Login

The apple of our eyes

Go into just about any supermarket right now and what do you see? Bins and bins of gorgeous red, green and golden apples. The harvest is overwhelming, but some apples are worth more than others.

If you are like me, an average consumer, it takes about 23 minutes to do your grocery shopping, according to Proctor and Gamble. During that space of time, I buy an average of 18 items out of maybe 40,000 choices.  I have little time to browse and, most of the time, I don’t even check the prices, which brings me back to the apple cart.

You see, I value my fruits and vegetables. The more local, the better, because to me, the taste is everything. Until recently, I was partial to certain kinds of apples depending on whether I was baking, cooking or just chomping down on one freshly picked from a local orchard. That’s until I encountered the Honeycrisp. 

If you have sampled one, you know what I mean. They are everything an apple should be: crisp, with an electrifying mix of acidity and tangy sweetness. It is an apple worth buying, even if the price is two or three times the cost of the next best thing. 

Why is the Honeycrisp worth so much more than the Fuji or Gala? Is the taste really that different, or is it all a clever marketing gimmick? First, let’s look at the apple business in general.

This year the industry expects a nationwide apple crop of 256.2 million, 42-pound bushels of apples. That is about 6 percent lower than last year’s crop. Washington state accounts for about 61 percent of that total. The Midwest produces 31 million bushels. The harvest there, thanks to better weather, is up 35 percent from last year. The East Coast will be about flat from last year, totaling 58.4 million bushels.

 

In this era of changing consumer tastes, foreign competition (think tangerines and kiwis), and the overwhelming dominance of a handful of supermarket chains, in order to survive in the apple business, you need to be close to the ground and light on your feet when it comes to consumer preferences. There was a great article in Bloomberg Nov. 12 that illustrates the need to be all the above. Evidently, my preference for the Honeycrisp is shared. It is taking the nation by storm.

The origins of this apple would, on the surface, contradict everything an apple farmer might have learned about America’s modern commercial environment. The Honeycrisp was never bred to be grown, stored or shipped. It takes much more pruning than its lesser brethren so that the apples on the lower branches receive enough sunlight. It is also lacking calcium, so needs to be sprayed with a supplement. While most apples can go from the tree right into the refrigerator, Honeycrisps need 5 to 10 days to get acclimated at a mild temperature before they can be stored. Birds love them, so they need protective fencing and nets. They are so thin-skinned that the stems need to be clipped off lest they bruise the adjacent fruit.  

 

And yet, production has doubled in the last four years. It now ranks as the fifth most popular apple grown, according to the U.S. Apple Association. Even so, the demand for the Honeycrisp outstrips supply by a mile. As such, those growers who have moderate weather and huge operations, like California and parts of Washington, have benefited at the expense of the Northeast where orchards are smaller, and weather is “iffy.”

But don’t think that the farmer’s bottom line has exploded as a result of the Honeycrisp. For most producers, the higher price somewhat offsets the additional cost of growing and transporting these apples. However, in the end, it is the large supermarket chains that will dictate how much they will buy and sell and at what prices. 

Bottom line: We are light years beyond Adam and Eve when it comes to the apple and everyone is on the lookout for the next Honeycrisp, me included.

 

Bill Schmick is registered as an investment advisor representative with Berkshire Money Management. Schmick’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Email him at wschmick@berkshiremm.com.