Ripe For Export
Ocean Spray CEO Randy Papadellis leads under an unusual business model. As an agricultural cooperative, his company is committed to accepting 100 percent of the crop that its member suppliers can produce.
Lately, it’s been quite a lot.
“The industry is in an oversupply situation so we have to sell in new ways,” says Papadellis. “Ocean Spray is more than 700 growers who individually own their farms. Farmers love to grow and with new agriculture practices they are increasing cranberry yields. The expectation is we will find more ways to sell.”
Ocean Spray is the largest seller and enjoys the highest rate of brand awareness—thanks to the success of its signature cocktail juice and Crazins brand—but it competes with nearly 30 cranberry brands and suppliers in the wholesale, raw product, direct and retail business lines, according to the Cranberry Marketing Committee, USA (CMC).
Papadellis has a tough assignment, but after seven years at the helm the former Cadbury Schweppes marketing expert has learned a thing or three about selling cranberries. His plans for Ocean Spray growth include focusing on global markets. In 2014, Ocean Spray got the attention of the Department of Commerce, which awarded the company one of its Presidential “E” Awards for Exports, owing to its track record in expanding agricultural exports (see sidebar, “Harvesting Exports”).
Papadellis says there’s an important distinction in their export business: the difference between sales under the Ocean Spray brand—or “finished” product—and ingredient cranberry products that are sold to a wide range of food manufacturers to use in their own goods. Ocean Spray exports now account for 25 percent of sales, though there has been a learning curve in selling its branded products abroad, according to Papadellis. In the U.K., for example, the company knows that blending black currants with cranberries is a good match for that region’s taste.
“We’ve gone back and forth the past five to 10 years to tailor our finished-brand products and advertising to specific countries,” says Papadellis. “But we’re finding the world is getting smaller and what works in the U.S. often translates to export markets.” Most of the company’s global advertisements depict growers in bright red cranberry bogs, offering a humorous marketing pitch.
The global marketing doesn’t just help introduce foreigners to a fruit native to America, it’s also building Ocean Spray’s brand awareness against the competition, which, as it turns out, is also overseas.
Growing global markets is the trend across the entire cranberry sector, according to a 10-year report through 2013 from CMC. The committee’s data shows that sales of fresh cranberries have averaged right around 56,000 barrels (100 pounds each) for the past decade. In the same time span, however, foreign processed (ingredient) cranberries have jumped from 1.5 million barrels in 2004 to 2.6 million barrels in 2013.
“In 2013, about 30 percent of the crop was exported,” says Scott Soares, executive director of the CMC, which consists of 1,300 growers and 70 handlers (including Ocean Spray). “In 2013, we saw a 16-percent increase in exports, with a 104-percent increase in China, a 109-percent increase in Korea and more than a 200-percent increase in Hong Kong.”
Soares says awareness of “America’s Original Super Fruit,” as cranberries are dubbed on the CMC website, is almost nonexistent in many overseas markets, requiring some groundwork to create product interest. To that end, the CMC conducts international press and food-processing events in such cities as Beijing and Shanghai, as well as sponsored events in the U.S to reach journalists and consumers.
All of which is welcome by Ocean Spray, which must also spread the cranberry gospel to establish its brand in foreign markets. The company recently expanded its 10-year-old “Bogs Across America” campaign globally, recreating a New England harvest at a Dublin, Ireland, garden show attended by 100,000 visitors. Some 50,000 cranberries in all their fiery-red glory were used in the “berry tableau,” which won Ocean Spray the show’s gold medal.
“Cranberries—which are just one of three fruits native to North America, along with blueberries and concord grapes—are often a new commodity in a market,” says Lisa Hill, Ocean Spray’s senior manager of Global Trade Strategies. “So we promote cranberries using three pillars: taste, health benefit and as a uniquely North American heritage product. (Think pilgrims and Thanksgiving). But once consumers taste cranberries, they are hooked and love the product.”
“We’ve got 80-90 raw products, from juices to dried fruit, being shipped to a number of countries, from Australia to Mexico to China,” says Papadellis. “It would be nice if we could put one juice in one bottle and sell it that way, but it takes an individual understanding of each country where you want to do business.” One past strategy was inking distribution agreements with Coca-Cola to sell cranberry drinks in new overseas markets.
Papadellis notes that although Ocean Spray has been exporting for 50 years, regulations such as food-safety laws, import laws and labeling requirements are always evolving. The export learning curve has been key for Ocean Spray, Papadellis says.
“For example, in the U.S. we can say on the label that the cranberries help cleanse and purify the body, but we can’t make the same claim in Canada,” he notes. “So we have to be alert to the ad messages we use in export markets. At the same time, whether it’s cocktail juice or Crazins, we have to stay true to our core finished product and its message.”
The universal appeal of the cranberry helps foster this tricky balance. Because it’s rare for Ocean Spray or its associated global producers to develop a unique product, Papadellis says the company works with international partners to bottle and package core products for efficient placement on grocery shelves.
Ocean Spray’s quality representatives make periodic inspections of overseas production plants to ensure its products are being produced to standard and safely. “We ship a lot of fruit to the southern hemisphere, so we have to pay attention to transit times and refrigeration when crossing the equator,” Papadellis says.
According to Hill, most of the company’s exports are sent in full container loads via ocean, although they will send smaller orders as air shipments via FedEx if that is what a customer needs. “We always work to get product to customers most efficiently and at the lowest cost,” Hill says.
To that end, Ocean Spray has a 20-year relationship with Boston-based Intral Corp., which specializes in international trade and logistic-management services. Hill says Ocean Spray has learned to be a great partner with its logistic provider, which is mutually beneficial. Ocean Spray pre-negotiates two to three primary ship carriers per shipping lane, with Hapag-Lloyd being one of the most frequently used carriers. Hill says that once Ocean Spray receives a purchase order from a client, nearly all shipping orders are arranged via email, with Intral providing a critical EDI (Electronic Data Interchange) information chain on the shipments.
“We act as our own importers with Intral in large markets such as the EU, Canada and Australia,” she notes. “In other markets we rely on the manufacturing parties, sales team and distributor to get the product in-country.”
Hill notes that in her 13 years with Ocean Spray, the company has become more adept at relying on government-agency resources, such as the USDA Foreign Agriculture Service and the U.S. Trade Office, to access global markets. She also says that several free-trade agreements in recent years have helped reduce the cost of duties on exported products, although this has been accompanied by the increase in complexity of rules and regulations to which Papadellis refers.
That complexity is one reason Papadellis cautions fellow exporters against overextending. In China, for example, he notes that the biggest issue was not the language—which was solved by hiring a few people who spoke Mandarin—but the extensive regulatory process for food imports.
“When you look at the world it’s easy to see a huge opportunity,” he says. “And it’s also really easy to get spread too thin. It’s better to focus on a few key markets at a time. Invariably, we encounter a few problems when shipping to a market for the first time.”
Ocean Spray was recognized on several fronts in 2014 for its ability to drive the cranberry exports, reduce emissions and improve the business climate in the domestic market.
The company received one of 66 Presidential “E” Award for Exports, an award given to companies “making a significant contribution to the expansion of U.S. exports.”
In recognizing Ocean Spray, U.S. Secretary of Commerce Secretary Penny Pritzker said:
“Ocean Spray cranberries has demonstrated a sustained commitment to export expansion. The ‘E’ Awards Committee was very impressed with Ocean Spray cranberries’ creative, multi-tiered marketing programs. The company’s work with non-profit organizations and committees dedicated to expanding agricultural exports was also particularly impressive. Ocean Spray cranberries achievements have undoubtedly contributed to national export expansion efforts that support the U.S. economy and create American jobs.”
On the green front, the Environmental Defense Fund (EDF) cited Ocean Spray in a case study of its success in reducing shipping emissions by 20 percent. The EDF noted that the company implemented three of EDF’s “Five Principles of Carbon-efficient Shipping” to achieve the results. EDF also highlighted that Ocean Spray reduced its costs on one route by 40 percent by adhering to the EDF standards.
The Associated Industries of Massachusetts (AIM) awarded Ocean Spray its 2014 Chairman’s Award. The company was cited for its expansion into 90 global markets, exporting 100 million pounds of cranberries and redistributing all proceeds to its grower-owners, 40 percent of whom reside in the state.