Cranberry Stressline Archives

11/1 to 11/8/00

People

Former Ocean Spray CEO Tom Bullock appointed to laundry services co. board

"During his career at Ocean Spray, Mr. Bullock worked to reinvent nearly every major function, from business operations to sales to new product development."

11/8/00 -- PRNewswire -- Mac-Gray Corporation (NYSE:  TUC ), a leading provider of laundry services and other amenities to the multi-housing industry, and the largest provider of such services to the college and university market, today announced the appointment of Thomas E. Bullock to its Board of Directors. Press release


11/7/00 This just in: 20 seconds just played on the syndicated t.v. show Extra  describing how cranberries might help with ulcers showing never before seen animation of how the chemicals in cranberries might work on ulcers in the stomach.


Independent Growers, District Three CMC Meeting and Election: A notification letter has been sent to independent growers in District 3, Wisconsin, Michigan and Minnesota, notifying them of the upcoming Thursday, November 16 meeting at the Mead Inn, Wisconsin Rapids, WI.  The purpose of the meeting is to nominate and VOTE for a member and an alternate member to serve on the Cranberry Marketing Committee for the remainder of the 2000-2002 term.  Only those growers from District 3 attending this meeting will have the opportunity to nominate and vote.  Therefore it is important that District 3 independent growers attend this meeting.   


Review:

Cranberries featured on scientific web site

11/7/00 The lead article on the web site of the American Phytopathological Society (APSNet: Plant Pathology Online), this month is "Cranberries: The most intriguing native North American Fruit" by Frank L. Caruso, Extension Associate Professor Cranberry Experiment Station University of Massachusetts, East Wareham, MA, Peter R. Bristow, Associate Plant Pathologist, Research and Extension Center, Washington State University, Puyallup, WA and Peter V. Oudemans, Associate Professor, Philip E. Marucci Center for   Blueberry and Cranberry Research and Extension, Rutgers University, Chatsworth, NJ. 

The main page has a picture of berries floating on a bog ("...used by Native Americans for many purposes, they were among the first native North American plants adopted by European colonists. But did you know that cranberries are unique among agricultural crops in many other ways as well? The cranberry plant thrives under conditions that would kill most other agronomically important crops."); then click to the article and you're greeted by a picture only a plant pathologist could love -- a graphic photo of fruit rot.

The article begins with a comprehensive history of the cranberry with three photographs you can click to enlarge. Most of the article is devoted to cranberry diseases with numerous photos of diseased vines and berries, unfortunately familiar to growers. 

The final section is devoted to future challenges. Helping explain why the cranberry crisis is unique to scientists not familiar with the industry, they write:  "Due to increased acreage in production (in both North and South America), decreased advertising and marketing (for unknown reasons) and other factors, there is now a large surplus of cranberries from the past two growing seasons in freezers..... Farmers are always faced with many tough economic decisions but the current downturn of the industry makes those choices especially difficult because this crop has been one of the most stable agricultural commodities for the last 25 years."

They explain the reasons why a crop must be harvested, and the effects of curtailing certain cultural practices to save money. As for the scientific community helping cranberry growers, they write that "plant pathologists must continue to look for new management strategies that are realistic in this new economic climate. During such a crisis, the need for grower education could not be more important. To make sound decisions, information on the etiology and epidemiology of cranberry diseases and how levels of disease increase as each growing season passes are vital."

The article ends on this upbeat note: "As we enter the Thanksgiving, Hanukkah, Christmas, New Year holiday season this year, remember that cranberries are truly a North American treasure. Enjoy!" Article


 

Quotes:

11/7/00 "This is not a bailout... these are conditions way beyond growers' control. It's a marketing loss payment, similar to those routinely given to corn and wheat farmers." Paul Russell, Plymouth County Farmer Service Agency executive director.

If Ocean Spray and other cranberry companies do not open new marketing sources, such as Europe and Asia, (CMC director David) Farrimond said he doubts the industry will see a similar hike in demand this year. "The impetus now is really on the industry," he said. From "Cranberry growers ready to benefit from Federal aid" in The Cape Cod Times.


A comparative summary position report for the 1997, 1998 and 1999 cranberry crop years.

From: Jeremy Bishop, Manager of Information Services, Bryant Christie Inc. ( www.bryantchristie.com )

The industry finished the 1999 crop year with an inventory of 4,273,067 barrels.  This reflects an increase of 1,165,701 barrels over the 1998 crop year and almost double the 1997 crop year ending inventory.

Although sales are up in the 1999 crop year by 348,638 barrels, compared to the 1998 crop year, the question remains whether this was primarily a function of price and not demand. See chart

Ocean Spray ads online

11/7/00 Ocean Spray is now running banner ads on several health web sites: Women.com, WebMD, Realage.com and OnHealth. The jury is out on internet advertising. Initially it was highly touted, in part because the technology allows companies to precisely measure how many "click-throughs" are generated by each ad. Advertisers weren't used to getting this kind of hard number. Previously the only way to evaluate an ad's design was in focus groups, and a campaign's success was measured in sales figures or coupons redeemed. 

Not only can software easily measure how many readers click on an ad and go to an advertiser's web site, but it measures how long readers stay on the site and how many pages within the site they look at.

Recently there have been reports that online advertising wasn't living up to expectations because of low click-through rates. However, this form of advertising is in its infancy and an ad on a specialized web site can be as effectively targeted as a magazine ad for, say, cranberry juice running facing an article on urinary tract infection in a health magazine.

Just out today, an article on ZDNet by Jesse Berst entitled The Demise of the Banner Ad - Not! has some interesting discussion and links on the topic.


In the Sunday Papers:

A.D. Makepeace development plan (go down to middle of page) Boston Globe


Quotes:

11/4/00 "We pride ourselves on independence from government. In order to ask for help, you have to admit that things are going worse than you ever imagined." Kraig Naasz, president of the United States Apple Commission. In The New York Times 

And cost-cutting can only go so far, analysts said. The benefit of a big beverage distribution system like that of Pepsi or No. 1 rival Coca-Cola Co. could boost Gatorade's volumes 10 percent to 15 percent. There's a lot of food industry consolidation going on. That's the real issue.'' Prudential Securities' John McMillin.  From Reuters


11/4/00 New links added below

Pepsi deal with Quaker Oats is off

11/3/00 Quaker Oats, which as recently as a year and a half ago was interested in purchasing Ocean Spray, could have been acquired by yet another spurned Ocean Spray suitor, PepsiCo.  The acquisition was said to involve about $14 billion in stock, 2.2 shares of Pepsi for every share of Quaker. 

Last night the two sides broke off talks when they failed to reach an agreement on price.

The star in Quaker's firmament is Gatorade, which sold $1.8 billion last year, making the company an attractive acquisition target for Pepsi and its competition. Gatorade, with 80% of the sports drinks market, hardly "breaks a sweat" maintaining its number one standing against Coke's Powerade (11%) and Pepsi's own All-Sports (3.1%). The Wall Street Journal, noting the rapid consolidation of the food industry, suggests that "Quaker Oats has long been considered the most attractive food company, precisely because of the strength of its non-food business, Gatorade." Adding Quaker's grain products to their line would have complemented  Pepsi owned Frito Lay.

According an article in the Wall Street Journal written before the talks broke off, "executives at Pepsi, Coke and other companies have always kicked themselves for not buying Gatorade and Snapple when the two brands were being sold as a package deal - for a much cheaper price - by Quaker Oats in the midst of Snapple's woes. Aside from the strategic fit, one reason Pepsi may be attracted now is fear that someone else will swoop in to buy Quaker if it tarries too long."

The New York Times notes that "the  ($14 billion) offer epitomizes PepsiCo's unbridled thrust to stake out a commanding position in the noncarbonated beverage industry, a fast-growing frontier that soft drink makers have traditionally been slow to explore but have been forced to take seriously in recent years...... for months, investors have been clamoring for soft drink companies to either buy such promising juice, tea and other nonbubbly brands or develop their own."

The failure of Pepsi to meet Quaker's price opens the possibility that another food giant may move in to acquire the company. With strong small food and beverage companies like Quaker clearly seeing their future in terms of joining forces with a much larger company,  many cranberry industry observers are questioning why Ocean Spray is still a notable hold-out, refusing to even consider the possibility of a sale.

Related stories: New York Times

"Given the incredible consolidation in the food industry over the last year, Quaker's looking more attractive as the list of companies left to be bought grows smaller. Like the last girl left in a bar who looks prettier and prettier the later it gets, Quaker is shining right now." From The Motley Fool 

"Quaker Oats in play as White Knights Emerge" Cadbury Schweppes PLC and Groupe Danone SA could team up to bid for Quaker in the aftermath of an aborted PepsiCo Inc. bid for Quaker. from Smart Money

"Quaker surges on reports it's in play"  . Last year, the company reported EPS of $3.25 a share, the highest in the industry, and a whopping 65 percent above 1998's profits. The gains have been driven through a straight-as-an-arrow focus on efficiency and productivity under CEO Robert Morrison, former president of Kraft. - from CBS Market Watch

"Quaker rumors heat up - investor speculation over the next bidder for the food conglomerate heats up" From CNN

"It's an interesting chess game," said John Sicher, editor and publisher of Beverage Digest. "Gatorade is such a powerful brand that Coke wouldn't want it in Pepsi's hands, and Pepsi wouldn't want it in Coke's." From The Atlanta Journal

Editorial

A hitchhiker's guide to the beverage galaxy

11/1/00 While Ocean Spray is ostensibly engaged in a vigorous turn-around plan engineered by new CEO Robert Hawthorne and a management team with far more talent than those they replaced, the battle lines are being drawn in the quest for fruit juice consumers by companies whose heft could easily crush Ocean Spray underfoot like so many cranberries. Take for example PepsiCo. The perennial number two rival to Coca-Cola has purchased SoBe, but this is merely a distraction to Coke. Coke and Pepsi both know that with carbonated beverage sales stable, the real world-wide growth potential is in mainstream fruit juices and juice blends.

Plain and simple, Pepsi's Tropicana and Coke's Minute Maid will be the major competitors to Ocean Spray within the next few years. In fact, within a year, Tropicana could be posting significant earnings on cranberry juices in countries that aren't even on the marketing maps at Ocean Spray. In the United States, this year look for more and more cranberry blends on the shelves under both the Tropicana and Minute Maid labels, as well as under Dole. (Seagram purchased the Dole global juice business in 1995. PepsiCo acquired Tropicana, including the Dole juice business, in August 1998.)  Continued


"Town meeting alters soil by-law" in The Berkley (Mass.) Bridge


New Ocean Spray ads highlight the healthy benefits of the cranberry


11/1/00 -- "Upper Peninsula is secret cranberry haven : Perfect soil, weather conditions make area prime for berry growing" in The Detroit News


More Quaker Oats/Pepsi Articles

"Like Mike, drink firms thirst for Gatorade -
Pepsi's Quaker bid only whets interest"
....don't rule out a second shot by PepsiCo. "The thinking is, 'Can you afford to let your competitor have Gatorade?"' said David Nelson, an analyst at Credit Suisse First Boston.
- in the Chicago Tribune

Morrison is credited with cleaning up Quaker after its fiasco with Snapple -- the tea and fruit drink line it unloaded at a $1.4 billion loss the year he arrived. ``Bob Morrison has begun playing his 'end game' after three successful years of improving the company,'' John McMillin, who follows the food industry for Prudential Securities, wrote in a research note. Associated Press

Despite Gatorade’s dominance, analysts have long believed it could get a big boost if it were to be more readily available in vending machines and convenience stores, two strengths of the Pepsi — and Coke — distribution systems. From MSNBC


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