History repeats itself

by Jack Bell
Sunday, 21-Nov. 21,1999

In 1967 there was a vast over production of cranberries. Prices paid to growers were in the $0.16 to $0.18/pound. This gave the growers an excellent return because wages were only $2.00/hour and all other factors were priced accordingly.

Ed Gelsthorpe then president and CEO said "No sales organization can sell what the growers can produce when the price is right". And Ocean Spray did something about it. They established a Federal Marketing Set Aside Order and we in British Columbia established the BC Cranberry Marketing Board. This effectively closed the door on any further planting into the indefinite future.

This second step taken by Ocean Spray which at the time controlled 80% of the market, was to literally dump excess production in order to keep the prices at a decent level.

In October 1977 we got word "Stop the dumping". Cranberry sales had increased about 9% a year and had finally reached the point where it could take all the production and more.

The next intelligent thing was that Ocean Spray invited its growers to submit their requests for new plantings. This opened the door to Ocean Spray growers and to independents as well. The result was that many growers planted more acreage - mostly Ocean Spray growers.

The 1980's were the Golden Years for cranberry growers. Production was increasing; the sales were increasing even faster.

This brings us to 1990 when because of fear of over-planting kept Ocean Spray growers from expanding resulted in severe crop shortage.

Ocean Spray, still worried about over-production kept a tight rein on all its growers. But there were no such restrictions on the independents and they were lured into planting new cranberry acreage by independent handlers who were anxious for the fruit and offering high prices for it - $0.20 to $0.30 / pound more than Ocean Spray growers would get. Many Ocean Spray growers quit Ocean Spray, lured by these higher prices. That was the first terrible mistake of Ocean Spray who for years would only permit its growers to grow by very small amounts. And when Ocean Spray finally realized its mistake and opened its doors wide to its growers, the damage had already been done. In very quick time, Ocean Spray dropped from 85% of the market to 43% of the market. And the stability that it once held dissipated.

This left us in the sorry mess that we are in now. The big question now is what to do? To continue as we are is completely and absolutely idiotic. Any back room salesman with a pencil and a pad can compete on price with Ocean Spray and take the order away.

There is still magic in the name Ocean Spray but it has to be revitalized. But that takes deep pockets which Ocean Spray does not have.

Secondly, and more importantly, this firm with deep pockets should have strong international connections, and that is where the future potential of Ocean Spray lies. Just as we in North America have adopted a myriad of foreign food items such as coffee, chocolates, bananas, pistachio nuts, olive oil etc. etc. etc., I believe with proper marketing this will also happen to cranberries in countries like Japan, Taiwan, Germany, France and so on. We must remember that Ocean Spray Juices also took many advertising dollars and many years to reach the point it has now. But certainly the future for Ocean Spray lies in world wide markets which can only be achieved by firms who have strong connections in these markets and the money to support it.

The name Ocean Spray is still worth billions of dollars. Let's take advantage of that and sell the marketing branch of Ocean Spray to anyone of a dozen companies that are seriously interested.

Some growers are worried that if we sell the marketing branch that we would lose control. That is pure and simple hogwash. If we have 45% of the production and possibly bringing it up to 85% by merging with one or two of the larger independents, that company will need us every bit as much as we need them. We will still maintain our co-op as a grower and harvester of cranberries, place them in cold storage and in fact, sell the fresh fruit ourselves and the marketing company takes over from there.

In my opinion, this is not a tough decision at all. On the one hand, it will take many, many years of effort if ever to rebuild it what it once was and we could well go down the tube before then. On the other hand we get value for the many many years we've invested in Ocean Spray and a bright continuing future.

Take your choice!

Jack Bell

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