Cranberry Stressline

Archives

July 15 to 21, 2000

Quote

7/25/00 "Adding to the woes of Southern farmers, the prices of their crops aren't rising to reflect the damage being done to their fields. Export demand is weak and farmers in most of the rest of the nation are on track to reap bumper, if not record, harvests this year. The prices of cotton, corn, soybeans, cranberries and tomatoes are depressed. Two of the region's staple crops are cotton and peanuts; the government heavily controls the price of peanuts."  From an article in today's Wall Street Journal entitled "Drought in the south Is pushing farmers to the brink of quitting."

Ocean Spray 
Press Release

7/25/00 There's a new ``castle of cranberries'' in Plymouth, Mass. The new Ocean Spray Cranberry World® is now open, attracting hundreds of visitors daily with its exhibits depicting cranberry cultivation, the healthfulness of this unique North American fruit and the people who grow it. Continued | Related: Stressline pictorial on Cranberry World

7/24/00 - New device helps cranberry growers with irrigation - Standard Times

So you want to become a corporate director, in the Sunday New York Times


New Jersey grower DeMarco embroiled in controversy

7/25/00 According to an Associated Press article that appeared in the Camden Courier Post on Sunday (7/24/00), Ocean Spray grower and former board member Garfield DeMarco may "be off the hook" for violating state wetland laws in the New Jersey Pinelands. DeMarco began a 33 acre expansion of his bogs in 1998 which included 22 acres that were allegedly in protected wetlands. He did not seek a state permit; thus opening himself for fines up to $10,000 a day, or over $8 million to date. A newly created  state permit that allows "after-the-fact" approval was enacted in April. DeMarco's application is being considered. Continued


Cranberries in the grocery freezer?

7/24/00 In response to a question printed in yesterday's "write to Know" column in the Cape Cod Times asking why, with a surplus of cranberries, consumers couldn't buy frozen cranberries year round, Brian Gill of Ocean Spray said that the idea had been test marketed, stating that  "the proposal never really worked. It's not that simple on paper, either. Special machinery would have to be acquired for freezing; there would have to be broker distribution, retailing, as well as supermarket slotting fees. A lot of different considerations enter the picture but, thus far, we've found the demand for frozen cranberries doesn't warrant the extra investment... Consumer demand was not as high as we hoped." He told the Cape Cod Times that Ocean Spray tries to urge consumers each fall to buy and extra bag to store in the freezer where the berries will keep up to a year.


Cranberry crisis covered on MSNBC.com

7/22/00 The local news section of the MSNBC.com website has a story on July 20th on its Oregon news section. Cranberry grower Charlie Ruddell was interview and said that the situation looks so grim for him that he was unsure if they will be able to stay afloat this year.

Ocean Spray's western general manager Bob Sopko is quoted as saying “my job is to turn around our business on the West Coast, so I’m here to assure the growers that we have a plan and strategy in place to do that. And that is to win in the marketplace for them.”

The article ends with the conclusion that "the most recent glut is attributed to Wisconsin farmers who turned in two successive years of extremely heavy harvests." Read article.


Commentary

Stressline readers get real "scoop" on ABCNews web site story
by Hal Brown

7/20/00 Readers who clicked on the link to the ABC News web site's  "Bitter times in the cranberry bogs" story (see article "Cranberry story makes national news" below) prior to the time it was removed today got a chance to read the unedited draft of Mark Baumgartner's article before publication. This happened because the draft was, for some reason, stored on their server in such a way that my search of the word "cranberries" located it. Since it was dated July 14th and I found it on the 17th, I assumed I missed the actual publication on www.abcnews.com. Instead of being late in getting it online, Stressline was premature.

In fact, Mark Baumgartner had only completed his rough draft. The final article will include photographs and he'll have the benefit of having been able to read, in advance, some of the feedback from the Stressline Forum.


Editorial Pictoon


Food industry consolidation

Keebler shares soar on talk of sale - from CBS MarketWatch

"As analysts have predicted, the maker of Cheez-Its, Famous Amos and Girl Scout cookies, is throwing in the spatula and posting the for-sale sign at a time when acquisitions of food companies are as hot as the baker's oven." CBS MarketWatch

7/20/00 From a BridgeNews article: "Romitha Mally with Goldman Sachs, in a research report released Wednesday, derives Keebler's purchase value at just $47 to $52 per share. That equates to $4.1 billion to $4.5 billion, or 1.6 to 1.8 times the company's estimated 2000 revenues of about $2.6 billion. Nabisco sold for 2.3 times its estimated 2000 sales."

7/20/00 Co-op cooperation: Land 'O Lakes and Farmland in joint venture. Press release.

7/19/00 "For any merger to make sense, it should have the potential to expand product distribution globally and increase companies' muscle with retailers and their chances of pushing through price increases," said Merrill Lynch food analyst Eric Katzman.  "Ultimately what consolidation could bring is better relations with the increasingly large retailers, cost synergies and the potential for better pricing, and the last point is probably the most important." From Reuters

7/19/00 Heinz acquires leading food service supplier: Press release

A "baker's dozen" on the General Mills - Pillsbury merger


Northland considers future as stock hits all-time low

7/19/00 (Ed note: Northland closed at 3 1/8th today.)  Northland Cranberries stock closed at $3.438 yesterday, its lowest price ever. According to an article in the Milwaukee Journal Sentinel "Northland is in talks to raise cash by either selling some of its assets or by acquiring equity financing, (Northland CEO) Swendrowski said. One possible scenario is that Northland would sell its brands - led by the Northland and Seneca bottled juice product lines - and then produce cranberry juice under contract for a company that would market those brands" Stressline has it on good authority that Minute Maid is exploring the possibility of expanding its line with cranberry juice and blends. Neither Northland nor Minute Maid, which is owned by Coca-Cola, would comment to the Journal on whether the later company was interested in a deal with Northland to assure a supply of cranberries so it can become a significant player in the red drinks market.  Read article here


Cranberry Marketing Committee seat in contention

7/18/00 A proxy fight, acrimonious meetings and dissension have made the election to fill an independent seat on the CMC into a battle. The current member, Dave Lucas (Northland Cranberries) is not running this year. Gary Jensen, a Cliffstar grower from Wisconsin and Rick Kress, who is Northland group president, corporate sales and operations, are running  against each other for the seat.  Jensen's alternate is Nodji VanWychen, another Cliffstar grower. Kress' alternate is George Gant, who is well known to readers of the Cranberry Stressline Forum (most recent posting.

Reliable sources indicate that the vote is so close that attorneys are looking at the results, and there may have to another vote.  David Farrimond went to Wisconsin yesterday to meet with growers there.


Northland reports 3rd quarter loss

07/15/00 Press release: Northland Cranberries, Inc., manufacturer and marketer of Northland brand 100% juice cranberry blends and Seneca brand fruit juice products, today reported fiscal 2000 third quarter financial results for the three-month period ended May 31, 2000. The company announced a loss for the period of $4.4 million, or $0.22 per share, on revenues of $61.4 million. The loss includes a one-time gain of $2.1 million, which was realized on the sale of the company's private label business to Cliffstar Corporation during the reporting period. For the comparable period last year, the company reported net income of $1.8 million, or $0.09 per share, on revenues of $70.9 million. Continued


Op-Ed

Fresh Fruit Foolishness
Dave McCarthy
Massachusetts fresh fruit grower

7/15/00 As we quickly head toward the harvest season, as a fresh fruit grower, I am very much concerned that Ocean Spray  will continue to emasculate the fresh fruit business with its unwarranted low opening per case price as it did last year.

For those who not understand the fresh fruit business, I would like to give  you a few facts... Continued


Blueberry Producers and importers approve national promotion program

07/15/00 From a  July 13 press release  -- Producers and importers of cultivated blueberries have voted to approve a national promotion program. The vote was taken in a referendum conducted by USDA's Agricultural Marketing Service from March 13 through April 14.

"The cultivated blueberry industry has recognized that a mandatory national promotion program is a valuable marketing tool," said Kathleen L. Merrigan, AMS administrator. "Industry members will fund their self-help program to increase market efficiency, develop new markets and marketing strategies, and enhance the image of cultivated blueberries in the United States and abroad. We will work with them to help them meet their goals," Merrigan said. Continued

 

Previous

 


All eyes on Northland as stock plunges

7/21/00 In a story published by Dow Jones (7/19/00) John Swendrowski explained his vision for turning Northland Cranberries around. He ruled out a sale of the entire company stating that part of the reason was that  "there aren't a lot of people in the branded business who want to own an agricultural entity." Commenting on the  recently filed 10-Q report which indicated that Northland's banks granted waivers to loan covenants that Northland violated, and that they had largely spent $155 million line of credit from its banks, mainly Firstar Bank of Milwaukee, he said "we think we're going to have a tough quarter here, but we don't anticipate losses like we had in the third quarter... sales have picked up dramatically - May sales were 60% higher than April's"  He added that they were beginning to see the benefits of the $27-million write down of inventory reflecting the drop in cranberry prices.

Swendrowski said that the company "has identified some things we need to change, and will address that by looking at various assets that don't make as much sense as they used to," adding that "our biggest inventory asset is cranberries... "it's already paid for, so unlike a lot of companies where payables will grow, as our (sales) grow we liquidate the inventory and turn it into cash... our vendors are supplying us. Nobody has us on C.O.D."

Swendrowski said he couldn't comment on the litigation filed July 7 in U.S. District Court in the western district of New York, in which Cliffstar alleges that Northland breached certain representations about the business as well as the value of certain juice concentrates they purchased. Cliffstar seeks "unspecified damages and/or rescission of the transaction." action, in which Northland received a $28-million promissory note as well as $7.1 million cash. The Cliffstar deal netted Northland a $2.1 million gain.

You can follow investors' reactions to Northland's troubles on the Yahoo CBRYA message board.

Related: Northland 10Q | Legal proceedings


SoBe set for  further growth

The success of SoBe has not gone unnoticed by Coca-Cola and PepsiCo, the giants of the soft-drink business, which have declared their intentions to become involved in all kinds of beverages. "Coke is going to be looking at that category very strongly," said Andrew Conway, a beverage stocks analyst for Morgan Stanley Dean Witter. "They will look at developing brands on their own and at equity investment or ownership of existing brands." NY Times

7/20/00 According to an article in today's New York Times, SoBe beverages, which grew from $67 million to in sales three years ago, to $167 last year to an expected $250 million this year with its offbeat variety of beverages, is poised to move to the next level. The company plans to increase advertising spending and sports sponsorship. SoBe competes with Ocean Spray's Nantucket Nectars for an unusual mix of consumers which includes trendy teenagers and health conscious adults. Read entire article in the New York Times.


Quaker reports  big gains in Latin America

7/20/00 Quaker Oats reported an impressive over all 16% increase in diluted EPS for the second quarter, with a 6% gain in beverages. According to their press release  "second-quarter sales were $751.0 million, versus $654.9 million in 1999, an increase of 15 percent. In the United States and Canada, and in Latin America, sales increased 15 percent. In Europe and the Asia/Pacific region combined, sales increased 5 percent. Worldwide Beverages volume grew 15 percent in the quarter... outside of the U.S. and Canada, Beverages operating income increased 76 percent in the quarter, to $13.7 million from $7.8 million in 1999, primarily driven by improving economic conditions in certain countries in Latin America." Read press release.


Ocean Spray introduces new kids drink

7/19/00  From O.S. press release: "Ocean Spray, the company that brought the first juice box to consumers in the U.S., has done it again with Ocean Spray® CRANTASTICS™, the cranberry juice drink box designed specifically for those who love juice boxes the most - kids.

Tested with kids and packaged in convenient, slim boxes, CRANTASTICS™ features three delicious, vitamin-fortified juice drink flavors that kids will love, including Cranberry Punch, Cranberry Grape and Cranberry Orange. The 6.8-ounce "slim boxes" are also easier for little hands to grab and hold and fit easily into kids' lunchboxes." Press release with photos


Ocean Spray on cover of major trade magazine

7/19/00 Brandweek's June 26th edition featured a cover picture of a wader-clad worker standing knee deep in berries at harvest with the title "Ocean Spray's Squeeze Play." Under the cover picture, the first paragraph of the article by Sonia Reyes and Gerry Khermouch reads "In his first major action after five months of the job, Ocean Spray Cranberries CEO Robert Hawthorne is about to roil the industry with a sweeping price cut on cranberry and citrus juices to generate a quick 10% sales spike. With more affirmative brand-building initiatives - from a bevy of nutritionally reinforced products to new ads - not due until fall from the growers cooperative, the controversial move promises to leave the industry scrambling against a radical value readjustment."

The article goes on to describe the objections Northland Cranberries has to price reductions despite Ocean Spray's assertion that the price reduction will "juice up the Ocean Spray brand an reignite our volume and the category." 

The article notes that not all industry observers agree on the wisdom of a price cut: 

Still, not all observers are buying that the pricing option is required so early. "The bloom is off the rose," said one observer. "The strategy seems to be price-price-price." With growers only receiving $10.50 per barrel for cranberries, far below their breakeven of nearly $30 - many growers are under severe financial pressure, he said."


Commentary

Why you should care about the CMC amendment sub-committee
Hal Brown, Editor

11/15/00 The Cranberry Marketing Committee (CMC) is still operating under rules promulgated thirty years ago. A  controversial cranberry marketing order was approved this year barely in time for growers to make cultivation decisions. Many growers already have wasted time and money on bogs they are now about to take out of production for the year. It is likely that there will be another marketing order next year, and for several years, until the supply/demand equation is in balance.  

With little fanfare the CMC's amendment sub-committee, established to study its governing rules and bring them up to date, was held in Warwick, Rhode Island on July 14, 2000. It proved to be a full day long working session that ended with a clear consensus among members that two or three more meetings would be needed to hammer out a revised set of the rules to present to the CMC at its next full meeting at the end of August. 

These rules are vital to you, the cranberry grower, and to the entire cranberry industry. They will dictate how marketing orders (if approved) for 2001, 2002 and beyond will be implemented. Continued


In the News: 7/17/00 Pillsbury - General Mills deal approved - in New York Times - AP story | 7/16/00 Cranberry woes now reach into town halls - in The Boston Globe Sunday South Weekly | 7/16/00 For Mass. growers, in the same article, liability for bog trespassers getting injured and conibear traps - in The Standard Times


Cranberry story makes national news

"Out in the bogs, there’s a mixture of hope that Hawthorne is the answer and skepticism that any changes will come soon enough to prevent the trickle of farms being put up for sale from becoming a torrent."

7/17/00 The popular Disney owned ABC News web site, www.abcnews.com, which is used as a portal by many Internet users, published an article by Mark Baumgartner entitled "Bitter Times in the Cranberry Bogs" over the weekend. Chris Phillips, Don Hatton and Hal Brown are quoted. (Link for article no longer available - see top of page)


7/15/00 Ocean Spray press release -- Diabetes reaches epidemic proportions, especially among Hispanic and African-American groups; Diabetics get more urinary tract infections than general population

 

 

 

 

 

 

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