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Sunkist Adds OffShore Sources to Ensure Year-round Citrus Supplies


July 14, 2003

Sherman Oaks, Calif., July 14, 2003 -- To ensure year-round citrus supply for its retail customers, Sunkist Growers, the nation's oldest and largest citrus marketing cooperative, has decided to import from offshore sources to complement the citrus produced by its 6,000 grower-owners in California and Arizona. The Board of Directors approved the action at its most recent meeting.

"Today's marketplace is global," said Jeff Gargiulo, president and CEO, Sunkist. "U.S. politics promote it; economists support it; retail customers demand it; and consumers want great citrus, year round. Today, almost half the produce sold in the United States is grown outside our borders. American producers have increasing competition as our government opens the U.S. market to imports."

Gargiulo went on to comment that with today's retail trade market consolidating, Sunkist's largest customers are demanding a single, year round supplier for the citrus category.

"Our customers tell us they are going to buy the best product for the best price, and they don't care where it comes from. Large international retailers require a comprehensive package of services. To increase efficiency, they are asking Sunkist and their other suppliers to become 'category managers,' able to meet the retailer's entire needs for a specific product area."

In response, Sunkist has taken on this role. The cooperative has consolidated its service centers, restructured its sales operations and is now partnering with offshore producers to enhance its position as the leading U.S. fresh citrus supplier.

"Our decisions are driven by our customers," said Gargiulo. "They decide what they want to buy and we focus on supplying it. They want year-round supply of citrus, and while our growers produce many varieties of high quality citrus, we are limited by seasonality. As a cooperative, our charge has been to sell the fruit our members grow today. In the long term, however, we need to insure that we have the opportunity to sell their fruit in the future."

Sunkist is now formulating the operational structure and exploring many different options for offshore sourcing. The final organization could involve export companies, partnerships or licensing agreements. The cooperative probably will not have the same arrangements in all countries.

"The added dimension of marketing citrus grown offshore is being pursued in a carefully -reasoned and researched manner," said Gargiulo. "The Sunkist name, for instance, is still highly regarded in Europe although we haven't sold citrus there for many years because of the European Community's discriminatory tariff practices and the high cost of transportation. Soon we will be in a position to outsource fruit into that market under the famous Sunkist name and to overcome those obstacles."

"These changes," said Gargiulo, "are evolutionary, not revolutionary. Over our 110-year history, we have continually analyzed our processes and implemented better ways to compete effectively in a changing marketplace. As a major marketer, Sunkist has developed a comprehensive, worldwide marketing strategy, coordinating our domestic and export sales efforts into a global selling strategy. We will source product where the market demands and where the opportunities exist.

"The key to our future lies in the broad base of our marketing strength and our ability to be the kind of supplier with the kinds of services that today's retailers need. In addition, we have the strength of our brand name, which denotes quality, value, health and safety to consumers worldwide," Gargiulo added.

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