VOG Consortium betting on quality for late European apple season
In this article, read the exclusive interview conducted by Sarah Ilyas with the Marketing Manager of VOG Consortium, Hannes Tauber.
Q: Can you tell me a little bit about VOG Consortium?
VOG was founded in 1945 and it's a consortium reuniting more than 4600 apple growers, and small family farms with approximately two to two and a half hectares on average, which amounts to approximately ten and a half thousand hectares, which makes VOG the largest apple producer and the largest apple organization on the European level.
We have one organic packhouse and we have around eleven cooperatives that produce or work on apples for integrated production. So around 10% of our surface is organic apple production and 90% is integrated production, which is a sustainable way of producing apples.
We are producing around 500-550,000 tons of apples a year, which is an equivalent of 25,000 containers a year or 3 billion apples that are picked every year by hand. We are located in northern Italy, at the border with Switzerland and Austria. The region is called South Tyrol and it's the region where apples have been produced for a long time. The entire region accounts for around 50% of Italian apple production.
Q: How many countries do you export to?
We export to 75 countries worldwide. Approximately one-third of our produce goes to Italy and the rest goes to Europe, the Middle East, Southeast Asia, Central America, and South America.
Q: What are your main apple varieties?
Our growing areas have a characteristic alpine Mediterranean climate which is ideal for growing apples at altitudes that go from 200 to 1000 meters, allowing us to grow a wide range of varieties. Every apple finds its place in our growing areas. For example, the variety of Granny Smith, Pink Lady, RedPop, and Giga, need a warm climate, warm soil, and a lot of sun hours. We grow them in the valley areas.
And then we have the hillside areas where we grow other apples that need a slightly colder climate and different soils. For example, the varieties Fuji and Gala or the well-known Kanzi apple.
Then we have the mountainous areas that go up to 1000 meters where we grow varieties like Golden Delicious or the varieties which our consumers can find under their brand name envy™ or Cosmic Crisp.
Gala makes up 20-25% of our production and is our main variety that is also being exported to many countries. In total, we have around 15 managed varieties. Marlene is our main and owned brand which we call the “Daughter of the Alps”; this is an umbrella brand for different varieties like Gala, Granny Smith, Red Delicious, Fuji, and Golden Delicious.
Q: What projections do you have for the next half of the apple season?
We have an overall positive projection because, in the past years, we have developed a varied assortment that allows us to have apples for twelve months a year, both organic and integrated.
This means that we have made a switch over to new varieties that have a very good shelf life so that we can offer the right apple at the right time, where our focus is always the consumer.
We want the consumer to go into the stores, buy an apple, be satisfied, and want to return to buy the apple again. So we find the right moment for the right products in the right country.
Q: What about pricing?
So, pricing and the overall market situation are tough because of inflation which has impacted consumer behavior. We see that a lot of consumers think twice before they go and spend money on fruits and vegetables, which for us is challenging because I think we need sales improvements in fruits and vegetables, and for us, more consumption of apples.
This is why it has been a challenging year so far but we look forward to the second part of the season where we think that with new apples, with new concepts, with our new marketing campaigns, we will be able to give our retailers more support and more consumers will be interested in apples.
Q: Are there any new interesting developments or new plans lined up for the upcoming years?
Well, the most exciting thing is looking at our varietal development and our offerings throughout the year with the introduction of new products.
For example, RedPop, Giga, and Cosmic Crisp are apples that target new consumers and they also create new moments of consumption.
RedPop is an apple that is hip, that is pop, that is young, that is the ideal snack. And on the other hand, you have Giga, which is mighty and very tasty, it's an apple you can share. And then we have the Cosmic Crisp, a new apple that has a heavenly taste, which also changes the game for the way we communicate, making the consumer think about leisure moments, an incredible eating experience with crunch and crispiness, refreshment and juiciness.
So from that point of view, we try to find new targets, we find new ways of advertising apples. We are focusing heavily on branded apples and on communication campaigns and are trying to find new ways to put apples in the right spotlight in trying to get consumers interested and increase consumption.
Q: Are there any specific ideas you focus on when you're trying to market a variety? What kind of concepts do you use?
First of all, we try to understand the product and the characteristics of the brand, and at the same time also the target group. So who is the consumer that we want to target? Because you need to create a dialogue between the brand and the consumer who is listening to you. And if you don't understand what the consumer is interested in hearing then, yes, you communicate your ideas but in the end, nobody is listening because they are not interested.
We need to invest heavily in market research and try to understand the consumer better and especially our potential future consumers. Because with our marketing campaigns, when we plant an apple tree that stays there for 15-20 years, we need to know which consumer will eat our apples in ten years and therefore our marketing campaigns need to keep an eye on who is the target of today and also of tomorrow.
Understanding the consumer, understanding the market, having the right products for the right market, and then connecting the right content to the brand in order to have content that the consumer finds interesting is crucial. This is what helps our consumers engage with the product.
Q: Do you want to build brand awareness of a product or build brand engagement?
Ideally, you have both, a brand that is high in awareness and that consumers engage with.
Engagement is when a consumer can mentally connect the brand with certain moments. So for example, with Cosmic Crisp, we have a brand that focuses on its taste. We use the image of a hot air balloon to connect the image of the heavenly taste to the sky. So when you see a nice sunset or a sunrise, you immediately should think about Cosmic Crisp if you have eaten it and understood the campaign.
Marlene, which is our umbrella brand and our biggest brand both in Italy, in Europe, and on the international level, is marketed as ‘the Daughter of the Alps’ where her father is the mountain and her mother is the Mediterranean sun. That automatically creates a picture in the consumer's mind. Then the consumer sees the mountains and the campaign and the advertisement and starts connecting emotions to the brand. It’s not just an apple anymore, it’s something more, it’s something that has an added value for the consumer and something that also adds value to the category.
So as the consumer, it’s not just saying “I am going to buy a red apple”, but, “I am going to buy a Marlene or I’m going to buy a Cosmic Crisp” because for me they have an added value as a consumer.
Q: What kind of challenges are you facing?
Increasing costs, increasing inflation, a lot of competition, not only in fruits and vegetables but also outside because we have a lot of FMCG products targeting consumers at different levels in trying to get this snacking moment or eating habits where you usually would eat an apple or a fruit but now you have other options as well.
Additionally, there is climate change causing extremely hot summers, little rain, hail storms, and frosts during blossoming. Moreover, consumer behavior is more reserved and is slowing down overall.
So there are different challenges that we are facing but once you identify the challenges, you can also work on strategies to address them and mitigate those risks.
I’ll give you an example, for all the new varieties that we bring to the market, we tell our growers to put a hail net on top. This is mandatory. This is a heavy investment to mitigate the risks of hailstorm damage.
Following this, suppose I make a program with you as a client and say, for the next 3 years, we are going to introduce this to the market, and in the second year I say, I’m sorry I don’t have fruit because there was a hailstorm. When you talk about sustainability, you have acres of land where you could produce fruit and you have the possibility to protect it but if you don't, you encounter losses.
We also have frost irrigation in our sensitive frost areas which means that when there is a frost night, our farmers are out in the fields sometimes one night after another.
During blossoming, the flowers of the apple tree are very sensitive to cold because the flowers die in freezing cold. So when it gets very cold in the fields at night, we enable frost irrigation, which creates an ice shell around the flowers, and within those ice shells, the temperature does not go below 0 and flowers can survive temperatures of 0 degrees. So we actually protect apple flowers with ice from the cold.
Q: How important is data to you as a company?
Data is crucial because data is information and to understand the market and how everything connects, data is essential. We are using data also for harvesting, because we need to start in the fields, trying to find the right window for harvesting, trying to understand what the crop outlook is going to be, and which market we need to work most in to have the right information.
Data is also essential for our growers, to bring the best fruit in. Additionally, we use data within our packing houses to understand which apples are stored where, when we need to pack them, when we need to ship them, what kind of packaging is used, and also to trace the apple from the supermarket back to the field. There is a lot of information that needs to be collected.
At the same time, market data, market trends that we share with retailers, sales outlooks, and sales numbers are all being used to better understand how we can access more markets, how we can reach new consumers, how we can work in the best way, together with our consumers. So data is important throughout the entire value chain, from the grower to the packer, to logistics to sales, all the way to the consumer because with market research, you understand the consumer better.
Once you know the consumer and your objective is to have a satisfied consumer, you can work on all the different steps that lead to it and on strategies to make them happy.