Building a custom program for each of
the top 50 retailers in the United States and
Canada is the promotional path the California
Tree Fruit Agreement is taking this year.
Dave Parker, CTFA’s longtime manager in
charge of the promotion and merchandising
efforts, said the 2003 program is designed to
build on the success experienced in 2002. “Last
year we limited our focus to the top 50 chains
and asked each of them to give us two extra
ads.”
The idea was so successful that on average
those 50 retail chains, which represent
about 88 percent of the supermarkets in the
United States and Canada, gave California summer
fruits eight additional ads during the season.
Parker said CTFA did an extensive study
on the advertising efforts of those 50 retail operations
and this year is working with each one
on a customized program. For some retailers
that may mean asking for more ads because
they underperformed; for others it might mean
working with them to enlarge space allocation.
Parker explained that some retailers are
doing as much as they can in ad allocation but
their space allocation may be below average.
He said that last year CTFA closely analyzed 300
stores across the United States and Canada, including
at least three stores from each of those
top 50 chains. “We discovered that in July and
August, for example, average space allocation
is 5.6 percent of the department. If a particular
chain only averages 4.8 percent during that time
period, our incentive program this year will be
tied to increasing that space allocation.”
California
Summer Fruit
Size of the Crop:
• California Plums — 15 million packages
• California Peaches — 21.3 million packages
• California Nectarines — 22 million packages
Peach and nectarine volume is down a bit from last
year, while plum shipments should be up a bit.
Crop Timing:
Timing was early but a cool spring has put the pace at
very similar to 2002
Varietal Changes:
The increasingly popular Summerwhite nectarines and
Summerwhite peach varieties will represent about 22
percent of the crop, similar to last season.
Interesting Facts:
Pluots, a cross between a plum and an apricot, can be
marketed as a plum in 2003 and there is expected to
be about a half a million packages.
Merchandising Tip #1:
The average retailer allocates 5.6 percent of space in
the produce department to the summer fruits in July
and August.
Merchandising Tip #2:
Like other crops, the tree fruit season is being extended
with later producing varieties. There are still lots of
promotional opportunities even when summer is
getting long in the tooth and fall approaches.
|
The CTFA executive said another chain
might receive their incentive package for time
period improvement for their promotions and
advertising. Parker explained that the season
has expanded with a good deal of increased
volume in September. Some retailers tend to
think of California tree fruit as a summer item
and cut their promotions back once school begins.
For a retailer such as this, their incentive
package will be tied to an increase in September
ad placements.
Parker said the CTFA program is fairly
straightforward — “We want retailers to give us
what they gave us last year, plus something extra.”
The bulk of the CTFA effort is limited to
the top 50 chains because he said that represents
the bulk of the sales and lets the CTFA
merchandisers target their efforts. “We don’t
feel like we are ignoring people,” he said. “We
do have the ability to add to this list if a chain
that doesn’t fall into the top 50 happens to do
a great job selling California tree fruit.”
As a way of quantifying the top 50, Parker
said the list includes basically any chain in North
America selling at least two million pounds of
California stone fruit during the season.
“We are not totally ignoring the other
chains,” he said. “We are offering them the information
that we have developed that shows
how to improve your sales. More promotions,
more combo ads and more space will yield more
sales.”
But Parker said these second tier retailers
will not be receiving personal calls from merchandisers
simply because the merchandisers
don’t have time to call on everyone.
Of course the goal of the CTFA promotions
is to increase demand and ultimately increase
the f.o.b. price to the growers funding
the program. Parker said pricing is always a
difficult gauge because the price on any given
day is dependent on many factors. A particular
shipper, for example, long on product, can
cause the market to fall even if demand is increasing.
He said it is virtually impossible to
measure the effect the CTFA promotions have
on the f.o.b. price. “We can’t measure that.
We do know that if you increase the ad counts,
you increase the volume and it should follow
that if you increase the demand, the price
should go up. We do know that last year the
(f.o.b.) price of peaches strengthened throughout
the season. Nectarines had a more difficult
time.”
In these days of market order and commission
challenges, the CTFA has not been immune
even though it received a favorable Supreme
Court ruling a number of years ago that
declared it legal. In fact, the California tree fruit
industry is the standard by which courts all over
the land are judging the constitutionality of
other commissions. In that ruling, the Supreme
Court ruled that mandatory assessments for the
purpose of advertising California tree fruit were
legal as the advertising was one segment of a
broad regulatory scheme that was self imposed
by the industry. The CTFA, however, is being
challenged once again as one San Joaquin Valley
grower does not believe it meets the standard
of a broad regulatory scheme anymore.
In addition, a paltry 14 percent of growers
voted in the last continuation referendum
held this spring. Of that number, 60 percent
approved continuation. This was less than the
66 percent that would have led to automatic
continuation but more than the less than 50
percent that could have led to automatic termination.
Consequently, the USDA scheduled a
“listening session” for late May to judge the
mood of the industry. CTFA and the growers
know the program will remain operational in
its present form through the 2003 season.
However, the listening session could result in a
variety of actions from termination to continuation
to changes or even to another vote. The
USDA needs to determine what the apathetic
voter turnout meant.
| 