March 1998

The study primarily reports on the market for applesauce in New England. In obtaining this information, the supply and demand factors influencing apples and apple sauce markets generally are investigated. Other market opportunities for fresh and processed apples that arouse as a result of the primary investigation are also discussed.

World production of fresh apples in 1997 was identified as 53 million tonnes. Growth has been slow or static in most areas of the world, except for China which now produces 30% of the world's apples, up from 10% in 1990. US production was 4.8 million tonnes in 1997, close to its 5-year average. Canada and Nova Scotia's 5-year average (1992-96) was 545,000 tonnes and 52,600 tonnes, respectively.

Based on the available information, it was estimated that approximately 10% of national fresh apple harvest is processed into apple sauce. (This percentage varies from region to region and year to year. Canada also generally processed 5% to 10 % more of its crop than the US.) On this basis, the US processes about 500,000 tonnes of apples into apple sauce resulting in about 325,000 tonnes per year. On a per capita basis, New England, with 5% of the US population, would consumer about 16, 250 tonnes of this per year (assuming imports and export are balanced and per capita consumption is the same in all regions.) Adjusted for USDA reported per capita consumption of 2 pounds, it was estimated that New England consumes approximately 14,000 tonnes per year, or the equivalent of 1.65 million cases of 25-ounce apple sauce.

The study determined that store brand (private label) apple sauce is sold almost like a commodity and the price that supermarkets were willing to pay all across the board was $US 7.20 per case. Hence, a favourable exchange rate is not enough to compensate a small Canadian processor which is not operation to the same economies of scale as larger producers. The study reported on the viability of marketing a branded apple sauce. The analysis suggests that if it is not too expensive to establish shelf space, this option could work quite well. A strategy to conduct a cost-effective trial is proposed.

Other Opportunities which were discussed, or evaluated, (depending on the available information) include:

1. an advertising campaign for local markets (tailored to a public-opinion survey and stressing the health benefits of apple and apple sauce consumption)
2. "pouching" apple sauce for local markets
3. apple slush
4. marketing fresh and processed apples to South America
5. apple pectin production
6. organic apple production/organic apple sauce
7. dried apple production