Hard cider production has increased dramatically in the United States in recent years with an annualized growth rate of 50% between 2009 and 2014 and revenues totaling $292.5 million in 2014 (Petrillo, 2014). The growth of the industry has been attributed partially to the craft beer movement, subsequent expansion of consumers’ palates, and knowledge of cider (Petrillo, 2014; Russel Lucha et al., In press). In 2014, there were 351 businesses producing cider in the United States and most of those cider producers were small in scale and were established within the last 10 years. For example, while four large producers produced 84.3% of the volume of cider, the other 347 or 98.9% of the producers produced only 15.7% of the output (Petrillo, 2014). Cider makers across multiple scales express plans to expand production (Peck and Miles, 2015). It is estimated that at current production levels, the U.S. cider industry requires an estimated 18 million bushel of apples per year (1 bushel = 40 lb = 18.1437 kg), representing ≈7% of all of the apples grown in the United States, and most large-scale producers use imported juice concentrate. According to the U.S. Association of Cider Makers (Denver, CO), large-scale cider makers produce over 500,000 gal/year. A recent study suggests that only a third of cider makers are producing any apples themselves, and mostly on a small scale (Peck and Miles, 2015). These factors represent a potential opportunity to increase sales of domestically grown apples to this expanding market.
Apple production for fresh markets and associated intensive management to produce high-quality fruit are fundamentally at odds with the needs of cider makers. Cider makers require multiple apple cultivars for their products, including lower-grade fruit from traditional commodity dessert cultivars (e.g., McIntosh and Cortland) as well as dual-purpose cultivars that may be sold to both the fresh market and to cider makers (e.g., Idared and Northern Spy) and specialty cider apple cultivars with unique flavor, acid, and tannin characteristics suited to only hard cider production including heirloom (e.g., Golden Russet and Esopus Spitzenburg) and bittersweet cultivars (e.g., Dabinett and Fillbarrel) (Moulton et al., 2010; Valois et al., 2006). Presently, few orchards are managed exclusively for cider apples in the United States (Merwin et al., 2008), but processing apples grown for apple sauce, fresh juice, and similar products were valued at $4.80 to $5.60 per bushel in 2013 (Fruit Growers News, 2013). Data on total acreage of specialty cider cultivars planted is limited and does not appear in the U.S. Department of Agriculture (USDA) or other survey metrics. However, cidery operators have indicated that a shortage of specialty cider apples exists in the United States with an estimated 200–300 bearing acres of specialty cider apples out of ≈380,000 total acres of apples (Fruit Growers News, 2015a; USDA, 2012). In many seasons, pest outbreaks [e.g., apple scab (Venturia inaequalis) and codling moth (Cydia pomonella)] and/or environmental factors (e.g., frost, hail, and preharvest drop) reduce the value of commercial fresh market apples despite use of intensive management practices. Much of this damaged crop is salvaged via sales to fresh juice processors and in 2012 the average price was $3 to $4 per bushel, compared with $17 to $24 per bushel for fresh market fruit (USDA, 2013a). Demand for fruit by cider makers represents an emerging market for apple growers and an opportunity to diversify their production and marketing systems. Due to the rapid growth of the cider industry, the price of apples for cider making is expected to rise in response to increased demand, which could in turn affect cidery profitability (Petrillo, 2014). From the growers’ perspective, planting new trees specifically for the cider industry represents a long-term investment that entails significant risk. Horticultural knowledge of cider apple cultivars, including potential yield, management needs, and regional adaptability is limited (Peck and Miles, 2015).
Cider makers have an array of options for apple procurement (Conner et al., 2012; Hobbs, 1996). Juice concentrate and processing apples are undifferentiated and widely available, suggesting that cider makers can procure them on spot markets. However, to obtain specialty cider apples, which have a narrow range of uses and lower availability, cider makers would need to produce the apples themselves or enter into strategic partnerships. In the latter case, a variety of governance mechanisms are available including contracts, joint ventures, and direct investments. Strategic partnerships have drawn the attention of agri-food scholars due to their potential for creating mutual benefit among supply chain partners (Conner et al., 2012; Stevenson and Pirog, 2008).
Surveys of apple growers and cidery operators in Virginia revealed that in order to ensure availability of cider apples, 80% of the cidery operators were willing to enter into long-term financial arrangements whereas 22% of the apple growers surveyed would plant cider apple trees if they had contractual agreements with cider makers insuring fair market prices in the long term (Peck et al., 2012; Versen and Kelley, 2012).
Apple production is significant in Vermont. From 2009–13, the mean annual value of Vermont’s apple crop was $10.3 million (farm gate) derived from average annual production of 800,000 bushels of fruit grown on 2560 acres, with average yield of 330 bushels per acre (USDA, 2014). While Vermont’s apple production measured in bushels ranked second among New England states over that period, its growers have received the lowest used price per bushel of fruit among the New England states (USDA, 2014). Few Vermont growers manage orchards specifically for production of processing fruit and the majority of apples are grown for fresh consumption (Vermont Tree Fruit Growers Association, 2011). Because of the state’s lower population density compared with the rest of New England, the Vermont apple industry relies on wholesale market channels to sell the majority of its fruit. Presently, over half of Vermont apples are sold to wholesale markets through regional fruit brokers and direct store delivery routes (Bradshaw, 2013). Most of the 14 cider-making operations in Vermont currently purchase fruit from the spot market at similar prices to those paid by fresh juice processors, but cidery operators and orchardists report that specialty cultivars grown for cider production are increasingly being purchased by local cideries for $6 to $25 per bushel (B. Hodges, personal communication; J. Heilenbach, personal communication). Some cider makers grow their own apples while other large cider makers purchase domestic and imported apple concentrate.
The growth of the cider industry is strong and the market opportunities for apple growers will likely continue to grow with it. However, researchers have identified current gaps of knowledge that could hinder the long-term growth of the cider industry including the current and future needs of the industry in terms of quantity of fruit purchased, preferred apple cultivars, and potential prices paid by cider makers to fruit growers (Russel Lucha et al., in press). Similarly, little is known of the types of fruit that apple growers are selling to the cider industry, the price received, and grower perceptions of future marketing opportunities.
The goal of this study was to compare fruit needs of cider makers with present cider fruit availability in Vermont orchards to identify opportunities and challenges for growth of both industries. Specifically, we wanted to better understand the cider fruit availability in Vermont orchards, the fruit needs of cider makers, and the opportunities and challenges for the growth of both industries.
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