archives 9/15-21, 1999

Cranberry Stressline

Dates: Sept. 15-21, 1999

 

9/21/99 - Cranberry Marketing Committee: 1998 Crop year figures

9/20/99 Op-Ed from a processor:  I wish to propose an initiative for the Cranberry Stressline that might hopefully result in influencing our industry to take notice (along with appropriate action) to rectify a situation that is most harmful to our industry and indeed is a contributing factor to the problems we presently face.....

9/16/99 Opinion - Heinz and Bestfoods

9/16/99 - Fresh Fruit price down $8 case from last year

9/20/99 Tom Bullock reminds us that Ocean Spray represents values like honesty and integrity.

9/20/99 Potential Ocean Spray suitors:Quaker Announces Supply Chain Reconfiguration; Targets $60-$70 Million in Savings in 2002 and Beyond

9/17/99 Ocean Spray hires Interim COO

9/17/99 Northland Cranberries: Swendrowski addresses concerns, issues, in letter to Northland growers

 

Cranberry Marketing
Committee:

1998 Crop year figures

stats_092199a.jpg (5021 bytes) 9/21/99 The gap between production and sales widened again for the second year in a row. Ending inventory was 1,070,473 barrels greater than in 1997. Between 1997 and 1998 sales were comparable, and production was only up from 5,957,262 to 6,162,699. For the nine years between 1988 and 1996, production and sales kept apace with each other. Ending inventories fluctuated between 771,487 (1990) and  1,383,406 (1992). In 1997 the ending inventory jumped to 2,037,441, from 1,221,319 in 1996. For the crop year ending in 1998, the ending inventory was 3,107,366. See graph and figures


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Editor's note: The following Op-Ed letter was submitted by a processor of cranberry juice drinks. He has legitimate reasons for keeping the identity of his company anonymous.

9/20/99 I wish to propose an initiative for the Cranberry Stressline that might hopefully result in influencing our industry to take notice (along with appropriate action) to rectify a situation that is most harmful to our industry and indeed is a contributing factor to the problems we presently face.  Your web site has the attention of our industry and the trade that we deal with, but does it have the clout to deal effectively with the kind of issue that I present in this letter?

It is my hope that I can raise awareness and a sense of urgency, through you, to the growers and handlers of our industry regarding my concern. I do believe that the Cranberry Stressline can be the vehicle to launch a movement to correct a gross injustice that is being inflicted upon our industry. As a processor of cranberry drinks, I want cranberry juice standards raised, not lowered.

I speak to the fact that the juice market includes many so-called cranberry juice drinks that contain virtually no cranberry as an ingredient. CONTINUED | Easy to print version


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Heinz and Bestfoods

9/16/99 The merger discussions between Heinz and Bestfoods, which have gone on for months, with most issues resolved, have broken off according to a story in today's The Wall Street Journal (link requires paid subscription). An unnamed Wall Street executive is quoted in the article as saying "Putting two food companies together, where one is in one category and one in another part of the grocery store, doesn't necessarily help...the reason why big wholesale mergers haven't happened is that when you really get down to the numbers, it's hard to get yourself over the hurdle of merging the whole portfolios. What helps is when they overlap on the same aisle."

A look at the juice aisle demonstrates connectivity between Ocean Spray and several partners. An acquisition by Pepsi links the cranberry blends with the orange blends of Tropicana. With Cadbury-Schweppes, cranberry blends would complement Mott's apple juices. Weaker "synergy" (the current buzzword) would exist with an acquisition by Procter and Gamble which owns Sunny Delight or Quaker Oats which owns Gatorade.


Ocean Spray
Fresh Fruit price:

Fresh Fruit price down $8 case from last year

9/16/99 A memo dated 9/8/99 (click here) addressed to Ocean Spray Fresh Cranberry Brokers and National Accounts from James Nolan, Ocean Spray's manager for domestic and international cranberry sales states that:

"effective immediately, we quote the following price on Ocean Spray fresh cranberries for the United States and Canada: $19.00 for 24/12 oz. poly bags and 20 lb. bulk, f.o.b. all shipping points. This price, which represents an $8.00 per case decrease from our opening price last year, will be good on all orders requested for arrival by October 30, 1999. In addition, we are giving a lid price of $25.00 f.o.b. for November's shipments. A firm November price will be announced in mid-October.

Shipping is expected to get underway the week of September 20 from Massachusetts and Wisconsin and the week of September 27 from Washington.

All requests for fruit are subject to Ocean Spray's confirmation, availability of supplies, ability to ship and acts of God.

Terms: Net 21 days from date of invoice."

 


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In the September edition of The Scoop, a publication written primarily for in-house employees of Ocean Spray, sent to grower/owners, and occasionally shared with the press, he steps onto the slippery slope of the issue of free speech vs. company loyalty and tries to discourage debate on "the Internet". He wants employees to confine their debate about critical business issues to "department and facility meetings, in CEO Mailbox and during Office Hours." I doubt if such an admonition would be made if outside debate was  going on only in the donut shop. CONTINUED | Easy to print version


Potential Ocean
Spray suitors:

Quaker Announces Supply Chain Reconfiguration; Targets $60-$70 Million in Savings in 2002 and Beyond

9/20/99 CHICAGO - - /PRNewswire/ -- The Quaker Oats Company (NYSE: OAT - news) announced today that it has begun a three-year project to upgrade and optimize its manufacturing and distribution capabilities in North America.

This program is expected to significantly lower operating costs by removing inefficient assets, building operating scale in key product lines, and integrating Foods and Gatorade warehousing. The project involves a rationalization of U.S. and Canadian food operations, an expansion of U.S. beverage manufacturing and a reconfiguration of the Company's food and beverage logistics network. In total, these actions could result in a total company headcount reduction of nearly 10 percent, or 1,200 jobs. Entire Press Release here


Ocean Spray hires Interim COO

mefford.jpg (5560 bytes) Click left for information updated 9/18/99

Story updated 9/17/99 - Ocean Spray has announced that Dean A. Mefford has been hired as the interim chief operating officer to work immediately under outgoing Ocean Spray President and CEO Tom Bullock. Mefford, 58, worked for thirty years at Ralston where he advanced from  management trainee to a series of top level posts."Given some of the critical supply chain and marketing issues we now face, we are fortunate to have someone of Dean's caliber and background to tighten our focus on the work at hand," said Bullock in a press release. "He has a proven track record of providing vision and leadership to grow existing businesses, start new businesses and turn around under-performing businesses."

According to Ocean Spray, Mefford became President and CEO of Viskase, then a subsidiary of Envirodyne, in September of 1994. He replaced  F.E. Gustafson, who remained as chairman of Viskase and executive vice president of Envirodyne Industries, its Oak Brook-based parent. Viskase is a supplier of food packaging materials. Gustafson went on to become President and CEO of the entire corporation, a position he continues to hold.

Mefford came aboard following the filing of a Chapter 11 by the parent company in 1993. (ed. note: I am not clear as to when Mefford left Viskase; but he was there at least until 1997.)

Envirodyne Industries, Inc. changed its name to Viskase on, Sept. 8, 1998. It is  traded on the Nasdaq SmallCap market under the trading symbol “VCIC”. Viskase is the world's leading supplier of cellulosic casings and a major producer of specialty plastic films. These packaging products and solutions serve the packaging needs for processed meats, fresh red meats, poultry, foodservice, cheese and bakery sectors of the food industry.

In 1997 Enrivodyne suffered a downward spiral. It sold off a number of its units, including Clear Shield National, Inc. to Solo Cup Co., for $140 million and its Sandusky Plastics subsidiary. The corporation was seeking a buyer, but had a $524.1 million debt load. There was an attempted leveraged buyout by Heico Holdings, Inc., which failed. A 1997 law suit  resulted in an $11 million settlement against D.P. Kelly & Associates and Salomon Brothers. It had been alleged by the plaintiff, the Atra Group, that they had been deceived about the prospects of Environdyne. Donald P Kelly and Salomon led the $840 mil buyout of Envirodyne, which later filed for bankruptcy. Prior to the buyout, Artra had a 26.8% interest in Envirodyne.

In 1997, revenues dipped 6% to $612.9 million, while the loss of $9.6 million, or 66 cents a share, represented only a slight improvement over the 1996 loss of $13.7 million, or 96 cents a share. They suffered a loss of $17.6 million, compared with a year-earlier loss of $7.5 million. Sales in the first six months were down 16% to $105.4 million. The company also had to lay off 215 employees in its Chicago plant in 1998.

In a 1996 trial in Chicago, a jury found that American National had infringed on Viskase's patents for casings and awarded $102.4 million in compensatory damages. Eventually on appeal in 1998, Viskase was awarded damages from American National Can Co. of Chicago. In U.S. District Court in Chicago, a jury found that American National's manufacture and sale of heat-shrinkable film -- used for fresh meat, processed meat and poultry applications -- infringed Viskase's patents. The judgement was almost twice the stock value of Viskase.

April 1999 Press Release on the state of the company

Archived news articles about Viskase from Hoovers

S.E.C. Filings (10K's are the most informative) for Envirodyne/Viskase


Northland Cranberries:

Swendrowski addresses concerns, issues, in letter to Northland growers

9/17/99 In a letter to Northland Cranberries growers (9/13/99), President and CEO John Swendrowski explains the erroneous reporting in the media that led to a buzz around Boston as major news radio stations like WBZ reported that Northland was considering the acquisition of Ocean Spray.

In the letter Swendrowski also elaborates on his opinion of the benefits of an affiliation between Ocean Spray and Northland: "A combined entity with the Ocean Spray, Northland, Seneca, Nantucket Nectars, Tree Sweet, Awake brands would be a near $2,000,0000,000 exciting entity with significant earnings potential. It would be a powerhouse on the juice aisle with tremendous opportunities to grow through acquisitions or merger with other juice focused franchises worldwide."

On the issue of Ocean Spray being acquired by a larger entity, vs. a merger with Northland, Swendrowski writes:  "I do not understand the discussions that a $1.4 billion sales company cannot compete in the marketplace and therefore must be acquired by a bigger player. I believe that, because of capital restraints, a $1.4 billion cooperative has difficulty competing and growing profitably. I also believe that a cranberry grower will be best served by a company that is cranberry focused, not a company that has a small part of its income from cranberry."

He is critical of Ocean Spray as he predicts the following: "do not be surprised if upcoming reports show an increase in Ocean Spray "sales". Based on reports filtering in from around the country, Ocean Spray is now giving away coupons for free 64-ounce bottles at checkouts. Since these coupons will "ring" up at full price in industry data, I would assume that the next industry report will indicate that Ocean Spray has increased its market share."

Read Northland Letter | easy to print version

 


News link:

9/15/99 Carver Selectman to join in Makepeace Discussions, from the Patriot Ledger

9/15/99 The Ocean Spray public web site, criticized here for being out of date (see below - article on 9/12/99), has now been updated and has a new look. 9/15/99 What better time to promote or reintroduce Cran - Blueberry?*  Read about the latest study on the health benefits of blueberries here.
* The Ocean Spray consumer web site notes, regarding Cran-Blueberry: "Very limited availability. May be available as of March 10, 1997 in select areas in the following states: AL, AZ, AR, CA, CO, FL, GA, HI, IL, IA, LA, MI, MN, MT, NE, NY, OH, OK, OR, PA, TN, UT, WA, WI and throughout New England."

.....

 

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