 
2002 Annual Report
Chairman's Message
2002 was a successful year for many Sunkist growers, with higher overall fresh fruit revenues and FOBs. It was also a year in which the marketplace spoke clearly about the direction for the future. Growers who produced what the market wanted - good looking, good tasting navels, lemons and minneolas for example - fared well. But those who produced varieties out of favor with consumers - such as grapefruit, Valencias and orlandos - did not. The marketplace is speaking, and each of us - grower, shipper and marketer - must listen.
2002 was also a very challenging year because of the changes both within the citrus industry and within Sunkist. While talk of change is not new by any means, the rate at which it is accelerating is affecting all of us.
The changes Sunkist has made, and is making, in its structure mirror the changes taking place in our customer base. Sunkist is doing exactly what our customers are doing - consolidating and centralizing. And we are not unique. This is happening in all parts of every industry.
The consolidation of retail has resulted in fewer, bigger buyers. Ahold stores around the world serve 40 million consumers a week. Wal-Mart stores serve 100 million. These customers require a different set of services from their suppliers. Sunkist's advantage is our ability to combine our size and brand name with the right services, to work with our customers more efficiently and effectively and to compete on the basis of service, not just price. Our bigger customers need continuous supplies, vendor-managed inventories and e-commerce capabilities, all of which Sunkist can provide.
Because of the changes in the operations of the Sunkist sales team, domestic and export sales now work together in a much more cohesive, efficient manner. The sales team is also more closely coordinated with marketing, which provides forward-planned promotions and long-term programs for increasing consumption. The new high-energy, collaborative environment makes our operation even stronger. As Sunkist grows increasingly more responsive to our markets and to our customers, it is this attention to business and the ability to competitively service our customer base, which allows us to obtain the best possible return for our growers.
While we must never lose sight of what's going on with the production side of our operations, what happens on the customer side is what drives our business - and what is happening is change.
The globalization of the produce industry is having a major impact on the way we do business. Today, almost half the produce sold in the United States is grown outside our borders. Sunkist exports nearly 25 percent of its crop. We have new competition as our own government opens the U.S. market to imports. We have stronger competition as offshore producers improve production and packaging technologies. And we have lower-cost competition as our offshore counterparts are able to produce high quality fruit at lower cost than we can here at home.
Our largest customers tell us they are going to buy the best available product for the best price. They don't care where it comes from. When we put ourselves in the position of not marketing the best product, year round, we are vulnerable.
Anytime we allow someone else to have leverage in a supply relationship, it ultimately costs our growers business. Not having the product your customers want, when they want it, is not focusing on the customer.
Today, consumers can choose from a growing proliferation of produce. Fifteen years ago, the average produce department carried 150 items. Today, most carry 600 or more - and that number is growing. Most stores, however, still have the same amount of square footage in which to merchandise it all. Our citrus competes with all fruit varieties - from apples to watermelon - as well as with citrus from other parts of the world.
And our citrus competes on two different levels. We compete for shelf space, and we compete for consumer preference. Consumers have more choices than ever before, and they are choosing variety - and convenience. In today's produce department, shoppers find cut fruit, cored pineapples and many other new consumer-friendly products. Sunkist is researching avenues for value-added products to meet the consumer demand for convenience.
I am privileged to have served as your chairman during this period of reform, of cost cutting and of consolidation. I am grateful to my fellow board members for their support, counsel and untiring efforts on behalf of our growers. I am optimistic that as we take the steps necessary to make us more market-focused and responsive, the present success and future achievements of the Sunkist system will be assured.
Al Williams
Chairman of the Board
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