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Pundit’s Mailbag — Former Sunkist Employee Weighs In On CEO Selection

Jim Prevor’s Perishable Pundit, July 12, 2007

Sunkist is one of the few iconic produce brands and so it has been a place we have long paid attention to. We wrote a piece in 1991, in Pundit sister publication, PRODUCE BUSINESS, entitled, Diversify Sunkist? This article dealt with many of the issues Sunkist wrestles with today.

Before we get to today’s letter, written by a former Sunkist employee, here is a summary of a number of pieces on Sunkist we’ve written to date:

Sunkist Wake-up Call? — which explored what the message was in the loss of Paramount Citrus as a Sunkist shipper.

Next came International Positions Of Two Citrus Companies, which 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.

Pundit’s Mailbag — Sunkist Responds to Article contained a lengthy letter from Rick Eastes, then director of global sourcing for Sunkist Global LLC, explaining Sunkist’s international efforts, and the Pundit responded by praising the effort but also by pointing out that these were the easy, noncompetitive decisions to make. The growers/owners of Sunkist still had to deal with competitive regions in the northern hemisphere such as China.

We extended our congratulations to the newly appointed president and CEO of Sunkist, Timothy Lindgren, but also posed a question: Will Tim Lindgren Go To China? The question was both literal: Would Tim Lindgren establish an effective strategy for Sunkist with regard to Chinese citrus? And figurative: Would Sunkist’s new President and CEO 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 came from a reader who had worked with Tim Lindgren and gave the writer’s take on the situation.

Bee Sweet Departure Adds To Sunkist Woes pointed out how quickly the relationship had soured between Sunkist and Bee Sweet.

A Paradigm Shift for Citrus pointed out that Sunkist was in big trouble and that the effect on the citrus industry would be transformative.

Sunkist And Pure Gold pointed out how consumer impressions of the Sunkist label would drop precipitously, which could lead to a weakening of the Sunkist brand.

Pundit’s Mailbag — Sunkist And The Australian Citrus Deal brought a letter from Jeff Gaston of Sunkist discussing Rick Eastes and the development of Sunkist’s southern hemisphere programs.

Pundit’s Mailbag — Univeg, Ready Pac, Sunkist and The Lord Mayor of Dublin dealt with many subjects, including the challenges Sunkist faced as a vendor of primarily one category grown in one place.

Pundit’s Mailbag — China, COOL And International Opportunities was built around a letter from Thomas Reardon, a Michigan State University professor with extensive experience in China.

Pundit’s Mailbag — Sunkist’s Missed Opportunities included a letter from Delos Walton, a former analyst at Sunkist questioning Sunkist’s ability to pursue markets in China and Europe.

Sunkist Hires Consultant To restructure Sales, Not Governance dealt with the decision Sunkist made to hire a consulting firm but not to deal with large strategic issues related to the cooperative’s governance.

Now we receive a note urging us to look at the future and, specifically, the question of a future CEO:

I am a former employee of Sunkist. I will say up-front that I had many fantastic years at Sunkist and left the company with only positive feelings. I do not have an axe to grind with the company.

Having said that in advance, I would like to discuss another take on who will run Sunkist and to ask if there is a reason that you have not discussed it. You have focused many of your comments on Tim Lindgren, who was appointed Sunkist’s president last summer. You also mentioned briefly that he was brought out of retirement, and as I have heard, Mr. Lindgren is either 68 or 69 years old. Both of these facts indicate that Mr. Lindgren is not going to be at Sunkist for the long-term, and I heard this sentiment from many within Sunkist.

Additionally, there was the reorganization last year as outlined in the following press release and which I am sure that you are aware of:

Staff alignment reflects expanding operations

Sunkist operating structure is being aligned to provide a more coordinated, integrated approach to our operations; better utilize the resources and talents of each division; clearly define reporting relations, and improve the lines of communication. To accomplish those goals, the board of directors has affirmed the following changes….

To facilitate closer integration of fresh fruit sales, licensed products and marketing, Russ Hanlin (formerly VP International Sales and Sales Operations) is named Senior Vice President, Sales and Marketing. In addition to overseeing the sales and marketing functions for fresh fruit and licensed products, Russ will oversee Sunkist’s interests in our two LLCs — Sunkist Global Sourcing, directed by General Manager, Rick Eastes, and our new fresh cut produce joint venture, led by Rick Harris, President, Sunkist/Taylor LLC. This alignment will improve coordination of our core domestic and export business with our newer global sourcing and fresh cut program. It also will improve communication among those divisions charged with enhancing the value of the Sunkist brand and will complement the way in which Sunkist products, both fresh and licensed, are presented.

John McGuigan (formerly VP Domestic Sales) is named Vice President, Fresh Fruit Sales, and will assume responsibility for fresh fruit sales in both our domestic and export markets. Robert Verloop, Vice President, Marketing, will continue to direct Sunkist’s marketing support activities and Greg Combs, Vice President, Global Licensing will continue with his current responsibilities with licensed products.

Mike Wootton is named Senior Vice President, Corporate Relations and Administration. Added to his current responsibilities of corporate communication, government and grower relations are the oversight of research and technical services (fruit sciences, food safety and engineering) and Sunkist’s human resources functions.

Richard French, Vice President and Chief Financial Officer, continues his oversight of the finance, accounting and IT functions. Tom Moore, Vice President, Law and General Counsel, continues to lead our legal division and Frank Bragg, Vice President, Citrus Juice and Oil, continues to oversee that business unit.

Prior to this reorganization Sunkist had a number of VPs reporting to the president, but there was no senior vice president position. With that reorganization Mr. Russ Hanlin II was given a promotion above the level of vice president and put in charge of a number of departments, all of which had vice presidents reporting to him. Mr. Hanlin thus went from being in charge of export sales to almost all of the key departments at Sunkist.

Given Mr. Hanlin’s greatly increased scope of responsibilities and the short-term nature of Mr. Lindgren’s tenure, it is not difficult to see that Sunkist has Mr. Hanlin in mind as the next long-term president of Sunkist. I could also see that Mr. Hanlin now has much greater influence within Sunkist and is taking a more hands-on role within the organization. As such, his philosophies and views will be very important to the direction that Sunkist takes in the upcoming years, and these should be addressed in your column as well.

If you do decide to comment on this, I ask that you do not use my name or identify me. I am still on good terms with my former co-workers at Sunkist and would like to stay that way. As you might guess, your column is not the most popular thing at Sunkist right now, especially your praise for Jeff Gargiulo (I agree with you on that point, by the way), and while I am very happy to offer my opinions on Sunkist, I would prefer to do so quietly and without identification.

We have many friends at Sunkist. It would be unfortunate, if human, for anyone to take the attitude of criticizing the messenger when what they really don’t want to deal with is the message. Benjamin Franklin is believed to have said, “Our critics are our friends, they show us our faults.”

It is not always pleasant to be shown one’s faults, but this is business, not personal, and for a company to constantly reexamine itself is imperative. As Andy Grove, the former CEO of Intel, entitled his book: Only the Paranoid Survive.

Besides, if they knew what the Pundit charges as a consulting fee, Sunkist would have a party at Sherman Oaks every time we give free advice.

Besides, a cursory glance over the baker’s dozen pieces we’ve done related to Sunkist shows that much of the impetus for what we have written comes from people in the industry, whether they are customers or suppliers, staff or ex-staff, board members past and present. Sunkist executives should take seriously this intellectual outpouring, since virtually all these people would like to see Sunkist succeed.

The obvious question posed by our correspondent is this: Is Russ Hanlin II, the namesake of his father, the highly esteemed former President of Sunkist, the man for the job to be the next President of Sunkist?

We found the letter a bit curious, and so asked our correspondent for his own opinion on the matter. Here is what he said:

My impression of Russ Hanlin II is that he is not similar to his father at all. I met his father on occasion, and as you know, he is very polished and a gentleman who is still very much respected within Sunkist. Russ Hanlin II does not quite have the people or diplomatic skills. He is more of nuts-and-bolts type of guy. He appears to be straightforward in what he says, but he also appears to keep his cards close to his vest and not let on as to what he is thinking. Also, since he spent his entire career managing fresh fruit sales and the associated income, he is also more focused on bottom-line numbers, a.k.a., a "bean counter."

None of these comments are intended to be positive or negative in nature, only objective observations. I doubt that I would want to report directly to Russ Hanlin II, but that is not the criteria for which somebody should be judged to be president. Russ has been at Sunkist for quite some time, so he obviously knows a bit about how Sunkist works and how to get things done (if they can get done). He may be the best candidate to be Sunkist’s next president. I don’t know if this is the case or not. My only point is that Tim Lindgren is obviously only a stop-gap appointment and will not be there long-term, and that all signs point toward Russ Hanlin II eventually taking the reigns. As such, I think that Russ Hanlin II’s attitudes and ideas are much more important to the long-term future of Sunkist than those of Tim Lindgren.

We rarely speculate on personnel matters. First of all, in a case such as this, we are not certain what Sunkist is going to be like in a few years. With volume dropping, headquarters for sales, sales offices closing, it may be a very different Sunkist than we saw even a year ago.

Second, much depends on what one wants a particular person to do. We have made the point several times that, although we would not have selected Tim Lindgren to run Sunkist, this is because we would be looking for a great strategic thinker to position Sunkist for the future. We would want someone to reform governance, to completely change the capital structure, to separate the powerful brand from the weight of grower interests in selling their own crop.

However, since the board of directors at Sunkist wanted none of these things, we think they made a great hire in the sense that the person hired is well suited for the job the board wanted to see done.

We can’t read Russ’s mind and so can’t say what his “attitudes and ideas are.” We can only say this:

When Sunkist was seeking a CEO, Russ was in the running. The board decided not to name him CEO, and the “inside scoop” was that he needed more seasoning. So they brought Tim in as an interim leader while Russ got seasoned.

In our opinion, having been passed over for CEO, Russ should have left and used his formidable talents somewhere else.

It is not good for companies or people to have someone who has been passed over still around. It doesn’t mean Russ is a bad person or even a bad executive. But when the man and the moment don’t meet, everyone is better off if you part ways.

We are also a little skeptical of the ”seasoning” argument. Russ has been at Sunkist, as our letter writer states, a long time. And he is not a kid. Whatever hesitation the board had about hiring Russ as CEO is unlikely to be satisfied by a couple of years’ experience in domestic sales.

Russ’s father ran Sunkist with a true understanding of a cooperative. In an interview as he was departing he said it best:

Advice for his successor — “Remember every day that Sunkist is a voluntary membership association. You have to have the consensus of the membership to make it work. Massage that consensus, get out there and try to communicate as best you can what it is you’re trying to do. Work on that constantly and don’t feel that it’s an intrusion on your job. That is your job.”

Yet we can’t help but think that time has passed by this management style; the CEO can’t be so busy massaging the membership of a co-op. There is just too much else to do. Perhaps it means time is passing by this kind of co-op all together.

We hope that the board won’t choose to give Russ the job out of nostalgia for the father. That would be bad for business and an unconscionable burden to put on Russ.

Our letter writer is, however, correct: The current regime is not thinking strategically, so the key to the future of Sunkist may be in the mind of the next CEO. We just hope there is enough of Sunkist left to be worth rebuilding.

Many thanks to our correspondent for bringing such a crucial question to the fore.

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