Will Sunkist Plan Bear Fruit?

A management consolidation at Sunkist Growers Inc. has set the 124-year-old cooperative on a new course – and executives are hopeful the change will streamline operations and deliver better value to members. Valenicia-based Sunkist is a recognized marketing brand for citrus, and the organization behind the name handles distribution and logistics for growers. But for more than 100 years, Sunkist has had an exclusive partner called Fruit Growers Supply Co., which supplies growers with shipping products such as cartons and pallets. In August, Sunkist and Fruit Growers decided to reorganize under one management. They have the same chief executive, but remain separate legal entities. The dual cooperatives also share a common headquarters building just off the 5 freeway near the Six Flags Magic Mountain theme park. They relocated there in 2014 from Sherman Oaks. Joan Wickham, director of communications for Sunkist, said that after three months of the new arrangement, it was too early in the process to quantify its impact. “But our board and management are optimistic about the positive changes underway to best serve our membership,” Wickham said in an email to the Business Journal. Russ Hanlin serves as chief executive for both Sunkist and Fruit Growers. The chief operating officers of each co-op – John Striff at Sunkist and Ted Pajak at Fruit Growers Supply – handle the day-to-day operations. Legal, finance, information technology, human resources and government affairs services are shared across the two companies. Hanlin said the management changes streamline the operations. “This structure will allow us to fully utilize talent and resources across both organizations to optimize service and value to our constituents,” he said in a prepared statement. Brand value Citrus production is a billion-dollar industry in the U.S. In 2015, retail citrus sales were $2.8 billion, according to online statistics company Statista Inc. The U.S. Department of Agriculture reported in July on U.S. production of citrus fruits – oranges, tangerines, grapefruit, lemons and limes. The country was forecast to produce 4.6 million metric tons of oranges for the 2016-17 growing season, making it the fourth highest in the world behind Brazil, China and the European Union. Tangerine production was projected to increase by about 9 percent in 2016-17, or to 941,000 metric tons, when compared with the same period a year earlier. Grapefruit and lemons and limes were forecast to decrease in production numbers in the 2016-17 growing season when compared with the previous one. Sunkist, founded in 1893, represents thousands of grower members in California and Arizona by providing customer specific marketing and promotional support to retailers and the foodservice industry. The cooperative reflects the values and legacy of its history: family-owned farms with traditional growing practices and stewardship of natural resources. Holly Schroeder, chief executive of the Santa Clarita Economic Development Corp., called Sunkist a great name to have in the city. “They are a well-known company and an identifiable brand that adds a level of prestige to the business community here,” Schroeder said. “In addition, they are active in contributing to nonprofits in the region and are good corporate citizens.” Kathy Means, vice president of industry relations for the Produce Marketing Association, in Newark, Del., said that Sunkist is a long-time member of the trade group and has exhibited at its annual convention for 60 years. Means called Sunkist trendsetters in that the co-op has been doing brand marketing long before that term became ubiquitous in advertising circles. “They put the Sunkist name on citrus when almost every other commodity, except for bananas, were just that – a commodity,” she explained. Fruit Growers Supply was established in 1907 by the same growers who formed Sunkist to supply wood for the packing crates to ship the citrus. It has since expanded to deliver integrated services for the agriculture industry. “Services include manufacturing shipping pallets, corrugated cardboard cartons, coatings as well as providing equipment designs, irrigation services along with parts and materials, and a wide array of agricultural supplies in our walk-in stores,” Wickham wrote in her email. Means said that while she couldn’t comment specifically on the Sunkist-Fruit Growers management consolidation, the organization sees many different types of business relationships among its member companies. Often these relationships are done not out of necessity or because a company is in financial trouble but out of strategic vision of where a company is going and how best to achieve that, she added. Both Sunkist and Fruit Growers were born out of the same growers looking to work together to be more efficient, Means said. “It makes sense that the same philosophy permeates both businesses as they look to figure how to best serve their members as they are both cooperatives,” she added.