Apples

Apples Global Market Outlook:

• Global apple production is estimated to reach 78.76 MMT during the 2022/23 season, supported by favorable production prospects in major growing regions, like the EU, India, US, Turkey, etc.

• Pandemic-boosted consumer purchase of fresh fruits and juices for shelf stable foods and growing awareness for healthy diets support demand growth in 2023.

• Consumption of fresh fruits, on the whole, is displaying an increasing trend. This is likely to increase in the upcoming years.

Apples Demand Market Outlook

• Apples are a common fruit that are consumed in households all across the world. However, this year's growing season has been impacted by unusual weather in many production areas. The season advanced by more than a week in the UK due to the recent warm weather for some kinds, but production fell in France and Italy as a result of the same heat. Losses were also a result of the springtime frost in Serbia and Spain. In North America, similar conditions resulted in fruits of different maturities on the same tree, making harvesting more difficult than usual.

Apples: Global Supply–Demand Analysis

• The global production of apples is estimated to register at a CAGR of 4 percent over 2022–2027. Increased consumer awareness of healthy food and change in consumption habits are driving the global fresh apple market. Some of the key factors contributing to rising consumption is the easy availability of the fruit and multiple health benefits offered.

• WAPA disclosed that as of 1 January 2023, European apple stocks were 4,051,645 T, down 6 percent from 2022. The following varieties had the greatest losses: Golden Delicious dropped by 20.1 percent, Idared by 19.2 percent, Jonagold by 23.3 percent, Gala by 15.5 percent, and Fuji by 7.5 percent

• Apple supplies and consumption from New York state are still consistent. In terms of difficulties this season, the recent winter storm that blanketed areas of the Northeast temporarily slowed apple movement, but apples rapidly resumed their usual pattern. Everyone in the industry has been hit by inflation. To compensate the costs of producing high-quality apples, prices must increase

• Heavy hail struck fields during early February. Farms along the Negro River's coast were later impacted by the storm as it proceeded to the south. 2,700 hectares of pear and apple crops were harmed. Although experts said it was too early to evaluate the damage, they insisted that it would have a major impact

• Himachal apple growers are concerned about the reduction of nearly 100 percent in funding for the Market Intervention Scheme (MIS) in India’s federal budget. Government firms HPMC and Himfed buy practically all of the "C" grade apple stock from growers under this scheme, hence the MIS is essential for apple farmers

Cost Structure Analysis: Apples

• Harvesting cost, one of the large cost contributors, is driven by labor rates. Labor rates are on a rise in Poland and are expected to affect the production cost of apples in the upcoming years

• The surging fertilizer costs, due to supply shortage, and higher transportation charges, due to the rising fuel prices, the Russia–Ukraine war are the chief cost increasing parameters in the coming year

Porter's Analysis on Apples

Supplier Power

• Large fruit processors engage in contract farming and ensure a steady supply

• Premiums/discounts are set based on the yield rates

• Farmers have an upper hand in negotiations with smaller processors

• These small processors are prone to high price fluctuation risk

Barriers to New Entrants

• High initial capital investment for processing facilities with large production capacities

• Fluctuating margins, due to dependency on weather conditions

• Higher cost of raw materials compared to competing larger companies

Intensity of Rivalry

• High competition prevails among a few established players in the developed markets

• Presence of large number of small-scale players in the developing countries dilutes the intensity of rivalry

• Cost of production largely depends on raw material prices and large processors minimize price fluctuation through contract farming

Threat of Substitutes

• Processed fruits do not face any threat from substitutes

• Fruit varieties could be substituted by each other based on cost and preferences

Buyer Power

• Processed fruits are generally procured in the form of concentrates, juices, cuts, fillings, purees, etc.

• Raw fruit cost is responsible for 70–75 percent of production cost and determine the prices of processed products

• Category managers keep a track of raw fruit industry in the growing regions

• Buyers hold a moderate bargaining power with processors