Citrus Growers Embrace Challenges and Change
At the 110th annual meeting of Sunkist Growers
February 18, 2004
February 18, 2004, Ventura, California..."Change is a shared responsibility and grower involvement is key," Sunkist President and Chief Executive Officer Jeff Gargiulo told the more than 700 Sunkist grower-owners attending the citrus cooperative's 110th annual meeting at the Seaside Park at the Ventura County Fairgrounds. "Sunkist, its growers and its packinghouse members must all continue adapting to meet the needs of today's global market: improving business models; managing costs; producing high quality product and employing the supply chain efficiencies that today's customers demand."
2002-2003 was a difficult year for many citrus growers as production levels of most citrus crops reached near record highs. As a result, supply and demand was out of balance at times, driving pricing lower. The current season, however, is a reverse of last year's supply issue as smaller crop volumes and excellent tasting fruit are helping drive prices higher.
Gargiulo's annual message centered on longer-term trends.
- The retail and foodservice industry continues to consolidate and discount marketers continue to expand. Buyers are becoming far fewer in number but vastly greater in purchasing power. These larger buyers continue to place more demands on suppliers.
- Consumers habits are changing as people cook less and eat out more. Convenience is king. And competition is fierce. In today's global market, fruit is always in season -- somewhere -- and the number of choices available to consumers is increasing.
- Citrus is in oversupply worldwide. Competition for the consumers' dollar is increasing. Imported Spanish clementines affected early season navel movement in the U.S. and large volumes of summer lemons from many countries changed the dynamics in its export markets.
- Offshore growers have far fewer restrictions and much lower costs than U.S. producers. Free Trade Agreements are rapidly opening U.S. borders to competitive product -- as well as to the potential invasion of pests and diseases. At the same time, trade barriers that prevent U.S.-grown fruit from being competitive in foreign markets remain intact.
These challenges, said Gargiulo, provide far more opportunities than obstacles for Sunkist and its growers. "Our size and expertise better position us to market to these larger operators. And the Sunkist name, known and trusted worldwide, is one of our biggest assets."
Sunkist is changing to take advantage of these new opportunities, he reported.
- Despite major increases in workman's compensation, health insurance and pension plan funding requirements, costs are being substantially reduced.
- Because of technological innovations and other efficiencies in operation, Sunkist now employs half the number of salaried employees it did ten years ago.
- Sunkist's licensed products brought in record royalties in 2003 as sales of Sunkist-branded products increased across the world.
- In the processed citrus juice and oils area, plants are being modernized, costs reduced and returns increased.
- With a strong focus on the customer, Sunkist has implemented a sales and marketing structure that provides the produce, services, strategies and ideas today's customer demands. "Our customer base, domestic and export, reflects our success," Gargiulo said.
"While we are making progress," he added, "many of these changes have just been 'catching up'. There are many more opportunities and challenges to come."
Sunkist now has in place a comprehensive planning process to address several critical areas. "Food safety, for example, is an issue of increasing importance to consumers. It is also an issue that offers a great opportunity for Sunkist. We have long been a leader in developing new and higher standards for product quality," Gargiulo said.
Moving forward through change is the only option for long-term growth, Gargiulo concluded, and grower understa