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On keeping options open: Making Peace with Pepsi " Ocean Spray seizes on this (occasionally hedged) concession to argue that the only remaining issue is irreparable injury; it assumes that the equities are favorable to it (Pepsi's breach being deliberate), and that the public interest is served by forcing businesses to adhere to their contracts. The situation is slightly more complicated than Ocean Spray suggests. One might suppose that such relief would follow from Pepsi's concession that Pepsi's ownership of Tropicana is itself a breach of the exclusivity clause. Instead, as first-year law students quickly learn, the enforcement of contracts by injunction is the exception rather than the rule." Judicial sarcasm, highlighted in red, from the Circuit Court denial of Ocean Spray's appeal of the District Court finding against the cooperative. 6/24/99 Ocean Spray has had a rocky relationship with Pepsico, many of the details of which are described in the somewhat sarcastic United State Circuit Court ruling which can be read by clicking above. The bad blood with Pepsi is rooted in many poor decisions made by Ocean Spray management. It also involves Pepsico's breaking a contractual promise not to distribute single serve products (Tropicana in this case) which competed with Ocean Spray. I am certain that Pepsico fully understands how the conflicts evolved and who the players were. With these players no longer in place, a whole new picture may emerge, making Ocean Spray once again an attractive partner for a strategic relationship that would benefit both companies. Instead of starting off such a relationship based on mistrust, with near-paranoid sounding missives about proprietary information, a more secure management at Ocean Spray should end this preoccupation with secrecy and focus on forthright communication and candor. I suspect that had someone handed Pepsi's CEO the top secret New Coke marketing plan and formula back in 1987, he would have done exactly nothing with it. Perhaps someone with equal market savvy would have nixed the entire Wellfleet Farms fiasco before dollar one was wasted on it. The jury will remain out on Nantucket Nectars until it's paid for and turns a net profit for the cooperative. The ERP system will eventually work, but it was negligent not to have planned for dramatic cost over-runs since it was common knowledge among experts that there was at least an 80% chance these would occur. Measured against the dollar cost of these dubious decisions, having paid the 2nd preferred stock payments to former grower/owners would have been a drop in the bucket. That these decisions only led to the early retirement of Tom Bullock, and not the dissolution of Ocean Spray, is something just short of miraculous. On learning from past mistakes: Whether Ocean Spray goes it alone, develops new alliances or becomes a subsidiary of a corporate giant, there are sobering lessons to be learned from the missteps of the last few years. For one, as the leader in the cranberry industry, never be seduced by the glamour niche markets to the point you loose your decidedly unglamorous (except when it comes to disposable income) core consumer. No more toe-nibbled Fergie, no more wise-cracking Martina (who was recently dethroned by a virtual unknown), and no more red Volkswagens. Learn how to be humble. Accept competition. Mend fences with the independents, and let them market their grower's cranberries without getting hysterical over their market share. Keep the lawyers out of any deal making. Don't let anybody near the negotiations with an elevated Pa score on their MMPI (for non-shrinks, that's a sign of paranoia). My advice to the independents is perhaps less strident. But I would hope to see them avoid negative anti-Ocean Spray advertising and focus on the basic rule of advertising: when products are similar it is image that counts. They paid a premium to lure growers from Ocean Spray, competing with each other to break that stubborn co-op loyalty so many growers clung to. They have their growers now, and also have the debt incurred by paying them so much for the first two or three years. So there are lessons to be learned all around.
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