 
2001 Annual Report
Preparing for the future
Since its inception, Sunkist has been the industry leader. Over the past 108 years, we have adapted and improved ourselves again and again to meet the changing needs of the marketplace. Many of those changes, however, have come slowly.
The world and our industry are changing rapidly. To continue to lead, as we are so well positioned to do, we are removing the impediments that stand in the way of how business is done in today's complex produce world - and we are doing it quickly.
Sunkist's mission is to provide the best returns possible to its growers. The successful accomplishment of that mission depends on mastering the changing dynamics of the produce industry. With the ongoing industry consolidation, purchasing decisions are being centralized among fewer and fewer buyers. The consumer is also changing, demanding convenience as well as quality. With the globalization of produce and the new diversity of products, there are many more choices competing for shelf space. Sunkist is developing new ways to maintain and to increase our share.
We have studied the market. We have listened to our customers. And we are making some difficult, but necessary, changes to ensure that Sunkist is aligned to offer the best service to our trade.
To better serve our growing list of high profile retail and foodservice accounts, Sunkist is restructuring. So far we have enlarged the national account sales office. By bringing under one roof a staff of highly qualified directors and category managers, Sunkist has created a centralized service that enables us to better partner with our major customers. We are now providing them with exactly what they need to conduct profitable, full-scale citrus sales efforts across their many diversion and distribution points.
To ensure that Sunkist is aligned to offer the best service to our trade, we are shifting from our geography-based district sales system and moving to one based on the needs of the customers. We have consolidated the District Sales Offices system, transferring the functions of some sales offices to others more strategically located to where buying decisions are made.
From data based selling and category management to how we handle the needs of our largest customers, we are re-evaluating the way we conduct business and we are finding new and efficient solutions. Already, projected costs have been reduced by several million dollars even as we expand our services.
Bringing more than 1 million cartons of pre-mium Texas grapefruit into the Sunkist family will complement our summer season grapefruit program with winter produce. This is a major step forward in our campaign to continue as the citrus category leader, capable of supplying our customers year-round.
Sunkist continues to actively build our brand via its global licensee network. With 45 licensees in 53 countries marketing $1.1 billion of Sunkist branded products, the Sunkist logo had over 7 billion impressions worldwide and our licensees spent over $100 million promoting the Sunkist name.
Sunkist has initiated a major new study on the brand, its consumers and its products globally. In the upcoming year, we will look for new ways to leverage our brand between our fresh fruit and our licensee partners. Increasing Sunkist's overall brand presence and increasing consumer demand is key to long-term returns for our growers.
On the processing side, Sunkist has forged a co-processing arrangement with Ventura Coastal which makes better use of existing facilities.
This agreement should enhance revenue while reducing costs by about $2.5 million in 2002.
Our new agreement with Florida's Natural® Growers establishes Sunkist firmly in the most profitable sector of the orange juice business - the Not-From-Concentrate (NFC) sector. Florida's Natural is second only to Tropicana in this very competitive juice category. This new long-term alliance with a leading name in orange juice sales will have a positive bottom line effect for our growers.
Sunkist offers year-round supplies of a wide variety of fresh citrus items. We are uniquely positioned to meet the volume, size and quality needs of our largest partners. Our strength lies in our brand, a name that is recognized the world over. We are focused on deriving the full benefit from our famous trademark.
Sunkist has new tools - innovative packaging, exciting promotions and sophisticated data gathering and research programs - to establish in our customers' minds that we are the citrus category leader. Our new marketing promotions and programs are customer-focused to drive sales for our retail, wholesale and foodservice partners.
Retail customers will see sweepstakes, loyalty programs, demonstrations, in-store events marketing, and cooking symposiums. Foodservice is partnering with high-profile chefs, moving citrus to the "center of the plate" to increase usage and building demand for Sunkist citrus.
These changes, however, only get us part way on our journey to reform Sunkist for the future. We have seven task forces looking into all aspects of our business - global sourcing, value-added convenience, forward distribution, brand image, category management, performance marketing and governance. We are soliciting the best thinking in the industry on these issues. These targeted task forces are doing the research, analyzing the facts and making recommendations to lay the foundation for a revitalized marketing organization.
These changes, while dramatic, are not revolutionary. They are evolutionary. Once the decisions are made, they will be implemented in carefully thought out steps. They will be tested, re-tested, and revised as necessary.
Our challenge is to reform Sunkist to be lean and fast moving like other successful companies in today's world. Our history is very important, but we cannot be trapped by the past as we lead into the future. It is time for Sunkist to reinforce its leadership role.
Today's Sunkist has accepted the challenge. We are continually analyzing and implementing better ways in which to compete. We want to be, we should be and we will be the best in the industry. With our more proactive approach to marketing and our more efficient, streamlined system, our customers are already seeing and hearing a new Sunkist.
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