Commercialization of HW624 pear in North America

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3 Commercialization of HW624 pear in North America Request for proposal(s) 14 November 2016 Prepared by Vineland Research and Innovation Centre

4 1 Background on the organization (Vineland) With a highly-skilled research team, oversight from an independent Board of Directors, engagement from an international Science Advisory Council and collaboration with more than 160 global partners including a Stakeholder Advisory Council, Vineland s goal is to enhance Canadian growers commercial success through results-oriented innovation. We are an independent, not-for-profit organization funded in part by Growing Forward 2, a federalprovincial-territorial initiative. Vineland s vision: A vibrant, prosperous and sustainable horticulture industry working with innovation to fill our world with fruits, vegetables, flowers and plants. Vineland s mission: Enriching people s lives through science and discovery in horticulture. Summary of the cultivar Historically, Agriculture and Agri-Food Canada (AAFC) conducted a pear breeding program out of its research stations at Harrow and Vineland Station, both located in Southern Ontario. This breeding program produced a number of high quality pear varieties including AC Harrow Crisp, AC Harrow Sweet, AC Harrow Gold, Cold Snap (varietal name: Harovin Sundown), AC Harovin Bounty and HW623. Vineland and AAFC have entered into a long-term license agreement, providing Vineland with the sole right to commercialize new AAFC tender fruit varieties, including pears. This license grants Vineland the rights for propagation, production and marketing of the fruit. HW624 is the fourth pear to be launched by Vineland from the AAFC germplasm collection. HW624 pear is protected by Plant Breeders Rights in Canada (CPBR #4402) and a pending United States Plant Patent (USPP Application#14/545,134).

5 2 Due to the positive features of this pear, Vineland intends to engage partners that are willing to invest in a brand for this variety with Vineland supporting the protection of the brand through trademarks. Over the last several years, Vineland has sought feedback on the variety from various parts of the value chain, including growers, marketers and retailers. There has been strong positive reaction to the HW624 pear variety from all parts of the value chain and Vineland is now seeking partners to cover the full North America market. In anticipation of the launch of this variety, Vineland has initiated preliminary propagation of HW624, with a total of 5,000 trees available for planting in 2017 and Future propagation plans in Canada will be negotiated with the licensee(s) in the terms of the license agreement along with other elements of the variety commercialization and roll-out, including production targets and marketing and branding activities. Although Vineland has existing propagation commitments with Associated International Group of Nurseries, Inc., Vineland will make best efforts to establish a framework that will work for all parties interested in propagation rights for the United States of America (USA). Proposal guidelines and requirements Vineland is seeking commercialization partner(s) to bring the HW624 pear to market in North America (or a sub-territory thereof). This is an open and competitive process and respondents may be based in Canada, the United States or Mexico. Proposals received after 4pm EST, January 13, 2017 will not be considered. The proposal may include participation by one or more cooperating entities, but one company must be the lead applicant. The types of applicants expected include, but are not limited to: individual growers; grower co-operatives; propagators/nurseries, collaborations between companies involved in different parts of the supply chain; marketers or a group of marketers; vertically integrated companies involving propagation/production/packing/marketing; and/or retailers looking for exclusivity. The following activities are all required to successfully commercialize HW624 pear in North America: Propagation (not required in USA) Sales Production Distribution Branding and Marketing Preference will be given to applicants who are able to address all components, or

6 3 include partnership arrangements that demonstrate the ability to deliver on all activities. However, if your organization has the capacity to manage only a subset of these activities, the proposal will still be considered as part of an alternate commercialization strategy. Once a licensee partner(s) have been identified, Vineland will initiate contract negotiations to define the final terms of the agreement. If agreement on license terms cannot be reached between the parties within 45 days, Vineland may seek an alternate licensee arrangement. The proposal must contain the signature of a duly authorized officer or agent of the company submitting the proposal. Technical description of the cultivar Agronomic and production data The following data is based on observations made by AAFC and Vineland of HW624 trees located at the AAFC Jordan Farm, situated in Jordan Station, Ontario from Parentage: Cross between Harrow Sweet and NY10353 made in 1988 Fruit Appearance: Medium to large sized fruit (average fruit diameter 70mm (2.75in); average fruit weight 200g) Harvest Date: approximately ten days after Bartlett Fruits are yellow-green with a large area of dark red over colour when exposed to sunlight at harvesting time Fruit stalk is thin Majority of the fruits have a large area of dark red over colour No russetting around the eye basin, on the cheeks, or around the stalk attachment At harvest, the area around the eye of is slightly ribbed

7 4 Tree Growth and productivity: Cultivar has medium to strong vigour; consistently produced yields similar to Bartlett, with no evidence of biennial bearing Strong branching with spreading to drooping habit Planting of other pear cultivars within the same block of HW624 is strongly recommended to improve pollination Disease tolerance: High tolerance to fireblight (Erwinia amylovora) High tolerance to pear psylla (Cacopsylla pyricola) Fruit quality The following description of HW624 fruit was provided by the AAFC breeder, Dr. David Hunter, during the course of evaluation of the cultivar: - Skin is medium to thick - Flesh is cream to cream-white, melting and juicy with good to excellent flavour - Slight acidic taste - There is some grit around the medium-sized core Postharvest data The following information was developed and provided by Dr. Jennifer DeEll, Fresh Market Quality Program Lead, Agriculture Development Branch, Ontario Ministry of Agriculture, Food and Rural Affairs: Preliminary storage trials have been carried out in normal cold storage at a temperature of 1 C. Initial results indicate that the development of fruit near harvest is similar to Bartlett. After fruit has been removed from short term cold storage and placed at room temperature, the shelf life is much longer compared to that of Bartlett along with fruit eating quality that far exceeds Bartlett. Vineland encourages the successful licensee(s) to pursue further storage evaluations of HW624 in advance of the marketplace launch.

8 5 Evaluation of consumer data Vineland does not have current consumer or sensory data on the HW624 pear. However, Vineland s Consumer Insights team is available to support the launch of HW624 pear on a contract research basis. Respondents are encouraged to describe if and how they would engage the Consumer Insights team to assist in development of consumer data and messaging in order to position the HW624 pear cultivar in the marketplace. Market information Canada Canada continues to give up the predominant share (~90%) of the domestic fresh pear market to imports. Canada imports over 75,000 tonnes of fresh pears annually with an estimated value of $82M. Conversely, Canadian fresh pear production is an estimated 8,855 tons 1 with a farm gate value of $9.2M 1. The Canadian pear industry in 2015 reported a total acreage of 594 hectares with Ontario representing approximately 59% of the acreage followed by British Columbia (30%), Nova Scotia (6%) and Quebec (5%). For decades, Bartlett and Bosc pear varieties have been the most widely planted across Canada. A number of challenges have led to decreased plantings over the last number of years; such as susceptibility to fireblight; limited fruit yields from low density plantings and costs of production. Forward thinking growers have sought new pear varieties and many have looked toward the AAFC breeding program for solutions to this serious production challenge. United States The overall bearing of pear acreage for 2015 in the USA was 48,940 acres with a total production at 820,520 tons. Conversely, the value of utilized pear production is $500M in 2015, up by 16% from 2013 as the average price (per ton) increases from $491 in 2013 to $620 in The commercial pear production continues to be dominated in the Pacific Northwest in USA, with Washington being the largest producer with 380,000 tons, followed by Oregon (228,000 tons) and California (202,000 tons). These states account for over 98% of the national production in The top three varieties produced by Pacific Northwest growers are: D Anjou 52.6%, Green Bartlett 23.3% and Bosc 14.4% 2. 1 Statistics Canada, (CATSnet, June 2015) 2

9 6 Mexico The commercial pear production in Mexico is limited due to high production costs, scarce water supplies and lack of investment. Therefore, the national planted acreages for pears has fluctuated from 9,884 to 11,120 acres, and the annual production of pears has been steady at approximate 2,755 tons, between 2009 and The Mexican pear production is concentrated in Michoacán, Puebla and Morelos, which account for 76% of total national production 3. Due to limited domestic production, Mexico is heavily relied on imports to satisfy its domestic consumption. The amount of imported foreign pears to Mexico is 89,000 tons in U.S. continues to be the largest exporter for Mexico in 2016, representing around 75% of total pear supply. The Kiefer (Pera Pina) and the Paraiso are the two most popular local pear varieties in the market. Among those U.S. imported pears, Anjou is still the most sought variety among Mexican consumers followed by Bosc, Bartlett and Red Anjou. Timeline The following dates are estimated. Launch of RFP process: November 14 th, 2016 Close of RFP process: January 13 th, 2017 Selection of successful applicant(s): February 3 rd, 2017 License Agreement(s) executed: May 1 st, 2017 First tree plantings in Canada: Spring 2017 First fruit at Canadian retail (estimated): Fall 2020 Licensing terms Vineland s operational model requires that it generate commercialization revenue from technologies and products. These revenues (in the form of royalties) will then be reinvested into Vineland s research and commercialization programs. In addition, Vineland shares revenues generated by cultivars with the organization that developed them, in this case, AAFC. 3

10 7 For this proposal, applicants are asked to submit proposed licensing payment terms within their application. For clarity, this is the proposed revenue stream that will be directed to Vineland in return for the rights to commercialize the technology. The terms may include, but are not limited to, the following: up-front payments, milestone payments, tree royalties, production royalties, trademark royalties and covering the costs of intellectual property protection. These terms will be negotiated and finalized once licensee(s) have been identified. Evaluation criteria Ability to manage the activities required for the successful commercialization of the HW624 pear, either directly or in partnership with other companies or organizations across both territories (the vision of how this will be achieved should be clearly explained in the submission) Knowledge and experience propagating, producing, marketing and branding tree fruit varieties and/or other relevant project experience Annual fruit production and/or tree propagation for the last five years, and projected fruit production and/or tree propagation over the next five years. Experience with pears is an asset, but not required Access to adequate infrastructure and skills to produce and deliver high quality trees (for propagation rights) and fruit (for production and marketing rights), including post-harvest management Ability and willingness to invest (funds, time and resources) in the scale-up and commercialization phases of the project including in the following areas: o o o Planting commitment time frame and quantities Marketing and branding (including working with Vineland s Consumer Insights team where required) Postharvest storage and handling (including research where required) Tree propagation location; if propagation is to be contracted out, please discuss this arrangement Intellectual property protection/enforcement plan Suggest how changes in land ownership where HW624 trees would be located should be handled to mitigate any intellectual property concerns Three references

11 8 Template and submission information The attached template should be completed by the applicant and submitted by 4pm EST, on January 13 th, Questions about the process or the template itself will not be accepted after 4pm EST, on January 9 th, Questions and submissions should be directed to: Vineland Research and Innovation Centre Attn: Michael Kauzlaric, Technology Scout and Outreach 4890 Victoria Avenue North PO Box 4000 Vineland Station, Ontario L0R 2E0 Phone: x755 michael.kauzlaric@vinelandresearch.com If you wish to have access to further information, please contact Vineland to make such a request. If a decision is made by Vineland to release more information than is currently included in this package, the information will be sent to all potential applicants. Disclaimer All information provided is accurate at the time the RFP is distributed but may be subject to change. Vineland does not guarantee the outcome of this process. Participation in the RFP does not guarantee that license(s) will be awarded. All expenses that proponents incur in responding to the RFP will be borne by proponents; Vineland will not reimburse any such costs. Responses will be evaluated based on all relevant factors, as determined by Vineland. Vineland may request, from any responding party, additional information and/or clarification in regard to the submitted proposal. Vineland reserves the right to enter into negotiations subsequent to this RFP which may result in changes to any of the terms initially proposed in the RFP, including without limitation, the territory, exclusivity, royalty rates, etc. A license will not necessarily be awarded to the party or parties proposing the most favorable financial terms in response to this RFP. This RFP process does not guarantee the award of any license by Vineland. Any responses, materials, correspondence, or documents provided to Vineland will be kept confidential.

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