Mike HornickKen Bedrosian (left), of Bedrosian Farms chats with Sun Pacific chief executive officer Berne Evans June 11 in Visalia, Calif.VISALIA, Calif. — Between rising demand for easy-to-peel citrus and a reduction in assessments, growers have good reason to pack under the Cuties label, Sun Pacific chief executive officer Berne Evans told potential recruits at the Visalia Convention Center.
About 160 growers and investors came out to hear the pitch from Evans and general manager Al Bates at a June 11 luncheon.
The meeting followed Sun Pacific’s acquisition of the Cuties brand from Paramount Citrus, whose new label is Wonderful Halos. The split cuts Cuties volume by about half, Bates said.
“We have a tremendous following in retail from Wal-Mart, Sams Club, Kroger, Costco — you name it,” Evans said. “Not that they’re on the hook, but they like Cuties and want to continue so we need more volume.
“Last year we sold under Cuties about 100 million 5-pound boxes for a packinghouse f.o.b. around $450 million,” he said. “It’s going to be a $1 billion industry before it’s over, probably bigger than the navel industry. That’s the way it is in Europe, anyway. They sell 500 million boxes of clementines to the same population. We’re selling 60 million.”
Evans was recently less enthusiastic about murcotts, but said the market proved him wrong.
“On murcotts I thought we would hit the wall this year,” he said. “But we misjudged the crop completely and were done by April. We couldn’t keep up with demand. Another six weeks would have been another 30 million cartons.”
Sun Pacific’s packing and selling charges will undercut most of its competitors, Evans said. And the promotional assessment will be about 10 to 12 cents per box — down from the past three years when it ranged from 25 to 31 cents.
It was 31 cents last year. Cutting that to 10 or 12 saves about $1,000 an acre, he told growers.
“That was one of the big arguments between Paramount and us,” he said. “They wanted to do national TV advertising. We didn’t think it was necessary. That was roughly 60% of the advertising budget.”
One of Sun Pacific’s complaints concerned broadcast of television ads in Boston, where Cuties had no distribution or customers, he said. Spanish clementines dominate Boston, Philadelphia and New York City.
“We’re going a cheaper, more streamlined way,” said Evans, who prefers in-store and social media promotions, coupons and the like. “I think the Cuties brand would be where it is without TV advertising.”
He reminded growers that Wawona Packing Co. and Moonlight Cos. LLC recently became licensed Cuties packers.
“They’ll be soliciting growers to pack with them,” Evans said. “Sales will be coordinated through us.”
Evans estimated Sun Pacific’s clementine acreage at 6,000 and Paramount’s at 6,200. For murcotts and tangos, Paramount has about 6,000 to Sun Pacific’s 4,500, he said. The two companies accounted for about 90% of clementines and 70% of murcotts.
Part of Sun Pacific’s approach in Visalia was to target smaller growers, or larger growers of other crops — even nuts — who have or are considering modest citrus acreage. It’s unclear what commitments may come out of the meeting, but there was interest.
LindaKay Abdulian, president and chief executive officer of Fowler-based Bedrosian Farms, said her company expects to plant 70 acres of murcotts and tangos by next spring.
“We’re trying to diversify,” Abdulian said. “That’s why we came. Mr. Evans was candid and forthright.”
So far only clementines, murcotts and tangos — which are essentially a seedless murcott — have been packed as Cuties. One grower said he’d consider packing the Gold Nugget variety under that label, but noted younger groves have had problems with alternate bearing.