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Sunkist CEO: Broader vision with global strategies

Mar 3, 2005 9:39 AM, By Dan Bryant

VISALIA, Calif. — Sunkist grower-members are beaming about their improved returns for 2004, but Jeff Gargiulo, president and chief operating officer of the citrus marketing cooperative, says future performance will be driven by a new, broader vision.

Sunkist payments for 2004, distributed among its 6,000 members in California and Arizona, rose about 11 percent as revenues exceeded $975 million, up 3.5 percent over 2003, from sales of 71 million cartons, 3 million less than the prior season.

At its 111th annual meeting, held here recently, Gargiulo, who is marking his fourth year at the helm, said Sunkist’s mission has always been the highest possible returns for members.

The vision for the next 10 years, however, is based on strategies for a stronger presence in the international marketplace, particularly with enhanced brand recognition through more logo "impressions" on every package or piece of fruit sold.

"Other well-known brands," he said, "spend hundreds of millions of dollars each year in advertising and marketing. We don’t have that kind of money, yet we continue to make the brand more distinctive with premium quality fruit."

Notable in that approach is Sunkist’s successful sourcing of lemons and oranges from Chile and South Africa into Japan and Hong Kong and navels from Australia into Canada. The result of the year-round supply was a positive consumer response to additional products, while Sunkist held on to its retail shelf space with premium branded citrus.

Berry business

Sunkist also sold one million trays of strawberries in a limited deal with Coastal Berry last year and is now exploring other ways to continue in the berry business.

Gargiulo said he is often asked why Sunkist is moving into offshore sourcing of citrus and marketing non-citrus fruit.

In answering, he pointed to what’s going on in European markets showcased by the massive, international Fruit Logistica produce show, which he said is four times the size of the Produce Marketing Association’s annual show in the U.S.

Although Dole, Chiquita, Driscoll and other prominent U.S. brands were represented at the recent exhibition in Berlin that draws buyers from everywhere, he said Sunkist was not an exhibitor but plans to be there in the future.

"We need to look at these opportunities, figure how we will execute them, and bring the bacon back home. Hopefully, it will affect our cost structure and get more brand impressions out there," said Gargiulo.

"There are a lot of changes in our world, and we have to understand what’s going on in Europe, and in China and the rest of Asia."

The immediate course of action, he said, is to re-focus on quality, with the reasoning that any sustainable brand has to earn and hold a reputation for unique quality. "The growers and packers who will be around in 10 years are the ones who produce quality."

Courting markets

Sunkist, he said, will do its part by continuing to build on marketing of quality fruit by courting export markets and ramping up already high standards for inspection and food safety.

It is diversifying with specialty citrus, such as Clementines, a marketing innovation for it in 2004, as well as new products, including Sunkist Fun Fruit, a line of bagged, ready-to-eat, fresh products for school food service.

David W. Krause, Orange Cove, Calif., grower and Sunkist chairman, credited much of the success of the 2004 season to industry unity, led by Sunkist, as demonstrated by the California Citrus Growers Association (CCGA), an effort to improve grower returns.

Sunkist has been a principal in CCGA, formed in 2003 for member cooperatives to share information and better coordinate marketing. A generic advertising campaign, a first for the industry, was launched this season. Funded by the industry and managed by Sunkist, it is centered on the Sunkist brand.

Other CCGA members are the Central California Orange Growers Cooperative, Sun Pacific, United Moonlight Citrus Association, and Corona-Citrus Heights Orange and Lemon Association.

CCGA, which represents 85 percent to 90 percent of the California citrus industry, is also dedicated to voluntary higher standards of fruit quality and timely deliveries to suit market demand.

Consistent supplies

Gargiulo said CCGA was not only a success in 2004 in improving grower returns but also in providing consistent supplies of high-quality fruit for consumers.

And produce buyers also benefited, he added. With orderly supplies, week-to-week, "they gained confidence with citrus and by gaining confidence they are willing to sell more."

Although Mother Nature took kindly to the 2004 crop, the present crop has several problems, Gargiulo said.

"While lemons are in good shape, oranges are bigger, there’s more of them, and they are not as pretty. We’ve had some freeze, a lot of rain, and the fruit will not last as long. So it is a more difficult crop to manage, and that may be, in some ways, more of a test for CCGA. But things are going along pretty well."

Gargiulo is bullish on the future for citrus. "Someone asked me if I would plant oranges. Yes, I would plant oranges. I think oranges have a future in California. I think we have a future for specialty citrus, and although we do have potential for lemons, they are more open to competition from imports than oranges."

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