Cranberry Stressline Archives

July 22 to Aug. 8, 2000

Playing soda-hardball

Coke used exclusive marketing agreements to eliminate competition and was found  guilty of anti-trust violations in Texas lawsuit
Source:  New York Times

8/6/00 Coca-Cola allegedly tried to force Royal Crown sodas off the shelves by convincing store owners to sign "increasingly restrictive marketing agreements that benefited it at the expense of other brands." According to food industry reporter Connie Hays, in today's New York Times "The case provides a vivid glimpse at the way Coke, already the world's best-known brand, battles for an ever bigger slice of the market. To keep growing, court documents show, it has developed a variety of tactics intended to make sure that rival brands remain all but invisible. Coke says the deals it makes with stores are typical in the industry. Plaintiffs counter that they keep rivals from having a fair shot. For consumers, it can mean limited variety, and in some cases, higher prices."

A former employee of Coke who left to start his own company is quoted as saying "when I worked at Coke, I was told that you couldn't ask for exclusive anything, it was considered predatory. You could ask for first position; but you couldn't ask for the only display in the store." He goes on to say that "the guy with the biggest checkbook is the one that wins; once they become the only one in the stores, you'll pay whatever they want you to pay. It will be $3 a can."

A Coke spokesperson expressed their position that they are "spending a lot of money with retailers on marketing, and it doesn't make a whole lot of sense to provide retailers with money to promote our products if, when the consumer goes into the store, it doesn't look like you are the featured product. The research we've done says it doesn't help the retailers' business either. Promoting a whole bunch of soft drinks at the same time means you are discounting the product to people who would have paid a higher price if it wasn't on promotion. It sort of devalues the category."

 Read article.


Science

8/5/00 A study in the Journal of Nutrition reports that purple grape juice limits the number of platelets which stick to the walls of arteries and cause plaque buildup. “If you reduce platelet activity, you reduce the risk of heart attack,” writes John Folts, Ph.D. in an article in the Journal of Nutrition. Orange and grapefruit juices didn’t inhibit platelet aggregation. But since they offer other health benefits, try this rotation is recommended: orange, grapefruit, cranberry, grape...etc.


Co-op news

Sunkist announces South American alliance

8/3/00 Sunkist, the California and Arizona based  marketing co-operative with 6,500 grower/owners, will market Argentine citrus fruit in the United States. ``Sunkist is the world's premier supplier of branded fresh citrus. Forging this new alliance with Argentine citrus producers fits well with our strategic plan to meet the needs of our customers globally,'' said Sunkist President Vincent Lupinacci. ``From a grower perspective, the marketing of Argentine citrus by Sunkist is essential if we expect to continue to meet the challenges and opportunities of the global marketplace,'' noted Al Williams, Chairman of the Board of Sunkist Growers. Press release


Counter-commentary

Cranberries for Sale? -- Commentator John Ridley explores the "sinister repercussions behind a recent government proposal to buy and dispose of millions of gallons of cranberries" on NPR's Morning Edition -- Commentator John Ridley explores the "sinister repercussions behind a recent government proposal to buy and dispose of millions of gallons of cranberries" on NPR's Morning Edition

7/31/00 (Revised at 4PM) John Ridley had a report on National Public Radio this morning. After the narrator introduces the segment as a report on what might be the next great government scandal, "call it cranberrygate," Ridley describes a "vast conspiracy taking place right under our very noses, literally... the innocuous glass of cranberry juice you're drinking is actually at the heart of a devious plot that reaches to the highest levels of government and business." Ridley says that this involves the USDA, Ocean Spray, Northland... and suggests we ask whether the presidential candidates have received industry "crandollars" received from a so-called "buyopoly* funded cran-pak" to pay for favorable government intervention.

But can we believe he doesn't have his tongue firmly planted in his cheek when he continues that this conspiracy is so far-reaching that the supposed scandal he's uncovered  "makes the Monika Lewinski-Bill Clinton political scandal look like nothing more insidious than a couple of adults having an extra-marital affair?" He says that he's always viewed the Department of Agriculture as "a shadow arm of the government" that he's always viewed as "nothing more than a shill for agricultural concerns."  While there isn't an agency in Washington that doesn't have its political side,  this blanket condemnation is an insult to the thousands of USDA employees working on behalf of America's beleaguered farmers.

He perfunctorily describes the marketing order, or in his words, "the wanton destruction of America's favorite fruit," as "a price gouging scheme," without elaborating on why it was enacted after considerable controversy and debate. He  seems to have the mistaken notion that destroying fruit will effect the price consumers pay for cranberry products.

He says nothing at all about what any cranberry industry observer knows is an unprecedented crisis. He says not one word about the plight of cranberry growers struggling to stay in business. In fact, he laments that destroying part of the crop will only drive up the price of raw cranberries without mentioning that the price being paid to growers is far less than what it costs to produce them. 

He sees a scheme as obvious as a cheap toupee in the hiring of Randy Papadellis by Ocean Spray as COO and president just  prior to enacting of the marketing order. He takes his conspiracy theory into the grape juice industry and asks how many gallons of grape juice might have been dumped into the ocean to enable Papadellis, to double Welch's sales when he was their marketing chief.

"How long," asks Ridley, "before this shadow alliance between government and business begins manipulating the price of other precious foods, how long before we are all living by their whim, hanging by the nose for the price of Pop Tarts, Tang, and Honey Nut Cheerios? The truth is out there, somewhere."

The report is now listed on the NPR Morning Edition web page where you can hear it using Real Player. You can email your comments about this story to morning@npr.org 

Afterthought: If Ridley (and National Public Radio) really was interested in the truth about the marketing order and the cranberry crisis, it is indeed out there, no further than the Internet.

A short profile of John Ridley | Read more about John Ridley's books 

Type in his name to search NPR for other John Ridley commentaries

* Neither buyopoly or biopoly appear in any of the major dictionaries.


On  food company mergers and acquisitions

7/31/00 From a 7/25/00 article in Food Processing: "The  (food) industry is ready to wheel and deal. Bargains await those companies prepared to move, with cash in hand or investors in waiting. But hold on. New business wisdom demands a bit more sophistication than we had to bring to the game in the not-too-distant past. We're not just buying a stable of names, prospective shelf space and vague synergies. Closer attention is being paid to facets of the business that may or may not have meant much to prospective buyers in decades past—distribution efficiencies and business cultures, for example. Fresh considerations are leaping to prominence—supply chain activity, integrating information systems, cost-control initiatives. Smart executives want to purchase companies that not only give them more store muscle and access to consumer dollars, but those that will add to, or at least not slow down, initiatives that are positioning their companies for 21st century business."  Read Article


 Campbell: Buy, sell or merge?

7/29/00 From the New York Times: "It cannot be easy for the Dorrance family to read the newspapers these days. In headline after headline, one food company after another has committed to a sale or a merger, leaving the descendants of John T. Dorrance, the chemist who invented condensed soup more than a century ago, with an agonizing decision: Should they sell the Campbell Soup Company, which has been in the family's hands for three generations but is now struggling? Or should they hire new management to revive flagging sales of its chicken noodle and tomato soups and Pepperidge Farm cookies and perhaps become an acquirer itself?" (Ed note: Campbell was once mentioned as being interested in an acquisition of Ocean Spray.) Read article

8/5/00 How folks in Washington state handle the environmental enforcers

8/3/00 Latest S&P credit rating for Ocean Spray and other food companies

8/3/00 From the Middleboro Gazette Decas looks at selling 525 acres including 72  acres of bogs

From 8/2/00 Wisconsin Rapids Daily Tribune Big surplus = Big Problem and Area growers wonder where to spread or dump berries

8/3/00 New York Times - Snapple flavors to be in new candies

Ocean Spray at the GOP convention

State to pay $100,000 for consultants to study Makepeace development proposal

V.P. Gore's press release on government purchase of pears


Dole to replace Ocean Spray for Pepsi 

7/31/00 According to an article in the July 21st issue of Beverage Digest, Pepsi is Pepsi preparing to replace Ocean Spray single serves with new Dole juices and juice drinks. 


Tri Valley Growers announced  that it has received final approval from the Bankruptcy Court for its debtor -in- possession financing. Press release

 

USDA rules on Oregon proxy vote for Marketing Committee

7/27/00 The USDA has informed the Cranberry Marketing Committee that the marketing order does not authorize proxy voting and that the unofficial ballots that were used in the nomination process are invalid.

The CMC has been asked to hold new elections in a letter to David Farrimond dated July 24, 2000 from Ronald L Cioffi, Chief, Marketing Order Administration Brand, Fruit and Vegetable Program. The USDA intends "to provide the committee with guidance  concerning the new nomination procedures." They also "request the committee to develop specific nomination procedures before the next full nomination cycle, and submit them to the Department of Agriculture for approval." 

The current member who holds the seat in contention, Dave Lucas (an officer with 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, ran  against each other for the seat.  Jensen's alternate was Nodji VanWychen, another Cliffstar grower. Kress' alternate was George Gant, a popular independent grower in the Bandon area. 

At the time Oregon growers were asked to vote for the Kress/Gant slate they report that they didn't know they were voting for the Northland representative when there would be an alternative slate. Then they received a letter from Jensen asking for them to vote for him, and many decided to change their vote.

A number of Bandon growers later reported they felt deceived in this process and didn't know that they had committed themselves to voting for a Kress/Gant slate; and asked the CMC to rescind their votes so they could cast them for Jensen and VanWychen. 

Note: The Cranberry Marketing Committee Amendment subcommittee is meeting again on Friday, July 28th at 9:30 A.M. at the Airport Comfort Inn in Warwick, R.I.


Northland suspends quarterly dividends as stock drops 21% in one day to under $2.00

7/26/00 5PM Stock summary: Northland regained some of Tuesday's loss, closing at 3/16 (+11.54%) in very heavy trading of 434,600.

7/25/00 Stock summary: Northland stock closed under $2.00 for the first time. The last trade of 1 5/8 was down -7/16 (-21.21%) from the close  of 2 1/16 on Monday. It dropped steadily through the day until 2:30 PM when it  was just shy of $1.53, then it rebounded three times in 90 minutes to about $1.85 before the close of $1.62. Trading was heavy at 198,000, about four times its average. According to a press release issued Monday evening "Northland Cranberries, Inc. (Nasdaq: CBRYA), announced today that, unless and until such time as it can successfully conclude its exploration of strategic alternatives, its Board of Directors has taken action to suspend its quarterly cash dividend of $0.04 per Class A share and $0.03636 per Class B share.

John Swendrowski, Chairman & Chief Executive Officer of Northland said, ' We hope that this is a temporary action that should help improve our future financial condition and liquidity position and allow us to continue to compete more effectively under continued very difficult competitive conditions in the cranberry industry while we pursue our ongoing efforts to explore various strategic alternatives through our team of investment bankers at U.S. Bancorp Piper Jaffray Inc. and Bank of America Securities LLC.

' Our Board, after careful consideration, has prudently determined to direct our resources at this point to facilitate our ongoing operational needs, although the Board will continue to review our dividend policy each quarter with a view towards reinstating some level of quarterly cash dividend payments as soon as possible,' said Swendrowski." Press release | Milwaukee Journal Sentinel article

For some well-thought-out opinions and analysis of the Northland situation, read the CBRYA message board, particularly the posts from IYEL and tooldguy (especially numbers 1125, 1136, 1138).


7/22/00 Northland is short on cash - Wisconsin Daily Tribune (WDT) | 7/22/00  Juice bottler sues Northland - WDT | 7/22/00 Northland brand still has value - WDT | 7/22/00 Northland faced with increased debt, decrease sales - A.P.

7/23/00 The Wisconsin Rapids Daily Tribune interviewed  U.S. Bancorp Piper Jaffray's George Dahlman who said "the business environment in the cranberry industry is very tough right now... the market has worsened and Northland is merely a reflection of the industry. This is nothing new. Northland has been looking at strategic alternatives for several months now. I'm sure Northland would still consider sale of the company. But it's unlikely someone will buy the entire thing. If you're playing the probability game, you wouldn't want to hold out for that." 

CMC subcommittee wrestles with rules


Surprise visitor at Green Airport meeting

7/28/00 The Cranberry Marketing Committee's amendment subcommittee met today at T.F. Green Airport in Rhode Island to review revisions to producer allotment regulations and recommendations for changes in the 2001 sales history calculation, and to review withholding and revised buy-back rules under withholding. It was a productive meeting marked by cooperation and a real attempt to devise rules that would benefit the growers and wouldn't give an advantage to one handler over another. All the changes which the subcommittee eventually proposes will go to the full committee at the end of August. Continued


What Northland needs is a "large capital infusion," an alliance with a company that can afford to sit out the depressed cranberry market...  "then Northland has value. It's a buyer's entry into the cranberry market. But if (the cranberry/cranberry juice market) is not the direction that a major player wants to go, then Northland is out there by itself."  Charles Krueger,  UW-Madison School of Business Executive Education

Read more of the local viewpoint on Northland's troubles from the Wisconsin Rapids Daily Tribune


Quinn successful in retaining funding for cranberry research

7/27/00 Cape Cod Cranberry Growers' Association press release -- Representative John Quinn (D) Dartmouth, member of the University of Massachusetts, Cranberry Experiment Station Board of Oversight announced that $250,000 was placed in the conference committee budget for research and development of the Massachusetts’ cranberry industry to be administered by the University of Massachusetts at Amherst Cranberry Experiment Station located in Wareham. Continued


Cadbury Schweppes reports strong first half

7/26/00 From company press release: A robust performance in beverages reflected volume growth and market share gains particularly in North America. John Sunderland, Cadbury Schweppes' CEO, said, ``We have delivered a strong performance in the first half and this gives us confidence that we can achieve our financial targets for the full year. The food industry is undergoing significant change and we have the strategy, financial strength and management to respond to this new environment to the benefit of our shareowners''.

``We have mutually agreed with The Coca-Cola Company to no longer pursue the sale of our businesses in Canada and Mexico. (see related) We now have a substantial beverages business enjoying significant positions in the key markets of NAFTA, Europe and Australia.

``We have delivered a strong performance in the first half and this gives us confidence that we can achieve our financial targets for the full year. The food industry is undergoing significant change and we have the strategy, financial strength and management to respond to this new environment to the benefit of our shareowners''.

``Our other US business, Mott's, has had a good start to the year, with base business volumes up 9%. We have grown market share in Clamato and Mixers, and Hawaiian Punch is delivering ahead of expectations. The acquisition of Mauna La'i gives us a profitable niche brand in the fastest growing juice drink segment.

``Beverages outside the US delivered a good performance overall. Profits in Mexico have more than doubled as we reap the benefits of last year's restructuring. Europe has delivered double digit profit growth on the back of 10% volume growth in France and the benefits of restructuring in Spain''.


Small food companies are making it

7/26/00 Some small food companies are bucking the merger trend, are finding their niche, and are competing successfully against the giants. Read the story on ABCnews.com

 

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."


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


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.


 

Previous

 

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 


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.

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