Claire H. Smith

Sunkist growers celebrate an excellent year and look ahead to an exciting future

February 21, 2007

February 21, 2007, Visalia, Calif….“We are here today to report on one of Sunkist’s most successful years ever – in the aftermath of a freeze that has a substantial impact on current business,” Sunkist President and CEO Tim Lindgren told grower-owners at the citrus marketing cooperative’s 113th annual meeting.

2006 was a record-breaking year for Sunkist. Total revenues reached an all-time high of $1.1 billion dollars and a complex navel season was brought to a remarkable conclusion. Valencia growers enjoyed the best returns in more than a decade and lemon FOBs, already high, climbed higher. Grapefruit growers enjoyed another year of high prices and sales of seasonal specialties topped all previous records. Sunkist’s Citrus Juice and Oil business was established as the region’s most efficient high quality operator. Sunkist’s global reach continued gaining in strength as the cooperative marketed more than 600 different products in over 50 countries on five continents.

“In 2006, Sunkist developed systems that drove the year’s revenue increases,” said Lindgren “and those systems are continually being added to and improved upon. In addition, Sunkist’s operating structure was realigned to provide a more integrated approach to its operations and to better utilize its resources. This realignment improves the coordination of our core domestic and export business with our newer global sourcing and fresh-cut programs. It also complements the ways in which Sunkist products, both fresh and licensed, are presented and helps increase the value of the Sunkist brand.”

Then came the freeze
“The 2007 season was also off to a superb start, with crops of excellent quality and manageable size,” said Board Chairman Nick Bozick. “Navel and lemon FOB averages were higher than at the same time in 2006 and sales of specialty varieties were on their way to beating the record set the year before,” Then came the freeze.

Early estimates were that the volume available for the fresh market may be reduced by nearly 50% and the by-products volume by approximately 35%. “Because there was prior warning,” Bozick explained, “packinghouses worked around the clock harvesting and packing as much fruit as possible. And, as time passes and we are able to better evaluate the freeze effects, we are finding that more fruit escaped severe damage than was at first though possible.”

Faced with a funding shortfall because of the reduced crop, Sunkist management immediately focused on downsizing operations and reducing expenses while preserving the cooperative’s fundamental capabilities. Despite the significant disruption to overall business operations, Sunkist does not expect the freeze to have a materially adverse impact on its financial position.

“Our attention,” said Bozick, “is now focused on aggressively selling the fruit that remains, on maximizing returns to growers on the remaining fruit and on meeting the needs of our customers. We’re also working hard to get disaster relief for the growers, shippers, harvesters and packinghouse employees who have been severely affected.”

2006 – A review
Last year’s Navel crop was exceedingly large – 90 million cartons industry-wide – and, as is usual when the fruit set is large, the fruit size was small. Despite a crop that was very short on the size consumers prefer, Sunkist delivered a fair net return per acre to growers. All returns, however, were not equal. The difference between growers who had high per acre production and larger-sized fruit, versus those who did not, was substantial.

Sunkist growers had the best Valencia season in a decade in 2006. The crop was short, but Sunkist’s sales force had the tools to drive sales and maximize revenue. Excellent collaboration between Sunkist’s Citrus Juice and Oil Unit and fresh fruit sales provided a juice price floor that also helped boost per acre returns.

Sunkist’s 2005-06 lemon revenues set an all-time record, despite the incredible



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