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Sunkist And Brand Equity

Jim Prevor’s Perishable Pundit, January 22, 2009

At one point, we were writing a great deal about Sunkist. This was mostly because there were a series of dramatic changes after Jeff Garguilo left as CEO… from the loss of the co-op’s largest member, Paramount Farms, to the search for a new CEO first to replace Garguilo and then to replace Tim Lindgren, a sort of placeholder CEO, who had been called back from retirement to keep the ship steady after Jeff’s departure.

Ultimately Russ Hanlin, Jr. took the reigns. He was the sentimental favorite all along due to the esteem his father, Russ Hanlin, II, held during his reign as CEO of Sunkist and because of Russ Jr’s long association with the co-op.

Russ and his cheerful wife, Holly are very down-to-earth, and it is easy to see why the growers of Sunkist would be comfortable having Russ at the helm. As it happens, the loss of Paramount and a few other producers, along with a freeze, probably pre-destined this to be a time of retrenchment and his rapport with the growers and packers has served the organization well.

Now we confess that we see the Sunkist name as an incredibly valuable asset, and it frustrates us that more of that value hasn’t gotten back to the growers. We think the very structure of Sunkist, in which growers own the co-op but packinghouse owners run the place, has led to a culture in which the focus is on running boxes through packinghouses rather than realizing maximum returns for shareholders. This is why various options, such as a public offering, have not happened even though there was much value to deliver to the grower/owners of Sunkist.

It also strikes us that it was a mistake to drop the marketing of strawberries, as the fresh product seemed compatible with the Sunkist brand and the product created consumer impressions that were valuable.

We also have urged Sunkist to get involved in the production, packing and/or marketing of Sunkist brand fruit from China. This strikes us as the only way to save the vast bulk of the Sunkist export business in Asia. With the continuing improvement in quality and growth in quantity of the Chinese citrus business, we fear that Sunkist may have to ultimately exit Asia as it had to virtually abandon Europe.

Walking into the Fancy Food Show in San Francisco, Sunkist was brought to mind again as right at the entrance to the hall, there is a giant Sunkist logo. It is not a Sunkist booth actually — it is a Jelly Belly booth. The product is Sunkist Fruit Gems, a gummy candy produced under a license agreement with Sunkist by the same folks who bring us Jelly Belly Jelly Beans.

The candy comes in various fruit flavors and colors, but contains neither fruit nor juice. Without a doubt, products such as Fruit Gems and Sunkist brand orange soda are cash cows for the co-op and its owners, returning license fees for very little work. In addition, the Sunkist name and, in the case of Fruit Gems, the Sunkist logo are given increased consumer prominence.

The question, though, is what does Sunkist prominently mean? Maybe once upon a time, candy and soda were seen as harmless treats but in an age where schools are banning soda pop and candy from vending machines and the whole society is seeing obesity as a major problem, is an association with these products really beneficial for Sunkist and the long-term value of its brand?

What do the owners want Sunkist to mean? Just something orange-colored? Or is it supposed to stand for health, vitality and freshness?

These licensing deals seem like legacies of days long gone by. By associating with such non-healthy products, the brand is damaged and consumer confusion encouraged. Sunkist ought to quit its addiction to the cash flow from the licensing deals that don’t help build brand equity and insist that any future deals need to enhance the brand image for quality, taste, freshness, health and vitality. Deals for non-healthy products should not be renewed when they expire.

As it stands now, every Sunkist orange is an ad for candy and soda. Does that make any sense? How long before some school bans the product on that basis?

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