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Sunkist Hires Consultant To Restructure Sales, Not Governance

Jim Prevor’s Perishable Pundit, July 10, 2007

Our article, Pundit’s Mailbag — Sunkist’s Missed Opportunities, brought forth a variety of input. Interestingly enough, it fell on two sides of the fence: Former employees, academics and consultants who have studied Sunkist, and business partners in the trade who admire Sunkist, think it has potential and are looking for Sunkist to rise like a phoenix from the ashes, simply loved the piece. On the other side of the fence, there were many — though not all — of those still at Sunkist who just seemed quizzical as to why Delos Walton bothered to write the letter at all.

Which provides a reasonable explanation of the two different mindsets at work.

A person long associated with Sunkist sent this note, along with a memo that has been circulated at Sunkist:

To be up front with the axe I have to grind, I believe that Sunkist could be a great brand and company if the current management and board were comprised of more highly skilled people with greater vision.

I side with Jeff Garguilo in wanting global product supply available 52 weeks a year and having the growers involved with Sunkist, rather than the packing-house managers.

I want the current Sunkist management to get booted out and some actual business people to take over the company and run it properly.

You may know that at the last Board meeting, Tim Lindgren (CEO) had to eat humble pie and accept that the post freeze financial plan he, Russ Hanlin (Senior Vice President of Sales and Marketing) and Richard French (CFO) put together was off by more than 35% forecasting year end sales and grower returns. Very embarrassing. He then had to announce signing up Monitor to help with finances and setting strategy. Take a look at the memo Sunkist sent out:

At the heart of Sunkist’s new vision is the opportunity to restructure ourselves to provide better service — to member-growers as well as customers — at a significantly reduced cost.

One of the key projects we will undertake towards that end is the revitalization of our fresh fruit sales process. Russ Hanlin, Senior Vice President of Sales and Marketing, is leading the team working to simplify our sales process and gain efficiencies through best demonstrated practices.

In addition to calling on the expertise of Sunkist’s fresh fruit sales and marketing staff, Russ has engaged an outside consultant, the Monitor Group, to help in what is envisioned to be a four-month assignment involving fact gathering, analysis, design and implementation.

Monitor is a global strategy and management consulting firm with the knowledge, analytic ability and expertise to create customized solutions which help its clients compete and win in the marketplace. We are impressed with their experience and expertise, finding them to be among the “best and brightest” in their field.

Headquartered in Cambridge, Massachusetts, Monitor’s roots are traced back to the Harvard Business School where many of its founders studied and taught. Founded in 1984, the company has more than 1,000 consultant-employees in 28 offices in 18 countries. The two leaders dedicated to Sunkist’s project are in Monitor’s Los Angeles office and, given the intensity of the work, they will have office space at Sherman Oaks.

Together we will undertake a comprehensive review of our current structure with all operating procedures falling within the scope of the project. The results will help make our sales structure become even more effective, competitive and efficient and will help us move forward to where we, as a company, want to be in the future.

Monitor is well known; it also has its work cut out for it. The problem is that if it is not given a broader, strategic assignment to look at all of Sunkist, Monitor should resign its assignment. To confine its inquiry to the “fresh fruit sales process” is a way for board members who are heavy into the packing house business but light on growing to avoid having Monitor look at issues of governance.

Yet governance is key. Tim Lindgren’s appointment as President and CEO has not been a disappointment to the board — the board got exactly what it wanted. The board did not like having a Jeff Garguilo thinking big plans, looking to Wall Street for capital, looking to liberate the value of the co-op owner’s shares.

The board wanted a kind of general manager, more than a CEO, with no grand strategic plans. That is what they have.

The ability to sell fresh fruit cannot properly be analyzed without looking at supply, by-product and general management issues.

As all roads led to Rome, so every critique of Sunkist leads to a critique of its unusual federated co-op structure.

There is still an opportunity to preserve for the growers a chance to realize the equity in the Sunkist name. It is, however, a chance that dissipates with each passing day.

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