Freeze Points Out Sunkist’s
Need To Diversify
Jim Prevor’s Perishable Pundit, January 30, 2007
We heard that Sunkist had decided to stop selling strawberries at the end of last year on the same day California had a horrible freeze destroying most of its citrus crop. Our sympathies go out, of course, to all the growers who have been hurt by this disastrous freeze.
Yet we couldn’t avoid the irony. We’ve been busy urging Sunkist to listen to Steve Barnard of Mission Produce. Here is what we wrote:
Previously the Pundit praised Steve Barnard of Mission Produce, who is on the Sunkist board of directors and has both the intelligence and marketing experience to really help the grower/owners. But nobody seems to be listening. Steve was originally one of Paramount’s appointees to the board. Paramount is gone, and Steve stayed to try to help. But he is not going to waste his time being the conscience of the board if Sunkist’s growers aren’t interested in maximizing the value of the brand they own and would rather watch its value atrophy.
Being that citrus is so short, you can be certain that many at Sunkist wish they had some strawberries to sell. They had a straight marketing deal that required no capital investment. It gave Sunkist something important to talk to retailers about, delivered from 12 million to 15 million consumer impressions of the Sunkist brand and made a cool $1 million for Sunkist. That is customer contact, money and brand impressions that Sunkist simply won’t have.
In contrast, Mission Produce was busy diversifying with a major asparagus deal. So the loss of avocado production won’t sting as much.
There are 6,000 Sunkist growers. It is one of the grandest names in produce, yet step by step, it is unraveling the progress that was made during Jeff Gargiulo’s time as CEO.
The question is why?
We’ve been dealing with this question for some time.
Sunkist Wakeup Call? asked what the message was in the loss of Paramount Citrus Sunkist shipper. A piece entitled International Positions of Two Citrus Companies suggested that the grower/owners of Sunkist should think about where Seald Sweet would be if it hadn’t gone international in a big way.
We ran a Pundit’s Mailbag with a lengthy letter from Rick A. Eastes, then director of global sourcing for Sunkist Global LLC, explaining Sunkist’s international efforts, and the Pundit responded by praising the effort but pointing out that these were the easy, noncompetitive decisions to make. The grower/owners of Sunkist still had to deal with competitive regions such as China.
We extended congratulations to the newly appointed president and CEO of Sunkist, Timothy J. Lindgren, but asked Will Tim Lindgren Go To China? The question was both literal: Would Tim Lindgren establish a strategy for Sunkist in regards to Chinese citrus? and figurative: Would he use his grower-friendly credentials to take the co-op public or otherwise lead it in a direction that had previously been resisted?
Pundit’s Mailbag — In Defense of Sunkist’s New CEO was a reader’s take on the situation.
What the current freeze should demonstrate to Sunkist’s growers is that they have too much in one basket.
They need to diversify Sunkist by product and they need to distribute shares of the co-op to the growers, then do a stock offering on the New York stock exchange.
This would give growers liquidity and separate out the value of the growers’ shares from the value of their citrus operations. The company would be valued in the billions.
We can only hope that the latest freeze leads to some rethinking. After all, wouldn’t it be nice to have some strawberries to sell now?