Editorial

Nestlé and Ocean Spray alliance good news for growers

1/25/02 Ocean Spray is to be applauded for entering into an agreement with Nestlé which will, among other benefits, allow its four bottling plants to operate at higher efficiency. From the employees standpoint, if there were layoffs anticipated these should be averted. For the growers, costs all along the manufacturing line should be reduced from purchasing to production to distribution, pointing to an eventual increase in price per barrel.

When middle aged cranberry farmers were growing up, Nestlé was known primarily for milk chocolate and coffee. Much has changed since then. With justification, Nestlé considers itself to be "the undisputed leader in the food industry, with more than 500 factories in over 70 countries and sales of more than CHF* 71 billion," and a wide range of food products. Based in Switzerland, it is that countries largest industrial company. It employs almost a quarter of a million people worldwide. Its U.S.A. operations alone employs over 17,000 people.

Nestlé has become a major player in the American juice business, especially with its very successful Libby's Juicy Juice. Ocean Spray has no comparable product appealing to children who are old enough to express a preference as to what their parents buy.

The improvement in the bottom line for Ocean Spray growers won't be realized immediately. However, once the savings begin to accrue, price per barrel should increase and the long hoped for target of meeting and exceeding a realistic cost of production can be met. Since independent prices are based on prices Ocean Spray pays to their growers, every month closer this vital date can be moved means that one or more cranberry grower can stay in business.

* At current exchange rates 100CHF equals aprox. 59 U.S. dollars.

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