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Stressline

News and opinion about the cranberry industry.

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Farm Stress Articles


Friday, Jan. 7, 2000 

 

The Sixteen Top Stories of 1999

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 News Briefs


Big changes at Northland Cranberries
So-called war with Ocean Spray to continue

"You can expect the most aggressive street fight for cranberry market shares we have ever seen." Scott Corriveau, president of Northland's branded products division

1/6/00 - In a Milwaukee Journal Sentinel article yesterday, reporter Tom Daykin writes: "Northland Cranberries Inc. is at war with arch rival Ocean Spray Cranberries Inc., company executives told shareholders at their annual meeting Wednesday."

Shareholders attending the meeting were shown a sampling of Ocean Spray coupons, including one that offered a $2 Ocean Spray discount to any consumer who buys Northland juice. The coupon would print out automatically at the time a customer bought a Northland product (Click to view coupon.)

The sale of the private label end of Northland's business is seen as a way to focus more on competing with the still dominant player in the cranberry juice business, Ocean Spray. The juices bottled under the Northland label are in direct competition with Ocean Spray juices. The Seneca label, still held by the company, is a lower end product that doesn't compete directly with Ocean Spray. Mil. Journal-Sentinel article

Cliffstar Press Release:

Cliffstar Corporation signs definitive agreement to acquire Northland's private label juice business

Nation’s largest private label juice company signs agreement to acquire Northland Cranberries private label division

1/5/00 - DUNKIRK, NY — The Cliffstar Corporation today announced that it has signed a definitive agreement to acquire the private label division of publicly traded Northland Cranberries, Inc.

"This acquisition will continue our growth as one of the nation’s leading private label juice manufacturers and offer us the opportunity for improved services, efficiencies and flexibility in our bottling operations," Sean McGirr, president, Cliffstar Corporation, said. "We are a leader in this industry because of the new opportunities we create for our private label customers, our associates, family of growers and our suppliers."

Cliffstar will acquire Northland’s private label product line that includes a wide array of cranberry, apple, grapefruit and grape juice products. According to IRI, dollar sales of juices are up 7.2% versus 1998, with private label having the largest category market share of 12.5% and sales up 12.2%.

"This acquisition, in combination with consumer trends and our recent acquisition of Carolina Products, provides expanded opportunities for growers and customers of Cliffstar," Robert Gioia, Cliffstar’s chairman, said.

Cliffstar manufactures more than 145 quality Corporate Brand Label fruit juices and drinks for the leading grocery customers throughout North America. The company operates manufacturing facilities in Dunkirk, NY, Joplin, MO, Fontana, CA and Greer, SC and processing plants in Warrens, WI, East Freetown, MA and Fredonia, NY. Corporate headquarters are based in Dunkirk, 45 miles southwest of Buffalo, New York.

Northland is a vertically integrated grower, processor and marketer of cranberries. The company processes and sells Northland brand 100% juice cranberry blends, Seneca brand juice products and other fruit juices, Northland brand fresh cranberries and other cranberry products. Easy to print version


Food Labeling & Health Related Claims Conference Attracts Monsanto, McNeil, Orafit, Kraft Foods, Nabisco, Roche, Tropicana, Campbell Soup Company, Pharmavite and other Major Players

NEW YORK, Jan. 3 /PRNewswire/ -- Strategic Research Institute N.Y., announces Food Labeling and Health Related Claims conference: Read press release HERE.

Added 1/5/2000: Read the papers from last year's conference on a similar topic, "New economic approached to consumer welfare and nutrition", including a long study "Measuring demand for functional foods and the impact of health labeling regulation" and fifteen other presentations. HERE


News:

Nantucket Nectars Implements Oracle's E-Business Suite

1/3/2000 - According to Beverage World, Nantucket Nectars will be replacing several computer systems with Oracle's E-Business Suite in March because they made collecting and analyzing data difficult. Read article here: Beverage World article


Oregon Washington race for BOD heats up

12/26/99 The proposed downsized Ocean Spray Board will combine the states of Oregon and Washington into one growing area for the purpose of Board representation. The Washington candidate, Don Hatton, is an incumbent and is the current Chairman of the Ocean Spray Board. His opponent, Daryl Robison, decided to run from Oregon when controversial director Jack Hackett resigned at the Dec. 21st meeting of the Ocean Spray Board in Chicago. Hackett was accused of leaking a "confidential" memo from Bain to shareholders.

This is the first time in the history of Ocean Spray where candidates from two different states have squared off in an election for one seat on the Board.

Daryl Robison has posted a statement about his qualifications and platform on the Cranberry Stressline Forum. Supporters of each candidate are also posting their opinions on the Forum. Go to Forum


Coke's distribution decision hurts smaller company

12/23/99 According to an article by Constance Hays in today's New York Times, the bottled water company  Naya is seeking bankruptcy. The story of Coca-Cola's decision to stop distributing a bottled water, manufactured by this Canadian company, which has led to a bankruptcy filing is strikingly similar to the PepsiCo decision to stop distributing Ocean Spray's single serve products when they purchased Tropicana.

Coke had been distributing Naya, which is a bottled filtered water with added minerals. With Coke's help, the privately owned company grew 30% a year for five years.It was so successful that Coke tried to buy the company in 1997. This year, when Coke introduced the own bottled water, Dasani, they stopped their Naya distribution. Now Naya is attempting to reorganize.

The Pepsi and the Coke cases demonstrate what can happen when a large company moves into a market previously dominated by smaller companies. In Coke's case with Naya, they first attempted an acquisition. Failing that, they brought out their own competing product, severed the distribution relationship with Naya, and are now becoming a formidable competitor.

Read NY Times article


CATCH UP ON THE PREVIOUS TWO WEEKS OF CRANBERRY NEWS HERE

Northland Cranberries, Inc., posts 1Q EPS $0.02 vs. $0.01

Northland Cranberries, Inc.   Interim Consol. Earns. Nov. '99-- Thou. US Dollars

3 Mos. to Nov. 30:  1999  1998 
Revenues  74,967  34,236 
Net income  321  120 
Share earns. (basic)  $0.02  $0.01 
Share earns. (diluted)  $0.02  $0.01 

Rreleased 1/7/2000 8:39AM EST: NEW YORK (Standard & Poor's)--, Northland Cranberries, Inc., announced 1Q EPS $0.02 vs. $0.01.

Northland Press Release:

Northland Signs Agreement to Sell Domestic Private Label Juice Business to Cliffstar Corporation

WISCONSIN RAPIDS, Wis., Jan. 5 /PRNewswire/ -- Northland Cranberries, Inc. , manufacturer and marketer of Northland brand 100% juice cranberry blends and Seneca brand fruit juice products, today announced it has entered into an agreement to sell its private label shelf-stable juice business and certain related inventories to Cliffstar Corporation, a privately-held manufacturer of private label juice products based in Dunkirk, N.Y. No plants or equipment are included in the proposed sale, which is expected to close before the end of the first calendar quarter of 2000, after certain conditions, including expiration or earlier termination of the 30-day federal Hart-Scott-Rodino Act antitrust waiting period, are satisfied. The business being sold represents approximately $43 million of Northland's $237 million of fiscal 1999 revenues.

Northland will receive a total of $32.35 million for the business and certain cranberry inventories and an additional amount equal to the fair market value of other inventories to be conveyed at closing, estimated to be approximately $4 million. Northland will receive Cliffstar's six-year promissory note for $28 million and the balance will be paid in cash at closing and during the first ten months thereafter. Northland will also be entitled to an earnout payment equal to a certain percentage of profits realized by Cliffstar from its sale of cranberry-based juice products during the six-year period following the closing, with a minimum earnout payment over the six years of $5 million. Cliffstar will have the option to terminate the earnout during the first 30 months following closing by paying Northland an aggregate earnout of $22 million (including any prior earnout payments) and prepaying the balance of the promissory note issued at closing. Northland expects to realize a pretax gain of approximately $3 million on the sale.

At the closing, Northland and Cliffstar will enter into a long-term cranberry supply agreement pursuant to which Northland will supply cranberries to Cliffstar and a contract manufacturing agreement pursuant to which Northland will co-pack juice products for Cliffstar at its bottling facilities.

John Swendrowski, Chairman and CEO of Northland, said, ``This sale will allow us to focus entirely on building the Northland and Seneca brands within the juice category. While the sale will considerably reduce annual revenues, we do not expect a material impact to our operating profits on an ongoing basis. We believe that the reduction in goodwill amortization and the interest income, co-packing profits and profits on raw cranberry sales from the transaction will offset prior profits from the business.'' Easy to print version

Press Release:

Northland Cranberries, Inc. reports first quarter earnings; conducts annual shareholder meeting; announces quarterly cash dividend

1/5/00 WISCONSIN RAPIDS, Wis., J /PRNewswire/ -- Northland Cranberries, Inc., manufacturer and marketer of Northland brand 100% juice cranberry blends and Seneca brand fruit juice products, today reported fiscal 2000 first quarter financial results for the period ended November 30, 1999. Total revenues recorded for the three-month period were $75.0 million, up 119% over last year's first quarter revenues of $34.2 million. Net income for the quarter was $321,000, or $0.02 per share, compared to fiscal 1999 first quarter net income of $120,000, or $0.01 per share.

John Swendrowski, Northland Chairman and CEO, stated, ``The results for the quarter are in line with our internal expectations, as well as the recent published estimates of market research analysts. The dramatic increase in revenues over the first quarter of last year was primarily a result of increased sales of our branded products, which includes Northland 100% juice products and Seneca juice and drink products. Also, substantial revenue gains were generated through co-packing operations, compared to last year. Continued


Corporate diversity

1/4/2000 - Part of the legacy at Coca-Cola that Douglas Ivester left for his successor, Douglas Daft, is an ongoing problem with the black community and its own black employees.  According to Constance Hays in today's New York Times (Ivestor was a)  "brilliant planner who masterminded the interlocking relationship between Coca-Cola and its bottlers around the world, (who) was criticized for what was seen as insensitivity and arrogance in certain situations. His tenure was clouded by declining worldwide profits, scuttled acquisition plans and the biggest product recall in company history last June."  NY Times article


Technology for the juice business

1/3/2000 - There's an excellent article about Enterprise Resource Planning (ERP) technology in Beverage World entitled "Food and beverage companies need to integrate information enterprise-wide."  Read article here.


Did you know?

12/29/99 - Just prior to Christmas, according to an article, "Call it a Christmas cranberry crunch: Not a crisis, mind you. But only three days before Christmas, there's a shortage of fresh cranberries" in the Madison, Wisconsin State Journal (12/21/99), there was a shortage of fresh cranberries in Wisconsin.

According to a British trade journal, Ocean Spray is spending 3 million pounds promoting cranberry as a drink with adult appeal in the U.K.  Bates Advertising is handling the account in the UK. Bates' U.K. chief executive John Stubbings said, "the market has grown by 40 per cent in the last six months but that's mainly in the kids' sector. We have to create a brand proposition for Ocean Spray as an adult drink." Also, in the United Kingdom, as of this summer, three flavors of Craisins were due to be relaunched: regular, orange and strawberry. New for the English Christmas, it was reported that Ocean Spray was introducing a gourmet sauce product described as a "cranberry variant with orange liqueur, mulled wine and extra fruit."

Craisins got a good review in the Israeli newspaper HA'ARETZ (Sept. 22, 1999) where they were described as "an excellent snack on their own or make fine additions to muffins, pancakes or English-style cakes." The article also said that craisins are "worth adding to dry breakfast cereals in the morning," and that "a great deal of current research indicates that cranberries are an excellent natural antioxidant, so these delicious tidbits may actually even be good for us."

According to an article entitled "The new economy is stronger than you think" in the Nov./Dec. 1999 Harvard Business Review, "Nantucket Nectars used to be a tiny company run by two friends who sold their wares off the back of a boat. An entrepreneur fell in love with their business plan and gave them several million to expand the business before it was purchased by Ocean Spray for almost $100 million."


Media: 12/28/99 - From the Patriot Ledger: 1999 in Review: Cranberry crisis hits Carver hard .

The following articles
are from the 12/16/99
edition of the Old Colony
Memorial, Plymouth, MA,

www.mpgnews.com

'When the bottom drops out
this fast, it's just unbelievable'

By Charles Mathewson
© 1999, MPG Newspapers

Reprinted with permission

PLYMOUTH - Will Stearns has a habit of chuckling in mid-sentence. He's not only an optimist. He's enjoyed 20 years of good fortune as a cranberry grower. The chuckle goes away when he talks about the future.

"It's been a wonderful ride," Stearns said. "But when the bottom drops out this fast, it's just unbelievable. Even if the market does recover, it will never come back like it was." The drop in cranberry prices means Stearns can no longer make a profit on his 42 acres of bogs. This year he and his son saved labor costs by picking the bogs by themselves. CONTINUED | Easy to print version

State wants growers to bog down
Offers $40,000 grants to those who agree not to develop land

By Charles Mathewson
© 1999, MPG Newspapers

Reprinted with permission

PLYMOUTH- Cranberry growers got an offer for help Friday. It's an offer many can refuse. They wonder if it's enough to save their farms.

Approximately 150 growers participated in a symposium at the Sheraton Inn Plymouth. They learned the state will offer $40,000 grants in exchange for an agreement not to develop their land for 10 years.

"Our growers must increase the efficiency of their operations and lower costs to remain competitive," said Jeff LaFleur, executive director of the Cape Cod Cranberry Growers' Association. "These programs will provide the means for Massachusetts' cranberry farms to remain a strong force in the now global cranberry industry."

No longer kings of the cranberry industry, local growers have to find new ways to remain competitive or sell the farm. Collectively, they own thousands of acres of developable land around their bogs. They could dump all those acres onto the housing market and retire from an increasingly losing proposition. Such a move would further stress local governments trying to maintain a reasonable balance between commercial and residential land.

"The meeting helped us put things into focus," said Wayne Barnes, a Plympton grower and past president of the Cape Cod Cranberry Growers Association. "It's discouraging. You put your heart and soul into something for years and overnight you have no income, no equity." CONTINUED | Easy to print version



The sixteen most important articles in 1999 Where it all started, the original Titanic article | On why Ocean Spray should dump Wellfleet FarmsOcean Spray and the ERP/SAP | Cranberry Stressline is "odd and misguided" | The most extraordinary two weeks in November | Wisconsin votes against merger | Wall Street responds to BOD decisions | Ocean Spray in the New York Times | Mefford appointed interim C.O.O. | Makepeace supports merger | NASS report on surplus | Bain and the Board | Acquisition rumors reported, denied | Bullock resigns | Tom Gelsthorpe's three part seriesHatton and Robison in battle for seat on Board following Hackett's resignation


 

 


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