rivoira (Rivoira Group) is more categorical, "we have to be honest with the consumer, 70% of what we sell as a sector is not competitive, this is the reality". Rivoira points out that it is not easy, that there are too many new selections and only some of them are really amazing. "Today everyone wants to create Pink Lady, but that is impossible". That's why Rivoira is once again focusing on the consumer as the industry's strategy for the future, to "re-appropriate" the lost consumer.
"Personally, I still see a huge potential in the description of flavour", remarks Kurt Ratschiller (VIP Val Venosta), who assumes that they have concentrated too much on the aesthetic issues of the apple and "we have forgotten about the flavour and what is happening now in the market." Ratschiller gives as an example the wine industry, which has been CONSUMPTION able to revalue AND PRODUCT the category with WE MUST FOCUS ON As several of varieties and THE CONSUMER AS A the speakers singularities that FUTURE STRATEGY, explained, give it a unique the decline in flavour and RECOVER THE “LOST consumption create a culture CLIENT is obvious and around it. This is worrying for a necessity and all of them. To an effort for the reverse this situation, Therry Mellenotte apple sector if it wants consumers to value (Pink Lady) presented an approach and its product. "And following on from what self-criticism, seeing how the product Hannes commented, the consumer will category and its penetration in the marunderstand that this year's apple has a difkets is decreasing, however, "we have not ferent particularity, because of the climate, increased our apple product category for than last year's." several years, if you innovate, normaly the category increase, but at the end that’s It is interesting to know the consumption not the case, we are not managing to details that Christelle Bertin (Blue Whale), create demand". Mellenotte added that, who after landing in the sector, conducted talking about Scandinavian market for exresearch on French consumers. She estabample, do we really understand the conlished five reasons for the erosion in apple
consumption. But she highlights the three most relevant ones, the first one is that we observe an accelerated competition in consumers mind with new tasty, fun and convenient options for healthy snacking, dessert, recipes .... This new competion is running mainly digital sales and marketing campaigns, and caught young generation attention very much. Number two is "disappointments" : consumers complaints about some old varieties to be not as good as they expected, which leads them to quit the apple category . And the third one is the banalisation of shelves, in comparison to what they are used to see or experienced in other categories (healthy snacking bars, yogurts etc) ... However, in fruits and vegetables the shopping experience could probably be rejuvenated with the fresh eyes of consumers insights, in order to grow the business again. This consumer demand erosion is Europe-wise: The number of dessert occasions is drastically decreasing. This means that dessert is disappearing from the European table and therefore apples are disappearing from desserts and are
CHRISTELLE BERTIN "Apple category is a "sleeping Beauty “ : even if we observe an eroding demand in european countries , consumer researches show that driving the demand back is possible " ---------------------"Consumers are attracted by some indirect competition (healthy snacking bars...) : sharing the reason why this situation with our retailers helps to create appropriate solutions with the whole chain
not being enough recovered with snacks or breakfasts. So there is also something to do with the new way of life and how you
eat or have the category in mind. "The solution to grow again is to understand and transparently share the consumers
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KEYS AND CHALLENGES OF THE EUROPEAN APPLE SECTOR
MARCO RIVOIRA “The apple knew how to make the transition from a bulk and commodity product to a differentiated product with value to bring to the consumer” ---------------------“My business idea is to make it easy for the consumer by offering a product with a constant and similar flavor throughout the campaign” ---------------------“We have to be honest with the consumer, 70% of what we sell as a sector is not competitive, this is the reality”
• Consumer research: the need to understand consumer expectations and preferences is essential, especially in an industry where product differentiation can be a challenge. Understanding and meeting consumer demands is key to success in the apple industry. • Consumer orientation versus product orientation: the struggle between meeting farmers' expectations and being consumer-oriented. While farmers can expect to sell everything they produce, it is necessary to respond to market demands. • Profitability: the importance of profitability for retailers as a motivating factor to invest in the category. The profitability of apples not only benefits producers, but also encourages retailers to actively participate. • The role of collaboration: The importance of open discussions and collaborations within the industry. Collective work towards a common goal, increasing demand, has a significant impact on the market. • The brand: The complexity of the brand in the fruit and vegetable industry, especially given the natural variations (due to climate or season) of the fruit. Branding should aim to create coherence and meet consumer expectations. • Innovation and category expansion: The sector challenges itself to think innovatively, suggesting that innovation should aim to expand the category rather than simply taking market share from existing brands. It exposes the need for innovative ideas in apple production. • Demand creation: the main objective of the sector, to increase the demand for apples. This involves innovating and introducing new concepts to motivate consumers to choose apples over other options. • Decrease in consumption: The board expresses concern about the decrease in apple consumption over the years and the need to reverse this trend. They note that, ideally, the launch of new apple varieties should lead to an increase in the overall category.
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reason why this situation with retailers and partners , so that it helps to create the appropriate solutions with the whole chain" Bertin concludes. The industry recognizes that it needs to do its homework in the field to bring a good-tasting apple to market. "Because we don't have too many apples, we have too many bad apples," agree several speakers.
So the question is, how do you create that value, "Apple is probably the cheapest dessert, if we can get a good tasting apple to the consumer and they are satisfied with what they are getting", he points out that is probably the best consumption moment you can create. So they advocate, of course, innovation at the product level, but there must also be innovation at the communication level.
Tauber reflects in that sense on the cauWhat is the key to understanding the tion when launching new products to the current apple situation? It is commonly market and have a different, more profesagreed that the sional approach, quality and taste because often of the product new products are is the best presented that marketing, the are not innovafoundation. One tion. "It's just an of its successes FOR A TIME, THE SECTOR improvement of was the quality something exFOCUSED ON VISUAL and consistency isting and that's ISSUES, FORGETTING of the product. not innovation, But why is apple iPhone was an THE TASTE losing consuminnovation in ers? Hannes mobile, but today Tauber (VOG) is every iPhone that clear: "We need to invest in order to atcomes out is not innovation, it's just an tract new consumers, to get young people improvement of something existing". He interested in apples. To this end, he asks acknowledges that the industry has made what is the best communication, "without some mistakes in the past in trying to innoa doubt, it is the one that adds value to the vate or bring improvements that have not consumer". Consistency in communicadelivered value to the consumer. tion, as an industry the sector is creating communication and content strategies in This led the sector to focus on retail with all directions, targeting the consumer from strong marketing with respect to color all angles at different levels with content. and an attractive image, demanding that MARKETING
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ANDREA FEDRIZZI “If we do not change the mentality of 'only' selling we will, in the long term, have to close our companies, the key now is to listen to the market and offer what it demands” ---------------------“Younger consumers don't even think about buying an apple, an apple is a basic product, let's put it on the table” ---------------------“Personally I see enormous potential still in development and communication of flavor”
producers take care of these characteristics so that distribution chains would buy their products. And taste shifted priorities. But what makes a consumer repeat a purchase, image or taste? the round table asked rhetorically. A general feeling is that all reps are in the same situation, everyone has a story to tell, but the key and perhaps the long-term path is segmentation. By category at the moment, we're all doing individually. And I think we need to align. FLAVOUR VS. RED DELICIOUS
"We have stopped working Red Delicious", with this unexpected phrase we opened one of the cases that highlights the current reality of the sector. As another representative confirmed to us, the situation of this variety is both generalized and surprising, since it is still one of the most famous and well-known apples in the world, photographed and filmed in all markets, but all agree that it lacks the flavour to gain a foothold in the market. The industry recognizes that, for a while, they have been concentrating too much on the aesthetic issues of the apple and we have forgotten about the flavor and what is happening now is a consequence of that. All of our speakers offer varieties that are focused on flavour, varieties with which to build consumer loyalty and, therefore, offer profitability to the consumer.
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SEGMENTATION
Market segmentation is a marketing strategy that consists of dividing the consumers of a product into groups with similar characteristics, in order to match the supply of apples with a corresponding demand. The sector has been working on it for years, although perhaps today this communication needs to be improved. With this segmentation, it is easier to direct branding, sales and monitoring efforts in a concrete way. Throughout the round table, we have mentioned the need to focus on a young
consumer, with the language of young people, and this is still not being achieved. Some speakers return to the flavour bet, but how to unlock this flavour potential as Andrea commented: "Younger consumers don't even think about buying an apple, an apple is a basic product, let's put it on the table", it was pointed out from the debate. For the industry it is not a commodity, but for many consumers it is a commodity. So the question is, how to 'de-commoditize' the apple? There are some examples in the industry, but the sector points to how to unlock the potential by making it attractive to the consumer and compete on the shelves. "Competition is not here at the round table, maybe in the short term, yes, but in the long term you have to think broad spectrum together to be able to deal with external threats", Hannes pointed out. Another example was provided by the table about the need for varietal improvement and segmentation, "the difference between a good kiwi and a bad kiwi is that the bad one goes to the trash, a bad apple is still edible, but it causes bad experiences in the consumer". Following on from this, Thierry stressed that there is one point to highlight within segmentation and that is the number of references in the assortment. "My opinion is that we have too many apples and too many unbranded apples". He relates that,
if in one segment you have three or four references of bicolors for example, with no real Unique Selling Point (USP), the consumer will not see any difference, will be confused and it won't be efficient to sell there. "We all need to think together about what kind of role we can play in the evolution of category management". It has been commented that there are a lot of uncompetitive references, but how should we reduce the references without losing the same space, which gives more space to the right reference, good expectations for the consumer, good for profitability, for the retailer, increases the category and simply brings value back to the apple? Questions to be resolved for a sector that has a lot of work ahead, but counts on the strength, knowledge and experience of its managers, who, aware of the reality of the apple, have provided light and a path to a challenging and optimistic future.
KURT RATSCHILLER “We all blame ourselves because apple consumption is going down, but we need to innovate, propose new ideas, new concepts to motivate the consumers of tomorrow” ---------------------“We cannot expect consumers 50 years from now to continue eating apples from 50 years ago”
The round table concluded with a generalized reflection on the sector's willingness to sit down together, capable of finding a common formula on how to increase demand under a joint umbrella and take a first step towards not seeing the apple simply as a
product that competes with other apples, but as something with which they can join forces and find a line of communication to explain to the consumer that apples are interesting, that they have a world to tell and that all together they can bring it to this point.
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