Cranberry Stressline

August 17-21, 1999

 

(Pet) Food for thought

8/21/99 Proctor & Gamble has been mentioned, along with beverage corporations like Coke and Pepsi, as the kind of large multi-national company that would benefit Ocean Spray grower/ owners should they acquire the brand label and marketing portion of the cooperative. Acquisitions are playing a large part in true multi-national's strategic planning for the next decade of international food and beverage marketing. Corporations valued in the $100 billion plus range and doing well, have the cash at hand to purchase comparatively small companies and use their savvy and clout to make them winners. Witness what Triarc has done for Snapple. Business in the juice aisle isn't soft for Triarc, a newcomer to the beverage industry.

Now Proctor & Gamble is about to enter the pet food market by purchasing privately owned Iams Co. for $2.3 billion in cash and debt. Americans might be surprised to learn that two-thirds of the market for pet food is international.  At present, international sales for Iams are only 30%, so there is huge world-wide growth potential which P&G will doubtlessly take advantage of.


Triarc, with Snapple up 10%, posts impressive 2nd quarter gain

8/20/99 Excerpt from yesterday's press release: "Triarc's premium beverage operations, comprised of Snapple, MisticŪ and Stewart'sŪ, reported adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $23.5 million for the 1999 second quarter on revenues of $196.4 million, compared to adjusted EBITDA of $19.6 million on revenues of $177.7 million for the comparable period in 1998....The significant improvement in premium beverage adjusted EBITDA, compared to the 1998 second quarter, was fueled by a 10% volume increase for Snapple. Snapple's core diet and fruit drinks and Elements(TM), a new product platform of herbally enhanced drinks introduced in April 1999, were the primary factors contributing to this growth. During the second quarter, approximately 1.4 million cases of Elements were sold, indicating positive initial reaction from both distributors and consumers. Read entire press release here


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Taking Charge of our Future

By Dave McCarthy
  Massachusetts cranberry grower,
Member, Cranberry Institute Board of Directors


8/19/99 - I believe that the time has come for all cranberry growers to take an active part in the future of our industry.  The news that the industry will have a carryover of approximately 3 million barrels is very unsettling and could bring the whole industry to its knees.

Leaving  our future in the hands of our respective handlers is not the answer.   Inbred jealousies, lack of trust between handlers, etc. do not  make a smooth path leading to the road to recovery.  There is, in my estimation, only one way that we can recover in a reasonable amount of time with a little skin left on us.  That way is to begin to promote the  cranberry industry by bringing to this country and the world the word  CRANBERRY.  Right at the moment, all handlers and bottlers are out there chasing the same dog.  This, as we all know, is only driving the price lower.

How do we go about doing this?

I would like to suggest that all cranberry growers (U.S. and Canada) agree to put up twenty five cents per barrel to be held out by their handlers and put into a fund to be used by the Cranberry Marketing Committee for the generic promotion of CRANBERRIES.   This promotion of cranberries would consist of telling the good story that we have to tell but without a brand name in sight.  I can only state that without  we, the growers, taking a lead in this direction, it will never happen.

Twenty five cents a barrel will be peanuts compared to the distinct possibility of a set-aside for a number of years to come.  We have to make a move and make it fast.

I would to further suggest that a so-called "Cranberry Summit Meeting" be held in the very near future.  This meeting could be hosted by the Cranberry Institute (with board approval) and would consist of the top two people from each  handler in the industry.  Subjects could be: How the industry used to be, how it is now and the principles used in returning  it to a viable industry.  It seems that if the Arab Countries can sit at a table and be somewhat civil to each other, we should be able to do the same.

There are no simple answers to a very complicated situation, but we have to start somewhere and these are my views on  where we could begin a recovery effort.

I would like to here from fellow cranberry growers as to their  views on this subject either on the Stressline Forum   (preferably), or E-Mail me at Mysticran@ webtv.net

Thanks and have a good harvest .  


NASS forecast for 1999 cranberry crop up 6%
Price per barrel hasn't been this low since 1980

Released August 17, 1999, by the National Agricultural Statistics Service (NASS), Agricultural Statistics Board, U.S. Department of Agriculture. For information on "Cranberries" call Steven Gunn at (202) 720-3110, office hours 7:00 a.m. to 4:30 p.m. ET.

1999 Cranberry Production Up 6 Percent

The forecast for the 1999 cranberry crop is a record high 5.81 million barrels, up 6 percent from both 1998 and 1997. Massachusetts, New Jersey, Oregon, and Wisconsin are forecasting increases from a year ago while Washington is expecting a decrease.

Production in Wisconsin is forecast at a record high 2.6 million barrels, 2 percent above 1998 and 13 percent above 1997. Growers reported very little winter damage. Berry set was good to excellent and a wet July provided a good water supply. Some growers expressed concern about excessive moisture causing fruit rot.

The Massachusetts crop is forecast at 2.1 million barrels, up 12 percent from 1998 but unchanged from 1997. A mild winter caused little winter damage plus very few insect and disease problems were reported. Growers indicated that the crop had good pollination and set with medium berry size.

New Jersey expects a crop of 580,000 barrels, up 11 percent from 1998 but down slightly from 1997. Growers reported good pollination, bee activity, and fruit set. Fruit size was reported as average.

In Oregon, the crop is forecast at 370,000 barrels, 4 percent above last year's crop and 6 percent above 1997. This year's crop had a slow start due to a cool spring. Pollination was good and fruit set was fair. No abnormal problems with pests were reported.

The Washington crop is forecast at 160,000 barrels, 5 percent below last year and 3 percent below 1997. Washington had a mild winter with little frost damage. A cool spring hampered pollination and set. Insect and weed problems also contributed to the decreased production.

1998 Production and Value Down

Production of cranberries in the United States in 1998 totaled 5.46 million barrels, down 1 percent from 1997. The area harvested, at 36,600 acres, increased 3 percent from the previous year and set a new record. The average yield of 149.1 barrels per acre was 4.9 barrels below 1997. The average price per barrel decreased $22.10 per barrel from 1997 to $41.60. Value of production decreased to $227 million, 35 percent below the previous season's record high.

Read charts and full statistics on NASS Web site.

 

Hard lessons:

"This Board sold us out"
Jon Jacobson -  Highfields Capital Management,
the largest single Reynolds investor on the sale to Alcoa

8/21/99 "....Reynolds managers and directors were dragged kicking and screaming to the point where they put the company up for sale, and only when they were faced with a hostile takeover battle from Alcoa. Then they botched the sale negotiations, quickly accepting an inadequate offer...." from Reynolds purchase leaves one Boston hedge fund manager steaming see also: Reynolds accepts Alcoa stock debt bid


Recommended Reading

8/21/99 "Merger and acquisition activities reshaped the face of European food manufacturing this past year, producing some large, powerful groups. Most companies recorded a successful year, but there are major challenges to be faced, such as European Monetary Union, the economic collapse in Asia and retailer consolidation." From Food Explore part 1  "Flexibility, a global outlook and longevity despite fierce economic challenges are taking top food companies into the next century." Part 2


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Loyalty, lies & Potemkin villages

by Tom Gelsthorpe

This is Tom's fifth contribution to Cranberry Stressline. In this article, he draws important lessons from Russian history. Here are some excerpts:

8/19/99 Potemkin would doll up the main street with a series of "false fronts" like the ones we see on Western movie sets. The intended effect was to convince Catherine that the peasant villages were much more prosperous and tidy than they really were, because the false fronts hid the squalid, misshapen cottages behind them.

Catherine the Great, being an absolute monarch, could afford to be deceived by appearances, and the peasants, with no feasible redress for their difficulties, learned to make do with whatever the monarchy could provide, and not to risk their necks by complaining too much.

A great handicap of tyranny is that most parties to the power equation find it to their advantage to deceive each other for short-term gains. Initiative for long-term gain almost always suffers under such a system, because frequently there is no long term. Read article here


Web surfing for The Wave

Every so often Stressline finds an interesting quote to share without comment on the Internet. Here are several:

8/19/99 From an article in last week's Patriot Ledger about Ocean Spray hiring Bain Consulting, by John Estrella:

"Everything is on the table," (OS BOD member Gary) Garretson said yesterday. "I don't think anyone wants to let preconceived notions dictate (the process). I think there are real opportunities here."

"I'm not going to speak to any options that are out there," (OS spokesman Chris) Phillips said.
"They range from doing nothing to doing a series of things. There are zero
preconceived notions. There are no assumptions that we're going to reach
any conclusions."


8/18/99

"A partnership with Ocean Spray has helped Pepsi emerge as a leader in the single-serve juice market. Ocean Spray Cranberry Juice Cocktail is the most popular cranberry drink made with a unique, refreshing "sweet-tart" taste that consumers love. Ocean Spray has a whole line of flavors to satisfy your taste when you 'Crave the Wave' ".

from: Pepsi-Cola Bottling of Northern California


Independently speaking
by Brent Olson

Sign Language

8/26/99 Last week while I was combining wheat, a lady stopped to ask me if someone on a tractor pulling a baler had driven past where I was working.     Actually, at first she didn't talk to me.  She tried to get the that the one-finger wave is becoming very popular in urban areas.  The only difference is they seem to use a different finger than we do.  Continued

Change in Sympathies

8/19/99 Okay, you're going to have to stay with me on this one. I'm going to
wander a bit, but trust me; it's all going to make sense in the end.

Sometimes it's important to have all the facts before you form an
opinion. This was driven home to me last week at our county fair. A young woman of my acquaintance was standing alone near where I was working.

"So," I said to her, "How are you?"

"Not so good," she said. "I'm a little sick to my stomach." Continued

 


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