|
John Swendrowski responds to an email from Joe Darlington and Brenda Connor which was also posted on the Ocean Spray ExtraNet Ed. note: Stressline has not received permission from Darlington and Connor to republish their letter. 3/3/01 -- I continue to find it amazing that the numbers from you or OS change every time we discuss the issue. In your response to my letter you state that OS now needs 1,800,000 carry over, this seems in conflict with OS claim that the industry needs 2,000,000. The meetings I have attended Jack Crooks claimed that you need 1,500,000. It seems to me that we just found 300,000 bbls. that you could take off your 4,800,000. Your comment on our increase of cranberry to 27% causing a decrease in the value of the fruit is true if you analyze the issue in a vacuum. I stated that we will use our cranberry by putting more in a bottle instead of spending foolish money to chase market share in order to use our fruit. The increased cost of the fruit is about 18 cents per bottle. We believe that we will significantly reduce our Advertising & Promotion spending by more than 18 cents. Joe, I'm sorry but concentrate sales below production cost, buy one get two free, coupons for a free bottle of OS if you buy a bottle of Northland, two 64 OZ. bottles for $3 etc. is not about building new markets. It is about "clobbering the competition" not about earning the highest grower profit. You lose money on every one of those sales. Those losses reduce the average pool return on every bbl. Those sales serve no financial purpose to the grower. It is about market share period. Just have the integrity to acknowledge the purpose of supporting those sales for what they are instead of looking for some justification. The timing difference regarding the utilization of the 2000 crop is another example of you and OS providing conflicting numbers as we try to determine how much fruit we need in 2001. You have one set of numbers that you give to the growers that defines when you will liquidated your inventory from the 2000 crop. That set of numbers determines when the grower will get paid for the crop. Those numbers conflict with the numbers that you keep using in the debate over the CMC. If your pool payment numbers are wrong then tell the growers you will pay them faster because you will use up the 2000 crop faster OR change your CMC numbers to match. It is very difficult to debate the issue when the numbers change. I am ready to support any number that brings in the necessary supply to make sure that we all can make all the good sales possible. Ocean Spray has not been able to demonstrate to me that they would be short fruit for sales that will increase grower returns. It seems as though every time I point out where OS can in fact reduce its demand to 4,000,000 and have all the fruit necessary you change the numbers or suddenly Canada does not count or you change the carry in numbers etc. Maybe if you had one set of numbers that is consistent with your grower payment schedule we could figure out once and for all if 4,000,000 works. I have not seen the Mass study you are referring to in your $29.90 cost of production. Does it include: depreciation, owners compensation, any interest expense etc. When will the OS grower receive 29.90 in cash over a twelve month period? Remember when you figure this out do not add the average incentives because fresh fruit premiums are most of the incentive dollars. Also do not add the non-patronage income because that is not a return on the cranberries. That is your bonus for all the great non-member business. You should also remember that a portion of your sales are in fact sales to other handlers, Welch, Cliffstar , Pappas, Decas etc. that really are not Ocean Spray sales to consumers. Those handlers could buy fruit direct from growers instead of helping use your supply. I wonder why they don't buy from growers instead of OS? I will be glad to continue
this discussion with you in Wis. I am not trying to be combative I
am looking for the answer that raises the grower price and meets the
real needs of the market. We need to have real numbers that do not
constantly change to find the answer. |