Editorial

Quenching the global thirst with chemicals?

11/23/00 Coke and Quaker have broken off talks and Quaker is in play again, raising speculation that ultimately Pepsi will end up acquiring the company. However, a larger question relevant to the cranberry industry was raised in a New York Times article: "For Coke, its decision to abandon its bid essentially demonstrated the board's unwillingness to pay so much for Gatorade, which has yet to prove itself in overseas markets where the company is projecting much of its growth." Indeed, the long-term future market growth of sports drinks, which have no dependence on a fruit supply, is solely dependent on the acceptance of this product by a large number of international consumers. 

We know that sports are a global obsession, witness Olympic fever. The billion dollar question for Coke, Pepsi and other food giants is whether this obsession will translate into overseas sales for sports drinks. 

The long-term future of the fruit juice business is also in global sales. Gatorade is "grown" in vats by lab technicians and fruit is grown in fertile earth by farmers. To increase the flow of Gatorade into the system one, presumably, only has to program a computer to turn a few valves; which is why you will never see advertisements for Gatorade showing the inside of a "processing" plant as you do for cranberry juice.

Cranberry growers well know that balancing the supply with the demand for their fruit is both complex and economically perilous. The only way to significantly increase demand is to develop international markets. 

Coke, Pepsi and other food companies also know that there is a huge untapped world-wide market for juices. But even a hundred billion dollar beverage corporation can't gamble away a few billion dollars on an acquisition based on the uncertain proposition that consumers in 199 Olympic countries, from Albania to Zimbabwe, will all take to sports drinks. However, people in all of these countries already drink some form of fruit juice. We know there is a potential market for the category; the only question is whether a large number of consumers will take to a new juice or juice blend. 

There are three ways for Coke or Pepsi to expand into cranberry juice internationally:

• Buy cranberry concentrate on the open market.

• Purchase an existing large cranberry company.

• Facilitate the major growth of a small cranberry company through a long term contract.

To a cranberry grower, it's a no-brainer. But then again, farmers have learned the hard way that corporate decisions can be made on something less than down-on-the-farm common sense.  

NY Times article

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