It was a strikingly different Sunkist 109th annual cooperative meeting in Visalia, Calif., this year than in years past.
Rather than bemoaning the loss of the citrus marketing order and castigating competitors, it was young, aggressive Sunkist corporate leadership telling its grower members Sunkist is scrambling to catch up in a rapidly changing retail and consumer marketplace.
Frank-talking Sunkist president Jeff Gargiulo said Sunkist does not exist to provide services to growers, but rather to provide products consumers want to buy.
And, that is not necessarily bulk citrus. It's convenient, pre-cut ready-to-eat citrus — like the ready to eat salads and fruit now flooding the market. Retail supermarket shelf space for bulk produce is getting smaller. Convenient, ready to eat produce shelf space is growing.
“We are behind in providing value-added products,” said Gargiulo. Sunkist is working hard to catch up and within two months will initiate a large scale pre-cut four to six product promotion with a Pittsburgh, Penn., supermarket chain.
That is just one element of Sunkist management's efforts to become more than just a commodity product marketer.
Sunkist must become a year-round citrus supplier. Buyers like Kroger and Wal-Mart are demanding it. To that end, Sunkist for the first time has purchased oranges from Florida and limes form Mexico to meet Wal-Mart's demand.
And, Sunkist is expanding its process business now supplying California orange juice for the Florida Natural Brand and lemon juice to Coca Cola.
“We have to make changes at the same pace the world in changing. “We are already behind in marketing to the Wal-Marts and in value added products. We cannot talk about making changes for two more years,” said Gargiulo.
“We sold 60,000 cartons of navels to Kroger last week and they asked us when we were going to make a proposal to them for supply product year round since our competitors had already done that.”
Much of the senior management of Sunkist is new and with them has come major reorganization of its sales division that included closing many offices and creating new revenue streams.
Gargiulo was not telling Sunkist growers anything they did not know about Americans wanting more convenience in purchasing food. “We all decide at 4 p.m. in the afternoon what we are going to do for dinner that night,” he said. “My children will not cut up a cantaloupe in the refrigerator, but they will go to the deli and buy it already cut.”
Robert Verloop said Sunkist is competing in a sensory marketing place. Consumers are saying, “Show me what is inside your product. We know what the outside looks like.
“We are not in the citrus business, we are in the taste business,” said Verloop.
The challenges may seem daunting, but Sunkist is a brand known worldwide for quality and good health and that bodes well for meeting the changing marketplace, said Gargiulo.
“We can be competitive in the marketplace. The question is how much Sunkist do we want to see in the grocery stores,” he said.
Gargiulo and grower board chairman Al Williams of Visalia urged producers to stay united in the cooperative and continue delivering high quality fruit.
“Our competition is not grower vs. grower; packinghouse vs. packing house or even independent vs. Sunkist. We are competing in a world marketplace for consumption,” said the Sunkist president.
There also may be changes needed on farms, said Williams, who told grower that “you need to look at your packout statements over the past few years. A change in variety or sub variety may be in order,” Williams said.
It was an attentive audience of almost 900 that had come off a good in year in 2002 with sales or $964 million for 315,000 tons of citrus. Most producers did well last year with a small, high quality orange crop.
However, Williams and Gargiulo said the 2002-2003 orange crop is not selling well. Too much supply for demand is keeping prices low.
“The last couple of weeks we have kept demand up and prices are stabilizing now,” Gargiulo said. He predicted they will rise slowly during the remainder of the season.
The war in Afghanistan and political trade deals with counties like Span and Argentina are hurting Sunkist sales. It's largest growing market is South Korea and tensions between North Korea and the U.S. are threatening that market as well.
“These changes are having a profound effect on us,” he said.