Cranberry Stressline June, 1999

Continued from previous page

Cliffstar CEO and Board Chairman Jim Koch resigns, is replaced
Source: Company Press Releases on 6/6/99, 6/10/99

6/8/99  DUNKIRK, NY  --- Stanley A. Star, a director on the Cliffstar Corporation's Board of Directors today announced the resignation of James S. Koch as chief executive officer and chairman of the board. After several successful years with Cliffstart, Mr. Koch is leaving the company to pursue other personal and business interests, but will continue to make himself available to the Cliffstar Board of Directors in a consulting role.

"Jim Koch, upon joining Cliffstart in July 1986, brought incredible focus and implemented  strategic initiatives that resulted in annualized double-digit growth for our company," Mr. Star said. "He has been a great asset to Clifffstar in our continuing growth and is a key reason as to why we are one of the nation's leading private label industry leaders." UP


Star went on to say that the Board of Directors gratefully acknowledges Mr. Koch's service to the company and looks forward to continuing their positive relationship with him. Mr. Koch was instrumental in working with the Board in growing Cliffstar's business, and the Board wishes Mr. Koch every success in future endeavors.

Koch first joined Cliffstar in 1986 as director of sales and marketing and was promoted to president of the company in January 9, 1997. From 1972 to 1986 he held various positions with Koch's Brewery, including vice president of sales and marketing. Koch received a Bachelor of Science degree in business administration from John Carroll University and a masters in business administration from Suffolk University. UP


6/10/99 ---Stanley A. Star, a director on the Cliffstar Board of Directors announced today the appointment of Robert D. Gioia as chairman of the board. In his new role, Gioia will be responsible for working closely with the Board of Directors to help Cliffstar meet future growth objectives and develop strategic planning initiatives.

Mr. Gioia come to Cliffstar with significant background and experience in the private label and grocery industries. He currently serves as a principal in the Food Group of Strategic Investments and Holdings, Inc. Previously Gioia served as president and CEO   of both CFP Holdings, Inc. and Quality Foods, LP. He also serves as vice president with the Red Wing Co. and in a management capacity with the Gioia Macaroni Co. Mr. Gioia is also a leader in the Western New York business and cultural communities, most recently serving as Chairman on the Niagara Frontier Transportation Authority.

More on Cliffstar

During the summer of 1997, Cliffstar's was one of several companies offering over $80 per barrel to Ocean Spray grower/owners whose contracts were due to expire with the cooperative.  At that time OceanSpray was paying growers $61 per barrel.

In November, 1998, Cliffstar purchased a private label juice company from Missouri based Speaco Foods Inc. John Koch was quoted as stating "part of our strategic plan for the future is to identify opportunities for growth through similar transactions in the ever-changing and competitive private label juice business." Read article here: Joplin Globe  (Ed. note: Previous reference to Cliffstar being part of Clement Pappas was in error.)

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

6/19/99:  Ocean Spray Cranberries chief to quit -Troubles include glut, competition by Northland,  by Corissa Jansen of the Milwaukee Journal Sentinel
"I don't think it's appropriate for Northland to comment on very difficult decisions at Ocean Spray at this time," John Swendrowski , President, Northland Cranberries.
HERE

6/18/99:Ocean Spray chief Bullock to leave troubled cooperative By Chris Reidy, Globe Staff
''They were a monopoly for many years, now it's a competitive environment, and it's not an environment they're comfortable in.'
' John Decas, President, Decas Cranberry Products HERE


Chris Reidy's Globe article was picked up by the Knight-Ridder/ Tribune Business News service serving 50+ Knight-Ridder owned newspapers (listed here).

 


6/18/99: Boston Globe - Associated Press announcement
"Despite the company's troubles, Ocean Spray reported sales of $1.48 billion for its last fiscal year ending Aug. 31, 3 percent more than the previous year. It also reported profits of $280 million, up from $273 million the previous year."
HERE

6/16/99: Ocean Spray growers can read the letter from Board Chairman Don Hatton in the Extra net HERE.

Tom Bullock Retires

"The cranberry cooperative has become bogged down in its attempt to transform from a monopoly into a company that could defend its turf from emerging rivals."  6/20/99 "Abandoning Ship" in Boston Globe Business Review

6/16/99: Tom Bullock became President and CEO of Ocean Spray in early 1997 with the promise to "reinvent the company and the cooperative". In an interview in Harvest Magazine (Vol. 19 No.2 May 1997) he promised   "this is all about creating prosperity for grower/ owners. That's why we're in business: higher returns per unit, a more valuable enterprise that they can have access to, a guaranteed home for their fruit in the future and maintaining farming as a way of life for the next generation."

Here's Bullock on competition from the same article: "As category leaders we have to continue to lead from strength. It's like playing king of the mountain when you're a kid. The guy on top is the winner. He has the advantage of working from height.  We're king of the mountain in the juice-drink business. There are a lot of people who want to knock us off, though. If we weaken, they will bring us down."  There was no clarification as to which competition he was referring to, companies like Northland, Decas and Hiller who were fighting for a relatively small portion of the cranberry  market, or the giant juice-drink beverage companies.

As he began his tenure, Bullock's prediction for the year 2005 was that Ocean Spray would still stand for cranberry and grapefruit with the core consumers. However, his goal was expansion: "we have to get a younger audience, we have to go for a more male audience, we have to go for a larger consumer audience than we have right now, we have to be available in more places."

Until more information is released, readers may want to review the PricewaterhouseCoopers Web Site here to become familiar with a likely candidate for transition management, as it has world renown expertise in "defining and facilitating change strategies and organizational transformations". It also offers a Transaction Services which is "dedicated to assisting clients with mergers, acquisitions, divestitures, joint ventures, spinoffs and strategic alliances."

Another company, with close ties to Ocean Spray, that has much to offer is Fleishman-Hillard, a company that works "closely with top management of some of the largest corporations in diverse areas such as senior management positioning programs, crisis counseling, merger situations, labor disputes and issues management. Fleishman-Hillard professionals have experience in crisis recovery, corporate identity programs, mergers and acquisitions, and in effecting socioeconomic or legislative change."

McKinsey & Co. is yet another top drawer management consulting company that may be in the running when outside help is evaluated. They have a relevant article in their August 1997 online magazine (click here), "Corporations of the Future". It is well worth reading. Here's a quote:  "Large corporations convinced that size ensures success often struggle to translate size and scale into customer value and profits. A lot of our clients have been choking in their own complexity, resulting in little innovation or employee fulfillment-and they are looking to us for answers."

It remains to be seen what, if any, role the ubiquitous Andersen Consulting firm will have in Ocean Spray's future.

bulbblink_white.gif (408 bytes) New readers interested in getting a sense of the dissatisfaction among Ocean Spray grower/ owners prior to Tom Bullock's retirement announcement, can read the two pages of over one hundred postings and responses in the Cranberry Stressline Forum. You can also look at the article that, along with the Fourm, began the transformation of a web site about farm stress to a news and opinion web site, here. Readership jumped from 130 a month to 1,300 in March and then increased to over 3,000 in April, when an Ocean Spray spokesman called it "odd and misguided" in a newspaper interview ("Web page ammunition for modern-day David", New Bedford Standard Times, 4/14/99.) The number of "hits" this month is already nearly 9,000.

After the fall, recovery isn't easy: lessons from the hog crisis

6/22/99 ''American agriculture does the best job anywhere in the world in producing grain, livestock, whatever it is, but somewhere along the line, I think we've gotten so busy with production that we've not been very good marketers. ... We have to match production to demand.'' Darrell Axtell, commodity broker. (Ed. note: Read the article, change the "h" in hogs to "b"...) AP Story in Boston Globe here


The future of Ag Co-ops
Source:
Successful Farming

6/20/99 Successful Farming Online's poll is showing that over 50% of respondents don't think there's much hope for the future of new agriculture co-ops, predicting that "new co-ops will be killed by processing giants who can outbid and undersell them."

"Investing in new-generation co-ops is something like investing in the stock market – perhaps harder – since no central source of information exists about co-op financial performance. "

Read article "Unite for Success: value-added co-ops help families capture greater margin in the food chain"   here.


Coke has its problems
Until 1959, the American people believed that retail food was always safe to eat.
Source: Fleishman-Hillard and
BevNet

6/22/99 Troubles Continue - read AP article here.

6/20/99 One participant in the Bevnet Forum says the tainted Coke in Europe is the "Exxon Valdez of the Bev industry" , writing "this crisis is the hugest ever in the industry -- While the amount of people harmed is relatively small, the effect on Coke's brand should be huge." Bevnet's own headlines project an editorial slant that isn't found in the articles they link to: "Coca-Cola:Crisis in Europe, Belgian Ban Reduced"; "Coke's reputation hurt"; and "Coke Apologizes - Too little, too late."

Irony

Fleishman-Hillard has an excellent chapter excerpt from Crisis Response: Inside Stories on Managing Image Under Siege which you can read on their web site here. It is interesting and perhaps ironic that the author,
Peter S. McCue, Senior Vice President and Director of the Corporate Communications Group at F-H, writes on page 4 :

"Today's information pollution can trace its roots back to The Great Cranberry Scare of 1959, which marked the end of an age of innocence for consumers. The announcement came just three weeks before Thanksgiving. The federal government had discovered samples of cranberries laced with a weed killer known to be carcinogenic in rats. Consumers were urged to avoid all cranberries except those which had been tested and approved by the government."


High tech:

Computer maps fertilizer needs
Source: Inc. Magazine

6/20/99 To keep track of fertilization schedules for his cranberry bogs, Peter Beaton utilizes commercial softwear painstakingly adapted by wife Deborah, that maps application schedules for five varieties of cranberries.

"So pleased is Deborah with her system that she and Charles River recently formed a venture, Cranberry Technologies Inc., to sell their custom program to other growers. But for Peter the greatest benefit is being able to spend time, he says, 'working on the bogs, instead of sitting around coloring maps.' "

Read 6/15/99 Inc. Magazine article here.


New in the Stressline Forum:

Message "A conversation that took place one year ago"

6/18/99 : There are 2 parties to this conversation. One is "Foe" the operative of a huge national corporation who is supposed to acquire Ocean Spray for his bosses. The other is "Moe", the man on the inside of Ocean Spray who is willing to betray us.

Foe: What's with these cranberry growers? We should have acquired them years ago. They're making good money, not fantastic money. But they seem satisfied. Maybe they're not vulnerable after all. It sure sticks in my craw though. A group of grower-owners skimming the profits from their own marketing vehicle. It usually isn't this hard to bring a group like this into the fold and turn them into serfs to the mother company.

Moe: Well don't give up now. I think we're just getting into a position where we can make our move.....
continued here.

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For the curious:

Cranberry Stressline readership increases significantly in three months -

1999 to date,  Statistics here.

Southern Maine loses only cranberry farm:

Cranberry operation abandons Alfred site
Source: Maine Today

"I think the future for this industry in Maine is on a large-scale basis. Our project was relatively small, and the financial viability was too dependent on the price per barrel." Robert E. Cleaves, Maine Cranberry Company

here


p-opinion.gif (1055 bytes)

Why not Motts?
by Hal Brown

Revised: 6/18/99 There has been much speculation about which company, if any, would benefit cranberry growers and Ocean Spray the most in a merger. Why not Motts?

Cadbury Schweppes has  close connections with Coca-Cola explained here: (1)   (2) . Cadbury Schweppes owns Motts. They also have a bottling arrangement with Welch's in Canada. Coke of course owns Minute Maid, giving them strength in orange juice and in the refrigerated section of the supermarket. If Ocean Spray were to merge with Motts and come under the umbrella of Coca-Cola and Cadbury Schweppes, their dominance of the juice aisle would all but be guaranteed, from apple juice through blends to cranberry and grapefruit juice. Welch's and store brands would still own a couple of feet of shelf space for grape juice, unless the "name" in grapes joined the new "franchise".  There seems to be a natural fit between Ocean Spray and Welch's in that they are both agriculture cooperatives.

All of the Ocean Spray apple blends would gain stature and recognition under a label that would highlight both Motts and Ocean Spray. Just like Ocean Spray is to cranberries as Kleenex is to facial tissue, so is Motts to apples. In addition, Motts apple sauce and Ocean Spray sauce are highly complementary products and beg to be worked into tasty combinations that would jump off the shelves with a combined label.


Tidbits:

Pricey Cranberry juice with a kick at New York's Four Seasons
Source:
Fortune Magazine

6/20/99 Diva Martini (Finlandia vodka, Malibu rum, Frangelico, and cranberry and pineapple juices)-- price $14-15.00

 


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