Ocean Spray on Standard & Poors Credit Watch

9/30/99 Citing "uncertainties pertaining to Ocean Spray's long-term strategic direction and ongoing business challenges in its core cranberry operations," Standard & Poors announced today that Ocean Spray is on "Credit Watch with developing implications" for its single-A long term corporate credit and senior debt ratings, triple-B-preferred stock rating, and A-1 short-term corporate credit and commercial paper ratings. Should Ocean Spray be acquired by a   higher rated corporation that assumed the rated obligations, the rating could be raised. If Ocean Spray was purchased by a lower rated company, the rating could be lowered. S&P notes that if the Ocean Spray market share continues to lose market share, the ratings could deteriorate further.

Media:

Feature story on T.V. news

9//29/99 New England Cable News broadcast a feature story last night on Ocean Spray and the cranberry crisis. Reporter Mont Fennel interviews and Massachusetts grower Al Robichaud, Ocean Spray CEO Tom Bullock. There is a brief comment from David Farrimond of the Cranberry Marketing Committee. 9/30/99 To see the video go to Archives and enter "cranberry" --  NEW ENGLAND CABLE NEWS.

Company Press Release

Harvest Sets Stage for Marketing Efforts; Ocean Spray Optimistic Despite Challenging Year

9/28/99 LAKEVILLE-MIDDLEBORO, Mass. As the cranberry harvest gets into full swing, there's no doubt another bumper crop is in store for the cranberry industry. The tart berries will be showing up everywhere in the year 2000, and that's good news for consumers.

Market leader Ocean Spray says consumers can expect a hearty supply of cranberry products for the holiday season while the record crop is spurring the Massachusetts-based cooperative to reenergize new product development efforts and aggressively promote cranberry offerings year-round. CONTINUED | Easy to print version

Media:

Widespread economic impact of lower prices reported

9/26/99 The Brockton Sunday Enterprise, a newspaper with a large circulation in southeastern Massachusetts, devoted most of its front page (Picture) to a story about the huge impact of lower cranberry prices on the region's economy. Unfortunately, the Brockton Enterprise is not online.

The important article was marred, however, by the misrepresentation of a matter vital to the cranberry industry. Under the heading "Merger possibility announced" the article says that Ocean Spray hired Bain and Company "to look into the possibility of a joint venture with Wisconsin based Northland Cranberries, Inc." As those following the cranberry crisis know, Bain was retained to help Ocean Spray explore all options. The article went on to state that A.D. Makepeace sent a letter to Ocean Spray grower/owners saying a merger should be given top consideration, and that Ocean Spray had not had any formal discussions. Both the Makepeace letter and the Ocean Spray comments had to do with the possibility of a strategic merger with a larger entity,  and had nothing to do with Northland Cranberries.

Boston television airs interviews with Bullock, local growers

click to enlarge

9/24/99 Boston's' WBZ television broadcast a story on the cranberry crisis on the 6:00 P.M. news. Ocean Spray CEO Tom Bullock, and Ocean Spray grower owners Peter Beaton and Betty Brown were interviewed. Read excerpts, including all quotes here | and view pictures here.

Old Colony Memorial, Providence Journal
Coming Sunday - Brockton Enterprise

9/24/99 The weekly Old Colony Memorial (Plymouth, MA.) published part one of a two part story entitled "Sour taste: tough times for cranberry growers" by Scott Smith on 9/23/99 - Picture.  The focus was on the plight of growers and those associated with the cranberry industry. Part two, already being printed, will cover marketing issues. The newspaper article is not online.

The Providence (R.I.) Journal published two articles in its Business section on 9/23/99."For growers, it's the bottom of the barrel" is a story derived from the New York Times article below, and "Caught in a squeeze: Ocean Spray finds it's ripe for picking - Several companies have offered to buy the troubled cranberry cooperative, a deal some analysts say could be worth $1 billion"  is attributed to the Boston Globe and Bloomberg News. As Stressline readers are aware. no verification of any buyout offers have been published.

New York Times, Wall Street Journal, Cape Cod Times, publish stories on Ocean Spray
All published on the same day
by Hal Brown

9/22/99 New York Times' business reporter, Connie Hays, a thirteen year veteran of the New York Times whose recent assignments have included covering Coke and Pepsi, visited Massachusetts last week and interviewed, among others, Ocean Spray CEO Tom Bullock, Sr. V.P. Nancy MacDermott, as well as critics of Ocean Spray management Tom Gelsthorpe, and this reporter's wife, Betty Brown.

The  in depth article by Connie Hays, "Low cranberry prices shake farmer's faith in Ocean Spray" includes quotes from Tom Bullock who was interviewed at the cooperative's headquarters in Lakeville, Mass. Referring to the various problems facing Ocean Spray he says "part of it is the surplus, and part of it is the competitive activity. People are unhappy," referring to grower/owners, "these are good, solid, hard-working farmers, and this is their paycheck. They'll remain unhappy until this turns around. We're doing a lot of things, but it's going to take a while." The Times reports that Bullock is in charge of choosing his own successor and has an agreement to stay on for a year to insure a smooth transition.

Regarding his retirement, he stated "I think it's time for a change, and that's what they'll have -- a change." The Times notes that "Bullock announced his retirement only a day after an advisory committee of growers expressed no confidence in management, although the company said that was not a factor in Bullock's decision."

Industry analysts are also quoted:

"This company was a trendsetter, what happened was they didn't keep evolving." Michael Bellas, chief executive of Beverage Marketing.

"It does appear that the whole board-management interaction the last few years has been somewhat dysfunctional,"  Rex Green, a managing director at Advest in Boston.

"Someone like Kraft or Coke or Triarc is going to come along and seduce them, and then someone they can't control will be controlling them. The Ocean Spray brand would become just another brand in some company's big-brand portfolio." Unnamed industry analyst

"Northland is what people now point to and say, that was the beginning of the Bataan Death March. People are saying now, under no circumstances should they have let the Northland growers leave the co-op." An unnamed consultant.

Others quoted in the article are: Wisconsin Ocean Spray Board member Paul Jonjak;David Farrimond of the Cranberry Marketing Committee; John Swendrowski, President of Northland Cranberries; Robert Rosbe, Treasurer of A.D. Makepeace; and Mary Brazeau Brown, an Ocean Spray grower in Wisconsin.

NY Times article has been archived, available for a fee

The Wall Street Journal story, "Ocean Spray Hires Merrill Lynch To Study Strategic Alternatives" provides little new information to readers of Stressline. The newspaper of record for the investment community does, however, call Ocean Spray a "financially failing company". It confirms that industry insiders consider Pepsi and Cadbury Schweppes as being "top contenders" to purchase Ocean Spray, and that the company has hired Merrill Lynch to assist in exploring strategic options. The story includes the following speculation: "Ocean Spray, which is facing stiff competition amid falling cranberry prices, could be valued at about $1 billion, according to industry officials." Insiders report that the article was put together in about a day after the Wall Street Journal learned that the New York Times was about to publish their story.

To read the story online in the Wall Street Journal you need a paid subscription: here

The Cape Cod Times published "Bogging down - Cranberry growers take aim at Ocean Spray as their livelihoods become threatened " The article, which was several weeks in preparation, includes interviews with John Decas of Decas Cranberries; Ocean Spray CEO Tom Bullock;  Ocean Spray Board member Chip Morse;   Brian Taber, public relations manager of Northland Cranberries;  David Farrimond, Executive Director of the USDA Cranberry Marketing Committee; industry analyst George Dahlman of U.S. Bank Corp Piper Jaffray; Cape Cod cranberry growers Carver Crowell, Linc Thatcher, Kevin Archambault and Tom Grew. It also includes an interview with Marston Mills grower Dave McCarthy, who left Ocean Spray in 1995 expecting to redeem his stock only to suffer what he terms "a breach of faith" when Ocean Spray suspended payments.  This is an important article about the problems at Ocean Spray and in the cranberry industry. Cape Cod Times

MOODY'S PLACES COMMERCIAL PAPER AND PREFERRED STOCK RATINGS OF OCEAN SPRAY UNDER REVIEW FOR POSSIBLE DOWNGRADE

Approximately $200 million in securities affected.

9/22/99 Citing the deterioration of the cooperative's operating performance and uncertainty regarding the company's future business configuration Moody's Investment Services has placed the commercial paper and stock ratings of the cooperative under review. "The review will assess the continuing impact of falling product prices, rising competition, and management instability on Ocean Spray's operations and financial profile, and whether or not there is likely to be any significant improvement in debt protection measures over the near to intermediate term. The review will also focus on the strategic options that Ocean Spray is considering." Read entire Moody's report here

In the Forum:

Look in the mirror
Thursday, 30-Sep-1999 10:07 AM

One of the first things we need to do is STOP laundering our (Ocean Spray) problems for the world (especially our direct competitors) to see on this site. Do the New England Patriots or Green Bay Packers send their "gameplan" to the opposition every week? Do you find Pepsi, Coke, P&G, Northland, Motts, Welchs, Cadbury beat up their own initiatives, strategies, tactics etc on the web for us to pick apart and laugh at? If so, where can we find it? Of course Hal Brown would like you (and everyone else) to ignore this posting, since this "board" is his claim to fame... and all it really has turned into, is a gossip column primarily talking about OS problems, concerns, short comings etc... Think about it... If I were Northland, Decas, etc, I would "hit" this board daily just to laugh at the ignorance (several employees and or owners) show, by publicly broadcasting/sharing our faults... We looked for the enemies...and guess what? They're in the mirror!  Hey Mr. B., Mr. G. and Ms R. now its your turn to say that I'm opposed to "open communication and free speech" and that the reason we are having problems is because of people like me... Unsigned   -- READ RESPONSES

Ocean Spray
trade release:

New bottle, Moody's rating

9/28/99 In an release to the trade Ocean Spray announced the introduction of a new bottle due in the first quarter of the new year, and addressed the ramifications of the Moody's Investment Service report. Read release HERE.

Russia proposal of concern to cranberry growers, Decas calls helping Russians to build bogs "absolute madness"

9/26/99 The Taunton Gazette reports that a Massachusetts state senator, Marc Pacheco, who has generally been known for his support of cranberry growers, has gone to Russia for the second time to meet with cranberry growers there. His intention is to promote a "win-win situation" for Massachusetts growers as they partner with Russians to market Russian and American cranberries in Europe. However, his initiative is being criticized by John Decas of Decas Cranberries who says:

"I think it is an ill-advised initiative on (Pacheco's) part. He is not fully aware of our problems. But to think there's something positive in teaching others how to compete with us ... just doesn't make any sense. If it's promoting cranberries in Europe as a product, that's one thing, but to go (to Russia), build bogs and introduce a product that's already in oversupply, that makes no sense. ... It's just absolute madness."

"Why should we help them and create competition for ourselves? I don't mind competition, but I'm not going to subsidize it. As long as we are capable of fulfilling the marketplace abroad, why get help from elsewhere?"

Read entire story here

Another story, in the Taunton Gazette

Possibility of Makepeace land development interests state and town officials

9/26/99 The rural town of Carver, MA. is only 10% developed. A.D. Makepeace owns 12% of the undeveloped land. The company owns 10,000 developable acres in the "gateway to Cape Cod" towns of Plymouth, Carver and Wareham, with  5,600 acres just ten minutes from the Bourne Bridge to Cape Cod. If, when, and how this land is developed will effect both the towns on the route to Cape Cod, and the Cape itself. With the commuter train now operating between Boston and Middleboro, before long the cranberry growers in the southeastern corner of Massachusetts  will find them farming a major crop in suburbia. But the state plans to buy some 200,000 acres statewide in the next decade to preserve open space. There's a possibility they might buy some of the Makepeace property.

From an article in the Cape Cod Times:

State environmental officials have taken notice. Already focused on Southeastern Massachusetts as the state's next "growth frontier," they hope to broker a plan that preserves as much undeveloped land as possible. That could include purchasing a portion of the Makepeace property.
"Pieces of land this big don't come up too often," Secretary of Environmental Affairs Robert Durand said.
The project will put to the test fashionable concepts like sustainable development, smart growth and regional planning. Read  article here

Free Speech on
the Internet

When companies sue Internet detractors

9/25/99 It was reported in yesterday's Milwaukee Journal Sentinel, that Universal Foods learned some hard lessons about free speech when it decided, in 1998,  to sue two former employees for posting negative messages on a Yahoo message board. As the legal process progressed the media learned of the story. Then the Milwaukee Business Journal decided to publish an article and Universal tried  to block it's publication in another law suit, citing irreparable harm to the company. This only brought more media attention. The Business Journal carried a front page story and noted that Universal was not the most pleasant place to work under it's Chairman and CEO.

One expert, Lawrence Soley, is quoted as saying "The problem is companies have a tendency to overreact and really infringe on free speech. I would advise caution, because I think there's a growing backlash against companies trying to curb speech rights. These are the types of comments that are made during lunch breaks and after work at a bar. It's just that it's a little more visible" Read the article HERE.

by Linda Rinta
Read a well thought out, albeit anonymous, rebuttal to this Op-Ed HERE.

9/24/99 We all know to judge our leaders not by what they say but what they do. Now let's separate what our leaders do from what they say. They say that we need new leadership but they keep Bullock in place, not only for the present but also into the future as hirer, trainer and consultant. They say that their goal is to raise the return to stock holders but they post a payment schedule that will doom Ocean Spray growers, alone, to loan ineligibility and dump our fruit onto the market at below cost prices. They say they want to help us realize the value of our investment and yet effectively undervalue our assets, drive up our debt. They vote to stop the redemption of stock while board members themselves try to purchase that same stock at bargain prices. They say that we should educate ourselves and they will keep us informed and yet they can't or won't answer critical questions, withhold information, and discourage us from "confusing" ourselves by reading outside articles. They say that they intend to take back market share and yet they cannot fill orders and deliver products. They say that the problem is over supply, and they take in 500 more acres. They say they are working very hard to bring about change but the only change they brought about is a downward plunge for their members.

Board Accomplishments:

The Ocean Spray crop does not cash flow. (Independent crop still cash flows.) They have lost or abandoned the single serve market. They have driven the market price for fresh fruit, which there is never enough of, into the bargain basement and dumped products into the market at below cost, continued to anger their customers and lose market share. They have devaluated our property and the value of our stock. They have broken faith with their stockholders. And, they hold fast to these accomplishments.

Not to be confused by what they say, what can be the motivation for what they've done? What is the motivation for what they continue to do? Someone in this picture has an agenda because nobody is this stupid! (You can respond to this Op-Ed on the Forum)

Read a well thought out, albeit anonymous, rebuttal to this Op-Ed HERE.

Tom Bullock must be fired

9/23/99 For a company that hadn't made the news for one specific event, Ocean Spray received more media attention yesterday on one day than any company in recent memory. It was the subject of  well researched newspaper stories in the NY Times, the Wall Street Journal, and the Cape Cod Times. All three were in depth analyses compiled by a group of experienced business reporters that took considerable time to prepare. To say that these three articles, plus the critical Moody's Investment Services report released the day before, put the company in a bad light is an understatement.

The sobering, if not chilling, suggestion by the Wall Street Journal that Ocean Spray's value is a mere $1 billion should be enough of a wake up call to the Board of Directors that more decisive action is needed than merely energizing and refocusing the company during a year-long transition period from management under Tom Bullock's regime to management under a new CEO that Bullock himself will be in charge of selecting.

If Ocean Spray aspires to be a world class company, the Board must assure that it handles mismanagement like other world class companies. Not having someone, like the Chairman of the Board, to step in immediately as interim CEO may have led the Board to act indecisively. But, regardless of why he is still in charge, now is the time for damage control.

Ocean Spray is a great company led to the brink of bankruptcy; but not  by a surplus and competition, made worse by few minor problems (the failure of Wellfleet farms and a troublesome computer system were not minor problems) as Bullock contends. It is where it is today because of Mr. Bullock himself.

Despite the fact that Tom Bullock has announced his retirement, he can, and must, be fired.
Print editorial

Web sites:

BevNet reprints Stressline article

9/23/99 BevNet, the web site noted for its reviews and ratings of beverages, has reprinted the Cranberry Stressline article "New York Times, Wall Street Journal, Cape Cod Times, publish stories on Ocean Spray."

BevNet is the only web site that attempts to give objective taste ratings to a wide variety of beverages including those from both small and large companies. It has been known to give ratings from A+ to F to different juices from the same company.

Sometimes its ratings can be instructive for those analyzing the beverage industry, other times they cause puzzlement as to why highly rated beverages disappear from the marketplace. How many people remember Ocean Spray's Wild Ciders? Like most  Nantucket Nectars, they received excellent taste ratings from BevNet. Yet Ocean Spray gave up on Wild Ciders and purchased Nantucket Nectars instead.