It’s No Longer Forbidden Fruit
Nearly a century ago, a copywriter working for ad agency Lord & Thomas dreamed up the name “Sunkissed” for a campaign promoting California oranges and lemons to shoppers back East.
The moniker soon was changed to Sunkist, but the image has remained: the bright sun splashing over the Golden State’s fertile citrus groves.
Now, Sunkist Growers Inc. is taking a radical turn.
It is putting its quintessentially California stamp on oranges, lemons, grapefruit and tangerines grown by the cooperative’s longtime adversaries: low-cost producers in countries such as Australia, South Africa, Spain and Chile. Not too long ago, applying the familiar blue-and-white Sunkist sticker to foreign fruit would have been unthinkable for the cooperative, which started as the Southern California Fruit Exchange in 1893. But rivals from abroad have been taking such a bite out of its marketing clout that Sunkist’s board voted overwhelmingly this spring: If you can’t beat ‘em, join ‘em.
The co-op’s 6,000-plus members own more than 230,000 acres of groves across some of the richest agricultural land in the world and harvest a variety of fruit in different seasons. Retailers, however, want more these days.
“They expect you to be able to provide all kinds of citrus year-round,” Sunkist’s chief executive, Jeffrey D. Gargiulo, said from the co-op’s Sherman Oaks headquarters. “Sunkist has been slow in waking up to the fact that we can’t sell what our customers want.”
For decades, Sunkist and the growers -- about 600 in Arizona and the rest in California -- resisted going global. The Sunkist name is on almost 600 products sold in 45 countries, but, except for a brief fling with Argentine lemons three years ago, the co-op wouldn’t touch citrus that wasn’t plucked off trees in the United States.
Then Gargiulo, a produce man himself, became president and CEO in 2001. His namesake company in Florida had been No. 2 in U.S. strawberry and raspberry sales. But it also sold imported grapes, nectarines, plums, pears and peaches from Chile. Before Monsanto Corp. acquired it in 1997, his company commanded 10% of the U.S. tomato market, and Gargiulo depended on imports from Mexico, Puerto Rico and Chile to hold on to that share.
Sunkist, Gargiulo believed, had to go the same route.
He converted some who were reluctant by wearing them out, chatting up the idea at co-op barbecues and annual meetings and putting it on the agenda of most management retreats. “I’ve been talking about this since I came here,” he said.
Sunkist Exports Drop
Co-op members had reason to listen. Fresh fruit exports by Sunkist fell 3% to $215 million last year from $222 million in 2001, the first decline in years, as Chilean lemons and South African grapefruit ate into Sunkist’s hold on key Asian markets.
Sunkist’s share of U.S. sales was slipping too. More and more supermarkets were stocking new and exotic items to appeal to a greater range of tastes. At the same time, they were stepping up imports of produce so that nothing ever would be out of season.
“We want our consumers to get what they want when they want it,” said Bruce Peterson, vice president of perishables for retail giant Wal-Mart Stores Inc.
Last year, Sunkist posted domestic sales of $585 million, down 4.5% from 1998, when a freeze wiped out much of the California citrus crop -- opening a window for foreigners. After importers rushed to bring in oranges from Australia, South Africa and elsewhere to fill grocery store bins, consumers liked what they found there.
So did grocers, in large part because of the price. Ventura County lemons command about $16.50 per 40-pound box wholesale, while lemons from distant Chile fetch about $13.50. One reason for the difference: The average hourly compensation for farm and packinghouse labor is 68 cents in Chile and $16 for Sunkist.
Not long ago, wholesalers and retailers paid a premium for all-American Sunkist with little complaint. The co-op masterfully promoted its California and Arizona products as superior, touting them as larger, juicier and better-looking than rivals and crediting Sunkist’s high standards and the region’s mild climate. “This is no ordinary fruit,” its advertisements say.
The image of California still carries weight -- to a point.
“We look to California first,” said Stacia Levenfeld, spokeswoman for grocery chain Albertson’s Inc. But Albertson’s buys from California only if it can get “the right price and quality.”
The oldest marketing cooperative in the nation, Sunkist was founded by California citrus grove owners who banded together 110 years ago to sell their fruit to stores in the East. Sunkist functions today much as it did in the beginning: Members pay fees for rights to use the name and to cover marketing and advertising costs. Profit from the sales of fruit or the licensing of the name is distributed among members.
In recent weeks, Chilean and South African lemons with Sunkist labels were shipped to Japan and Hong Kong, where the co-op’s first non-U.S. fruit will be marketed.
Eventually, some foreign-cultivated citrus with the Sunkist name will be sold in the U.S., though Gargiulo said the co-op may create an entirely new brand name for foreign products that it decides aren’t of the same quality as the fruit that comes from the farms of California and Arizona.
Whatever the imports are called, they’ll bring in profit that Sunkist members in California and Arizona will share, while no doubt cutting into citrus sales from the two states. Sunkist’s California Valencia oranges might take a back seat to larger, easier-peeling Sunkist Australian navels during the summer. And Sunkist’s California navel oranges could lose shelf space to Sunkist’s Spanish clementines during the winter.
Inevitably, Gargiulo acknowledged, there could be “some unhappy people out there.”
A Changing World
But there’s no going back. “The produce world is changing,” said John Grether, a Ventura County lemon grower who sits on the 25-member Sunkist board.
Another board member from Ventura County, lemon grower Richard Pidduck, called the vote to accept imports recognition of a “cultural change” at Sunkist.
“It would be nice if we could ... control the domestic market ourselves,” he said, “but these products are global now.”
Indeed, growers’ acceptance of the fact that their sales will be under pressure from abroad, no matter what Sunkist’s stance on imports, explains why there is so little fault-finding with the decision to market foreign fruit.
“If we can be controlling the fruit that’s coming in, instead of other people controlling it and bringing it in at a lower price, it will be advantageous,” said Leslie Leavens-Crowe, a lemon grower and owner of Leavens Ranch in Santa Paula.
That’s not to say that the overall trend doesn’t worry some.
“Once you develop a mentality that says we can best serve the population by having other countries grow our agricultural products, you basically cede the domestic food supply,” said Tom Nassif, president of Western Growers Assn., a trade group. “China can potentially produce everything we can at a very good quality 12 months of the year. If it were allowed to, it could capture all of our markets.”
Sunkist figures that’s where its new policy comes in: By teaming up with foreign producers -- instead of trying to compete with them -- the co-op believes it can help protect U.S. growers.
Anyway, now that Americans are used to the taste of foreign fruit, there is little choice in the matter.
“If Sunkist doesn’t market it,” said Daniel Sumner, head of the Agricultural Issues Center at UC Davis, “someone else will.”
