Contact: Claire H. Smith (818) 379-7455

Growers hear a message of unity in changing times at the 109th annual meeting of Sunkist Growers

February 19, 2003

February 19, 2003, Visalia, Calif..."Today, the concept of uniting to sell our crops is even more critical than it was at the birth of Sunkist 110 years ago," Sunkist President and Chief Executive Officer Jeff Gargiulo told the nearly 1,000 Sunkist growers-members attending the citrus cooperative's annual meeting at the Visalia Convention Center February 19.

"In this world of rapid change, one of the dynamics that doesn't change in the produce industry is the concept of supply and demand," said Gargiulo. "Supply control can, and does, positively impact price. With the many choices available to consumers, oversupplying the market often produces very poor results for growers. The best possible way to improve grower returns," said Gargiulo, "is by uniting and working together."

In most other areas, however, Gargiulo stressed that the pace of change continues to accelerate. Retail consolidation has resulted in fewer, bigger buyers. As an example, Ahold stores around the world serve 40 million consumers a week. Wal-Mart stores serve 100 million. "These retail customers require a different set of services from their suppliers," he said. "Sunkist's advantage lies in our ability to combine size and brand name with the right services, to work with customers more efficiently and effectively and to compete on the basis of service, not just price."

The globalization of the produce industry also has a major impact on the US produce industry, Gargiulo said. Today, more than half the produce sold in the US is grown outside its own 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 produce high quality fruit at lower prices than we can here at home."

In addition, consumers can now chose 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 space 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," said Gargiulo. "And our citrus competes on two different levels. We compete for shelf space, and we compete for consumer preference among the growing number of produce items available. At Sunkist, we pay attention to the consumer and we work to understand long-term trends. Knowledge of what products consumers want as well as what logistics and support our customers need is critical to our growers' future."

"Companies that do not change fast enough, do not prosper," Gargiulo said. "Today's stock market is full of them, some long-standing companies with brands that are household names. Sunkist made some significant changes this past year, and we must continue to accelerate the pace of change."

In 2002, Sunkist completed a major reorganization of sales and marketing areas, which resulted in the closing of many of the traditional district sales offices and the expansion of the two centralized offices in Sherman Oaks and Visalia. "The changes we have made, and are making, mirror the changes taking place in our customer base," said Gargiulo. "We are doing exactly what our customers are doing -- consolidating and centralizing to best meet our customers changing needs and to exceed their expectations," he added. "Today, the Sunkist sales team works together more efficiently and effectively. Our new high-energy, collaborative environment makes our operation even stronger."

In these dynamic times, it takes great effort for businesses and growers to compete long term, Gargiulo concluded. "By pooling resources, listening to customers and consumers, and by working together, we can explore the best possible alternatives and offer the best chance at success," he added. "The pro



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