07.30.01
The Food Partners Urges Strategic Cooperation for Washington Apple Industry
Industry losses mount in the face of fragmentation, over capacity, declining capital investment and weak barriers to entry in world markets. Growers, packers and shippers told to put mistrust aside and restructure industry beginning with a strong marketing alliance.

July 30, 2001, Yakima, WA - The Washington Apple industry can enjoy sustainable growth and success over the long term, but to do so, growers, packers and shippers of all sizes must cooperate - sooner rather than later - if it has any hope of reversing several years of mounting losses.

That was the message delivered to leading growers, packers and shippers at a packed meeting of the Washington Apple GrowerÕs Marketing Association (WAGMA) here today by The Food Partners (TFP), a national investment banking firm focusing exclusively on the food chain.

Consolidation within the retail grocery business has created buyers with significant purchasing power, TFP presenters David W. Schoeder, Jeff A. Menashe and Dave P. Collins explained to the 130-plus members who gathered to hear their views.

"The top five national grocery chains represent 38 percent of the market. These large retailers use volume and technology investments to drive efficiencies in distribution, purchasing, replenishment and information management. Increasingly they are expecting the same from their suppliers throughout the food chain," noted Menashe.

The apple industry, on the other hand is fragmented, resulting in an unleveled playing field. In addition, industry fragmentation, along with declining capital investment, has hampered the Washington Apple industryÕs ability to satisfy retail grocersÕ needs.

"The retail grocery business has changed significantly in the past few years. In order for you to be price makers instead of price takers, you must respond to those changes in a more uniform fashion, and you must do so as quickly as possible," Collins said.

Banking consolidation along with weakening balance sheets also have caused capital to pull away from the industry just when new investment is required. "Stability created by marketing alliances, joint ventures and mergers will in turn create stable cash flows, which is a critical first step in reattracting capital to your industry," Schoeder advised.

"The Washington Apple Commission has done a good job of branding ÔWashington ApplesÕ and creating a premium at the retail level. Unfortunately, this has not translated back to the growers, packers and shippers," he concluded.

The Washington Apple industry has experienced losses exceeding $350 million annually for the past three years. The industry faces fragmentation, over capacity, weak barriers to entry in world markets and declining capital investment. WAGMA, a marketing association consisting of the industryÕs leading growers, packers and shippers, was formed in March of this year to address these issues and to create a level playing field between the "buy" and "sell" sides of the industry.

The Food Partners (TFP), with offices in Washington, DC and Seattle, WA, is the nationÕs preeminent investment banking firm focusing exclusively on the food chain. With more than 80 years of collective investment banking experience, TFP provides merger, acquisition, divestiture, capital raising and strategic advisory services to the food industry. Clients served by TFP span the entire food chain and include privately and publicly held companies, with a particular emphasis on family owned businesses, and cooperatives. TFP's web site can be found at: www.thefoodpartners.com.