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Ocean Spray’s Special Treatment Of HEB

Jim Prevor’s Perishable Pundit, June 6, 2007

We’ve run several pieces now on the legal dispute that is ongoing between Jim and Theresa Nolan, their company The Nolan Network and Ocean Spray, most recently right here.

A great deal of focus on the dispute has regarded warehouse club stores and the claim that Ocean Spray provided Costco with preferential pricing . It seems as if Ocean Spray made it up to C&S, which was buying for BJs. But this left open the possibility that Ocean Spray could have to pony up millions to make Sam’s Club whole. This would be especially true if Sam’s Club asked for compensation for damages to its low price reputation.

The case, though, also mentions preferential pricing for H.E. Butt, and many more players will be involved in this simply because there are more supermarket chains — even just in Texas — than there are warehouse clubs.

On this issue, one of the claims is that Ocean Spray provided preferential treatment to H.E. Butt by charging it full truckload freight rates, even though it only took less-than-trailer load delivery of cranberries.

Is this true? One of the documents filed with the court is this e-mail, which seems to powerfully support this contention.

The whole H.E. Butt situation was odd. Although The Nolan Network was representing Ocean Spray nationally, somebody at Ocean Spray decided to retain Acosta to represent Ocean Spray with H.E. Butt. The Nolans claim that the whole reason for hiring Acosta was because Ocean Spray wanted to offer H.E. Butt special deals, and either they knew the Nolans wouldn’t do it or knew the Nolans wouldn’t lie to other customers about it so wanted to keep them in the dark.

This e-mail seems to be the place where the final OK was given for a special freight deal.

One unanswered question in all this is, if all these allegations are true, who at Ocean Spray was so desperate to sell Costco and H.E. Butt and why?

Fresh cranberries are often on allocation, and Ocean Spray, as a co-op, only had its growers’ fruit to sell.

Was this whole thing tied in with processed product? This would raise more issues for the USDA to look at. After all, the growers of the fresh and processed product are not necessarily the same people. So if Costco or H.E. Butt were being given deals on fresh cranberries in order to get them to carry or promote juices or other processed products, the USDA might see this as failing to properly account for the growers’ fresh fruit.

One wonders if when this is all over, Ocean Spray might not lose its PACA license.

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