Ocean Spray Cranberries, Inc.

One Ocean Spray Drive
Lakeville-Middleboro, Massachusetts 02349-0001
U.S.A.
(508) 946-1000
Fax: (508) 946-7704

Cooperative
Incorporated: 1930 as Cranberry Canners, Inc.
Employees: 2,200
Sales: $1.09 billion
SICs: 0171 Berry Crops; 2033 Canned Fruits and Vegetables; 2037 Frozen Fruits, Fruit Juices & Vegetables; 2099 Food Preparations Nec

A leader in the marketing of shelf-stable juice drinks, Ocean Spray Cranberries, Inc. is responsible for 80 percent of the cranberries sold worldwide. Since its beginning, the company has functioned as a grower-owned agricultural cooperative; however, its strong emphasis on new product introduction, advertising, and packaging places it in direct competition with many publicly owned companies. Once known only as a seasonal cranberry sauce business, Ocean Spray now markets blended juice drinks, juice concentrate, fresh fruits, and several other items to both retail and food service outlets year-round. Ocean Spray’s Cranberry Division, with $852 million in 1992 sales, still accounts for the bulk of the company’s operations. However, since the addition of grapefruit growers to the cooperative in 1976, the company has displayed an increasing tendency to develop a broad fruit-oriented product line to fortify its presence in the consumer market. Preserving a strong brand image, perfecting production forecasting techniques, and promoting operational efficiency have all led the cooperative into the ranks of the Fortune 500. Ocean Spray’s stock is held by some 150 grapefruit growers in Florida and nearly 750 cranberry growers in Massachusetts, New Jersey, Wisconsin, Oregon, Washington, and Canada.

The history of Ocean Spray is naturally tied to the history and lore of the cranberry, an unusual native American wetland fruit. Small, reddish, and distinguished by a strong, bitter flavor, the cranberry was first used by various native American tribes in the New England area to make dyes as well as a high-energy food called pemmican: a concentrated mixture of dried venison, fat, and cranberries shaped into cakes. Cranberries were believed to have been present at the first Thanksgiving feast in 1621. The first cranberry juice recipe dates back to 1683. Throughout colonial times, cranberries also became widely used in tarts, preserves, and sauces. Exports to Europe also began during this era. However, commercial cultivation of cranberries did not commence until the early 19th century, when Captain Henry Hall began experimenting with cranberry vines in East Dennis, Massachusetts. As many already knew, the Cape Cod marshland, with its high concentration of peat, was particularly conducive to cranberry growing. Hall, however, made the singularly important observation that when sand from the nearby dunes blew into the marshes, or bogs, the cranberries thrived. He began applying sand manually and found he could grow cranberries that were larger and juicier than those found elsewhere. Growers from another state in which the cranberry was native, New Jersey, soon followed Hall’s lead. Among such pioneers were Benjamin Thomas and John Webb. During the 1850s, cranberry cultivation spread to Wisconsin; three decades later, farmers in both Washington and Oregon began establishing cranberry bogs of their own. By the mid-twentieth century, mechanical pickers were invented to replace manual procedures, and soon wet-harvesting techniques were developed to take advantage of the cranberry’s natural buoyancy.

The Ocean Spray name was conceived by a Boston lawyer named Marcus L. Urann, who gained a reputation as the “Cranberry King” for a cranberry sauce he packaged in tins and marketed under the brand as early as 1912, as well as for his later promotions. Urann headed the Ocean Spray Preserving Co. of South Hanson, Massachusetts, and was one of the principal proponents behind a merger of similar companies to form a large, powerful cooperative. Urann reasoned that a merger would erase the stiff competition he faced from the Makepeace Preserving Co. of Wareham, Massachusetts, and The Enoch F. Bills Co. of New Egypt, New Jersey, and also allow for greater marketing clout. John C. Makepeace and Elizabeth F. Lee, the other two owners involved in Urann’s proposed merger, joined Urann in signing a certificate of incorporation in June 1930. A delay by Urann in transferring the Ocean Spray trademark jeopardized the merger for a short time; however, by August, Cranberry Canners, Inc. had been formed and Ocean Spray’s survival was thus ensured.

Urann, as president and general manager, assumed responsibility for advancing the cooperative by meeting with and encouraging growers and by enlarging the demand for cranberries. Among the products introduced by Cranberry Canners during the 1930s were Cranberry Juice Cocktail and Ocean Spray Cran, both tart-tasting forerunners of later, sweetened juice and juice concentrate products. With the 1940s and the addition of Wisconsin, Oregon, and Washington growers to the cooperative, the product line expanded to include dehydrated cranberries (for U.S. troops) and cranberry-orange marmalade. By 1943 the co-op controlled 15 facilities for production, storage, and distribution. Because of the rising prominence of the cranberry and the Ocean Spray label, the cooperative renamed itself the National Cranberry Association (NCA) in 1946. During this same year, the company also began marketing fresh cranberries, in cellophane packaging, for the first time.

The NCA, with a membership nearly double that of its modern-day variant, continued to sustain itself throughout the 1950s principally as a seasonal business that revolved around the Thanksgiving and Christmas holidays. Highlights of this decade were numerous and included the incorporation and then formal assimilation of Canadian growers; the first Ocean Spray television commercials; the retirements of Urann in 1955 and Makepeace (who had served as secretary-treasurer) in 1957; the introduction of frozen cranberry-orange relish and frozen cranberries; and the final renaming of the cooperative in 1959 to reflect the central importance of the Ocean Spray brand. On November 9, 1959, Ocean Spray Cranberries, Inc. was faced with its first and only major crisis. On that day the Secretary of the Department of Health, Education and Welfare announced that residue from the potentially cancer-causing weed killer aminotriazole had been found in cranberries produced in Washington and Oregon. Because of the ill-timed announcement—just prior to Thanksgiving—Ocean Spray’s entire cranberry business was in jeopardy. Cranberries quickly became known as “cancer berries” and hopes for any profits from that year’s holiday sales were dashed. Although the co-op’s new president, George C. P. Olsson, rightly asserted that the purported danger was nonexistent, it was too late to avert the widespread fear that had been raised. Grocers were forced to take all suspect products off their shelves. Ironically, “The History of Ocean Spray Cranberries” records that a membership newsletter dated December 1957 had actually alerted growers to the dangers of aminotriazole, then an unapproved weed killer which, if used, could “cause needless expense to your cooperative and result in the condemnation of your crop.” The Department of Agriculture had actually approved the compound in 1958 for use after harvests, but the linkage to cancer and the tests for detecting residues were not established until the following year.

For a time, the co-op was in danger of folding, but a partial comeback in sales for 1960, as well as a government subsidy for unsold cranberries found to be free of residue, kept the business going. However, Ocean Spray’s earlier successes had now created the problem of over production. New marketing avenues needed to be explored if the high demand for cranberries were to be revived. Edward Gelsthorpe, an executive with experience at both Colgate Palmolive and Bristol Myers, was brought in to develop a new, long-term marketing plan for the company. Gelsthorpe’s answer, unpopular at the time, was to emphasize juice drinks under the Ocean Spray brand. Between 1963 and 1968 the company committed itself to the consumer drinks market with Cranberry Juice Cocktail, Cranapple, and Grape-berry (later changed to Crangrape). The guiding philosophy was to compete against both the large soft drink and orange juice markets not through product imitation but through product diversity. As consumers became more health conscious during the 1960s and 1970s, the Ocean Spray formula for success struck a responsive chord. By the mid-1970s the cooperative was on the fast track to achieving Fortune 500 status and appeared all the more healthy after its bold expansion into grapefruit growing. A minor setback occurred in 1979 when the Federal Trade Commission, as part of an investigation of all agricultural cooperatives, threatened an antitrust action against Ocean Spray. No suit was launched, however, and so the company began the 1980s with its $235 million in annual revenues intact.

In 1981 the company made packaging history with its introduction of the block-shaped juice container with attached drinking straw. The innovation captured a new segment of the juice-drinking public, children, and has since become a staple of the Ocean Spray product line. This same year Ocean Spray achieved its ranking as the largest domestic seller of canned and bottled juice drinks. The co-op fought vigorously to retain the title during the decade—as new competitors entered the fray—with a growing number of product introductions, including Mauna-La’i, a guava-lemon drink; Firehouse Jubilee, a tomato drink; Ocean Spray Liquid Concentrates; and Cranberry Fruit Sauces. By the mid-1980s, the company had reached annual revenues in excess of $500 million. The company also improved its distribution system, expanded its marketing to food services, and capitalized on the Cape Cod tourist industry by attracting millions of visitors each year to its headquarters and museum near Plymouth Rock.

One of the most important developments for Ocean Spray came in 1985 with its acquisition of Milne Fruit Products of Prosser, Washington. A manufacturer of fruit concentrates and purees, Milne was once primarily a grape business but has grown under Ocean Spray to process cherries, blueberries, blackberries, plums, raspberries, strawberries, and cranberries. Milne’s largest customer is Ocean Spray, but the subsidiary also serves such major food companies as Kraft General Foods, Gerber Products, Nestle, Sunkist, Welch, and Baskin-Robbins. Most importantly for its parent company, Milne has tripled in size since acquisition and has become a significant generator of nonpatronage revenue, which is reinvested in the cooperative for future expansion.

The only blight on the company during the eventful 1980s occurred in 1988, when it was charged under the Clean Water Act with illegally dumping insufficiently treated effluent from its Middleboro plant into the town’s sewer system. Ultimately, Ocean Spray was fined $400,000; the company also donated $100,000 in water-treatment equipment to the town of Middleboro. Since this time, Ocean Spray has become an industry leader in promoting environmentally sound operations and has spent some $26 million upgrading waste-treatment facilities.

While the cooperative reformed itself environmentally, it was also in the process of analyzing all of its internal operations. A program called Right Turn Only (RTO), dedicated to quality improvement, problem-solving, and teamwork, was adopted to aid Ocean Spray in remaining competitive while fostering an open working environment. In the area of market research, crucial in a brand-driven industry, Ocean Spray decided to take advantage of new database technologies by entering into a joint venture with Information Resources of Chicago. The result was a state-of-the-art software program called CoverStory that offered market information from universal product code (UPC) figures and trends. Other innovations include techniques to boost crop yields and forecast harvest results.

Under John S. Llewellyn, Jr., Ocean Spray recently became a billion-dollar company and continues to build on its strong brand image. The cooperative’s most important new development involves a joint arrangement with PepsiCo to distribute individual cans and bottles of Ocean Spray juices and drinks. This agreement offers Ocean Spray a relatively inexpensive opportunity to increase its individual serving segment, which accounts for roughly $100 million in sales, through vending machine, convenience store, and related outlets. According to reporter Jon Berry, “The logic behind the New Age partnership is forceful. During the past decade, Ocean Spray has burst from obscurity to become one of the acknowledged innovators in the beverage industry. But its strength has been notable only in supermarket aisles. To become an equal power in single-serve sales, Ocean Spray would have to spend millions building a distribution system.”

Although fiscal 1991 was marred by flat sales, lower than expected harvests, heavy competitive pressures, and a Wisconsin freezer storage fire, the company had reason to look optimistically to the future. Foodservice sales were up 19 percent, citrus revenues increased 21 percent, and Refreshers Fruit Juice Drinks and Ruby Red Grapefruit Juice Drink came on line. Single-serve sales, representing ten percent of the company’s revenues, showed the potential for tripling in size during the decade. In 1990, Christopher Daly wrote: “The cranberry.. .is in many ways an American success story.” One could say the same of its biggest supporter, Ocean Spray.

Principal Subsidiaries

Milne Food Products, Inc.

Further Reading

“Cranberry Growers Reel under Pre-Holi-day Blow,” Business Week, November 14, 1959; Skilnik, Rayna, “Ocean Spray’s Canny Marketing,” Sales & Marketing Management, August 18, 1980; Ling, Flora S. H., “The Little Man’s Monopoly,” Forbes, December 8, 1980; The History of Ocean Spray Cranberries, Inc., Lakeville-Middleboro, Massachusetts, 1981; Buell, Barbara, “How Ocean Spray Keeps Reinventing the Cranberry,” Business Week, December 2, 1985; “Crushed Cranberries,” Time, February 8, 1988; Donahue, Christine, “Can Ocean Spray Sell Cranberry Sauce Off-Season?” Adweek’s Marketing Week, June 26, 1989; Hanson, Peter D., “How Ocean Spray Trims the Risks of Seasonal Borrowing,” Corporate Cashflow, May 1990; Daly, Christopher B., “Squeezing the Humble Cranberry into a Success Story,” Washington Post, November 21, 1990; Schmitz, John D., Gordon D. Armstrong, and John D. C. Little, “Cover Story—Automated News Finding in Marketing,” Interfaces, November/December 1990; Eichinger, Mark S., “Empowerment: A Blue-Collar Perspective,” Personnel Journal, October 1991; Pace, Eric, “George Olsson, 88, Head of Cooperative Built on Cranberries,” New York Times, November 16, 1991; Berry, Jon, “Ocean Spray Joins the Pepsi Generation,” Adweek’s Marketing Week, March 9, 1992; “How Ocean Spray Gave Cranberries Some Sparkle,” New York Times, November 26, 1992.

—Jay P. Pederson

Ocean Spray Cranberries, Inc.

One Ocean Spray Drive
Lakeville-Middleboro, Massachusetts 02349-0001
U.S.A.
(508) 946-1000
Fax: (508) 946-7704
Web site: http://www.oceanspray.com

Cooperative
Incorporated: 1930 as Cranberry Canners, Inc.
Employees: 2,500
Sales: $1.44 billion (Fiscal 1997)
SICs: 0171 Berry Crops; 2033 Canned Fruits and Vegetables; 2034 Dried & Dehydrated Fruits, Vegetables & Soup Mixes; 2037 Frozen Fruits, Fruit Juices & Vegetables; 2099 Food Preparations Not Elsewhere Classified

Ocean Spray Cranberries, Inc. is a marketing cooperative owned by almost 1,000 cranberry and grapefruit growers in the United States and Canada. A leader in the marketing of shelf-stable juice drinks, Ocean Spray Cranberries, Inc. is responsible for 75 percent of the cranberries sold worldwide. Since its beginning, the company has functioned as a grower-owned agricultural cooperative; however, its strong emphasis on new product introduction, advertising, and packaging places it in direct competition with many publicly owned companies. Once known only as a seasonal cranberry sauce business, Ocean Spray now markets blended juice drinks, bottled juices, juice concentrate, fresh fruits, and several other items to both retail and food service outlets year-round. Ocean Spray’s Cranberry Division still accounts for the bulk of the company’s operations. However, since the addition of grapefruit growers to the cooperative in 1976, the company has displayed an increasing tendency to develop a broad fruit-oriented product line to fortify its presence in the consumer market. Preserving a strong brand image, perfecting production forecasting techniques, and promoting operational efficiency have all led the cooperative to its position as the leader producer of canned and bottled juices and juice drinks in North America. Ocean Spray’s stock is held by some 250 grapefruit growers in Florida and nearly 700 cranberry growers in Massachusetts, New Jersey, Wisconsin, Oregon, Washington, and Canada.

Early History

The history of Ocean Spray is naturally tied to the history and lore of the cranberry, an unusual Native American wetland fruit. Small, reddish, and distinguished by a strong, bitter flavor, the cranberry was first used by various Native American tribes in the New England area to make dyes as well as a high-energy food called pemmican: a concentrated mixture of dried venison, fat, and cranberries shaped into cakes. Cranberries were believed to have been present at the first Thanksgiving feast in 1621. The first cranberry juice recipe dates back to 1683. Throughout colonial times, cranberries also became widely used in tarts, preserves, and sauces.

Exports to Europe also began during this era. However, commercial cultivation of cranberries did not commence until the early 19th century, when Captain Henry Hall began experimenting with cranberry vines in East Dennis, Massachusetts. As many already knew, the Cape Cod marshland, with its high concentration of peat, was particularly conducive to cranberry growing. Hall, however, made the singularly important observation that when sand from the nearby dunes blew into the marshes, or bogs, the cranberries thrived. He began applying sand manually and found he could grow cranberries that were larger and juicier than those found elsewhere. Growers from another state in which the cranberry was native, New Jersey, soon followed Hall’s lead. Among such pioneers were Benjamin Thomas and John Webb.

During the 1850s, cranberry cultivation spread to Wisconsin; three decades later, farmers in both Washington and Oregon began establishing cranberry bogs of their own. By the mid-twentieth century, mechanical pickers were invented to replace manual procedures, and soon wet-harvesting techniques were developed to take advantage of the cranberry’s natural buoyancy.

The Ocean Spray name was conceived by a Boston lawyer named Marcus L. Urann, who gained a reputation as the “Cranberry King” for a cranberry sauce he packaged in tins and marketed under the brand as early as 1912, as well as for his later promotions. Urann headed the Ocean Spray Preserving Co. of South Hanson, Massachusetts, and was one of the principal proponents behind a merger of similar companies to form a large, powerful cooperative. Urann reasoned that a merger would erase the stiff competition he faced from the Makepeace Preserving Co. of Wareham, Massachusetts, and The Enoch F. Bills Co. of New Egypt, New Jersey. The merger would also allow for greater marketing clout. John C. Makepeace and Elizabeth F. Lee, the other two owners involved in Urann’s proposed merger, joined Urann in signing a certificate of incorporation in June 1930. A delay by Urann in transferring the Ocean Spray trademark jeopardized the merger for a short time; however, by August, Cranberry Canners, Inc. had been formed and Ocean Spray’s survival was thus ensured.

Urann, as president and general manager, assumed responsibility for advancing the cooperative by meeting with and encouraging growers and by enlarging the demand for cranberries. Among the products introduced by Cranberry Canners during the 1930s were Cranberry Juice Cocktail and Ocean Spray Cran, both tart-tasting forerunners of later, sweetened juice and juice concentrate products. With the 1940s and the addition of Wisconsin, Oregon, and Washington growers to the cooperative, the product line expanded to include dehydrated cranberries (for U.S. troops) and cranberry-orange marmalade. By 1943 the co-op controlled 15 facilities for production, storage, and distribution. Because of the rising prominence of the cranberry and the Ocean Spray label, the cooperative renamed itself the National Cranberry Association (NCA) in 1946. During that same year, the company also began marketing fresh cranberries, in cellophane packaging, for the first time.

Facing a Serious Crisis That Began in Late 1959

The NCA, with a membership nearly double that of its modern-day variant, continued to sustain itself throughout the 1950s principally as a seasonal business that revolved around the Thanksgiving and Christmas holidays. Highlights of this decade were numerous, and included the incorporation—and then formal assimilation—of Canadian growers; the first Ocean Spray television commercials; the retirements of Urann in 1955, and Makepeace (who had served as secretary-treasurer) in 1957; the introduction of frozen cranberry-orange relish and frozen cranberries; and the final renaming of the cooperative in 1959 to reflect the central importance of the Ocean Spray brand.

On November 9, 1959, the newly-named Ocean Spray Cranberries, Inc. was faced with its first major crisis. On that day, the Secretary of the Department of Health, Education and Welfare announced that residue from the potentially cancer-causing weed killer aminotriazole had been found in cranberries produced in Washington and Oregon. Because of the ill-timed announcement—just prior to Thanksgiving—Ocean Spray’s entire cranberry business was in jeopardy. Cranberries quickly became known as “cancer berries” and hopes for any profits from that year’s holiday sales were dashed.

Although the co-op’s new president, George C. P. Olsson, rightly asserted that the purported danger was nonexistent, it was too late to avert the widespread fear that had arisen. Grocers were forced to take all suspect products off their shelves. Ironically, “The History of Ocean Spray Cranberries” records that a membership newsletter dated December 1957 had actually alerted growers to the dangers of aminotriazole—then an unapproved weed killer—which, if used, could “cause needless expense to your cooperative and result in the condemnation of your crop.” The Department of Agriculture had actually approved the compound in 1958 for use after harvests, but the linkage to cancer and the tests for detecting residues were not established until the following year.

The Debut of Juice Drinks in the 1960s

For a time, the co-op was in danger of folding, but a partial comeback in sales for 1960, as well as a government subsidy for unsold cranberries found to be free of residue, kept the business going. However, Ocean Spray’s earlier successes had now created the problem of overproduction. New marketing avenues needed to be explored if the high demand for cranberries were to be revived. Edward Gelsthorpe, an executive with experience at both Colgate-Palmolive and Bristol-Myers, was brought in to develop a new, long-term marketing plan for the company.

Gelsthorpe’s answer, unpopular at the time, was to emphasize juice drinks under the Ocean Spray brand. Between 1963 and 1968 the company committed itself to the consumer drinks market with Cranberry Juice Cocktail, Cranapple, and Grape-berry (later changed to Crangrape). The guiding philosophy was to compete against both the large soft drink and orange juice markets not through product imitation but through product diversity. As consumers became more health conscious during the 1960s and 1970s, the Ocean Spray formula for success struck a responsive chord. By the mid-1970s the cooperative was on the fast track to achieving Fortune 500 status and appeared all the more healthy after its bold expansion into grapefruit growing. A minor setback occurred in 1979 when the Federal Trade Commission, as part of an investigation of all agricultural cooperatives, threatened an antitrust action against Ocean Spray. No suit was launched, however, and so the company began the 1980s with its $235 million in annual revenues intact.

Company Perspectives:

Ocean Spray is North America’s leading producer of canned and bottled juices and juice drinks. Ocean Spray has been the best-selling brand name in the canned and bottld juice category since 1981, selling more than the combined total of its three biggest competitors.

In 1981 the company made packaging history with its introduction of the “juice box,” a block-shaped juice container with attached drinking straw. The innovation captured a new segment of the juice-drinking public, children, and has since become a staple of the Ocean Spray product line. That same year Ocean Spray achieved its ranking as the largest domestic seller of canned and bottled juice drinks. The co-op fought vigorously to retain the title during the decade, as new competitors entered the fray, with a growing number of product introductions, including Mauna-La’i, a guava-lemon drink; Firehouse Jubilee, a tomato drink; Ocean Spray Liquid Concentrates; and Cranberry Fruit Sauces. By the mid-1980s, the company had reached annual revenues in excess of $500 million. The company also improved its distribution system, expanded its marketing to food services, and capitalized on the Cape Cod tourist industry by attracting millions of visitors each year to its headquarters and museum near Plymouth Rock.

Acquired Milne Fruit Products in 1985

One of the most important developments for Ocean Spray came in 1985 with its acquisition of Milne Fruit Products, Inc. of Prosser, Washington. A manufacturer of fruit concentrates and purees, Milne was once primarily a grape business but grew under Ocean Spray to process cherries, blueberries, blackberries, plums, raspberries, strawberries, and cranberries. Milne’s largest customer was Ocean Spray, but the subsidiary also served such major food companies as Kraft General Foods, Gerber Products, Nestle, Sunkist, Welch’s, and Baskin-Robbins. Most importantly for its parent company, Milne tripled in size from the acquisition through the early 1990s and became a significant generator of non-patronage revenue, which was reinvested in the cooperative for future expansion.

The only blight on the company during the eventful 1980s occurred in 1988, when it was charged under the Clean Water Act with illegally dumping insufficiently treated effluent from its Middleboro plant into the town’s sewer system. Ultimately, Ocean Spray was fined $400,000; the company also donated $100,000 in water-treatment equipment to the town of Middleboro. Since that event, Ocean Spray has become an industry leader in promoting environmentally sound operations, and has spent more than $26 million upgrading waste-treatment facilities.

While the cooperative reformed itself environmentally, it was also in the process of analyzing all of its internal operations. A program called Right Turn Only (RTO), dedicated to quality improvement, problem-solving, and teamwork, was adopted to aid Ocean Spray in remaining competitive while fostering an open working environment. In the area of market research, crucial in a brand-driven industry, Ocean Spray decided to take advantage of new database technologies by entering into a joint venture with Information Resources of Chicago. The result was a state-of-the-art software program called CoverStory that offered market information from universal product code (UPC) figures and trends. Other innovations included techniques to boost crop yields and forecast harvest results.

Billion-Dollar Company in the 1990s

Under John S. Llewellyn Jr. (who took over as president and CEO in 1987 from Harold Thorkilsen), Ocean Spray became a billion-dollar company by 1992 and continued to build on its strong brand image. A very important development in 1992 involved a joint arrangement with PepsiCo, Inc. to distribute individual cans and bottles of Ocean Spray juices and drinks. This agreement offered Ocean Spray a relatively inexpensive opportunity to increase its individual serving segment, which at the time of the agreement accounted for roughly $100 million in sales, through vending machine, convenience store, and related outlets. According to reporter Jon Berry, “The logic behind the New Age partnership is forceful. During the past decade, Ocean Spray has burst from obscurity to become one of the acknowledged innovators in the beverage industry. But its strength has been notable only in supermarket aisles. To become an equal power in single-serve sales, Ocean Spray would have to spend millions building a distribution system.”

Throughout the 1990s Ocean Spray rolled out a steady stream of new products. In 1991, Refreshers Fruit Juice Drinks and Ruby Red Grapefruit Juice Drink came on line. The following year Cran-Cherry Juice Drink joined the lineup, while Ruby Red & Tangerine Grapefruit Juice Drink was added in 1993. Craisins sweetened dried cranberries—a direct competitor to raisins in the dried fruit category—had their national launch in 1995, with Cran-Currant Black Currant Cranberry Juice Drink made available for purchase in 1997.

Ocean Spray also increasingly sought out joint ventures to extend its product line. The co-op joined with Nabisco in 1993 to marketa cookie called Cranberry Newtons. Ocean Spray and Warner-Lambert joined forces to debut Fruit Waves hard candy in 1994. With PepsiCo, Ocean Spray that same year launched Breakers, a soft drink with 2 percent juice and available in three flavors. The following year saw the introduction of Cranberry English Muffins, a venture with Thomas’ English Muffins. And Craisins were included in the 1996-introduced Post Cranberry Almond Crunch Cereal.

Ocean Spray also placed a high premium on effective advertising, signing Sarah Ferguson, the Duchess of York, in 1996 for the “It’s Your Zing!” campaign. In March 1998 the co-op announced that it had signed tennis star Martina Hingis to a three-year spokesperson contract. Hingis’ first promotion for Ocean Spray involved the 1998 debut of Ruby Red & Tango Grapefruit Juice Drink, the third member of the Ruby Red line.

Meanwhile, Ocean Spray continued to upgrade its manufacturing facilities, combining just-in-time inventory systems and computer integrated manufacturing in a 1995-opened facility in Henderson, Nevada, that increased output without increasing costs. In January 1997, Llewellyn retired as president and CEO of the co-op and was replaced by Thomas E. Bullock after a 16-month transition period. Bullock had to contend with the after effects of poor cranberry harvests in two of the previous three seasons, which forced Ocean Spray to delay some product introductions. He also soon faced the end of Ocean Spray’s five-year relationship with PepsiCo after the soft drink giant announced that it planned to abandon the distribution agreement in May 1998. By the end of the 1997 fiscal year, the Ocean Spray-PepsiCo arrangement had helped Ocean Spray achieve $225 million in sales for its single-serving products (out of total revenue of $1.44 billion, or almost 16 percent). It had grown from number six to number two among makers of single-serve juices and drinks.

Surprisingly, Ocean Spray and PepsiCo announced in March 1998 that a three-year extension had been reached on the distribution agreement. In August of that same year, however, the partnership once again appeared threatened when Ocean Spray said that it might attempt to block PepsiCo’s proposed $3.3 billion acquisition of juice maker Tropicana Products from the Seagram Company Ltd. The co-op believed that the purchase violated its agreement with PepsiCo. It was speculated that PepsiCo planned to distribute single-serving packages of Tropicana juices and drinks, which would directly compete with Ocean Spray products.

In December 1997 Ocean Spray acquired a major interest in Nantucket Allserve Inc., a juice drink company based in Cambridge, Massachusetts, and famous for its offbeat “Nantucket Nectars” line of single-serve drinks, including Orange Mango and Protein Smoothie flavors. Nantucket, whose younger clientele complemented the typical consumers of Ocean Spray products, would continue to operate independently. In July 1998 Ocean Spray acquired Sydney, Australia-based Processing Technologies International, a leading food technology research company and holder of the patents to the technologies used to create Craisins. The co-op, which renamed the acquired company Food Ingredients Technologies (Australia), planned to take the process used to create Craisins and apply it to numerous other fruits and vegetables, mainly to create ingredients for sale to other food companies. The potential for success of this venture appeared large as Craisins had proved to be a smash hit, becoming the fastest-growing product and the number-three brand in the dried fruit market. These deals proved that Ocean Spray was not going to rest on its cranberry laurels.

Principal Subsidiaries

Milne Food Products, Inc.; Nantucket Allserve Inc.; Food Ingredients Technologies (Australia).

Further Reading

Appelbaum, Cara, “Ocean Spray, Pepsi Ink Vending Machine Deal,” Adweek’s Marketing Week, November 25, 1991, p. 6.

Berry, Jon, “Ocean Spray Joins the Pepsi Generation,” Adweek’s Marketing Week, March 9, 1992.

Buell, Barbara, “How Ocean Spray Keeps Reinventing the Cranberry,” Business Week, December 2, 1985.

Carton, Barbara, “Bog Heaven: Forget Cows and Corn; Let’s Bet the Farm on Cranberry Crops,” Wall Street Journal, July 23, 1997, p. A1.

“Cranberry Growers Reel under Pre-Holiday Blow,” Business Week, November 14, 1959.

“Crushed Cranberries,” Time, February 8, 1988.

Daly, Christopher B., “Squeezing the Humble Cranberry into a Success Story,” Washington Post, November 21, 1990.

Deogun, Nikhil, “Ocean Spray May Try to Block PepsiCo from Acquiring Seagram’s Tropicana,” Wall Street Journal, August 6, 1998.

Donahue, Christine, “Can Ocean Spray Sell Cranberry Sauce Off-Season?,” Adweek’s Marketing Week, June 26, 1989.

Eichinger, Mark S., “Empowerment: A Blue-Collar Perspective,” Personnel Journal, October 1991.

Elliott, Stuart, “Ocean Spray and Napier Try to Tinker with Success,” New York Times, September 11, 1991, p. D16.

Hanson, Peter D., “How Ocean Spray Trims the Risks of Seasonal Borrowing,” Corporate Cashflow, May 1990.

The History of Ocean Spray Cranberries, Inc., Lakeville-Middleboro, Massachusetts, 1981.

“How Ocean Spray Gave Cranberries Some Sparkle,” New York Times, November 26, 1992, p. D1.

Ling, Flora S. H., “The Little Man’s Monopoly,” Forbes, December 8, 1980.

Pace, Eric, “George Olsson, 88, Head of Cooperative Built on Cranberries,” New York Times, November 16, 1991.

Prince, Greg W., “The Urge to Surge,” Beverage World, December 1995, p. 41.

Schmitz, John D., Gordon D. Armstrong, and John D. C. Little, “Cover Story—Automated News Finding in Marketing,” Interfaces, November/December 1990.

Skilnik, Rayna, “Ocean Spray’s Canny Marketing,” Sales & Marketing Management, August 18, 1980.

Stevens, Tim, “Making Waves: Product Innovation, Widespread Distribution, and Global Expansion Set the Table for Growth at Ocean Spray,” Industry Week, November 18, 1996, p. 28.

Swientek, Bob, “Ahead of the Pack,” Prepared Foods, March 1995, p. 96.

Theodore, Sarah, “Ocean Spray’s New Zing,” Beverage Industry, March 1997, p. 20.

Willman, Michelle L., “Crantastic!: Ocean Spray Makes a Splash with Partnering, New Products, Fresh Flavors and Expanded Distribution,” Beverage Industry, November 1993, p. 34.

—Jay P. Pederson
—updated by David E. Salamie

Ocean Spray Cranberries, Inc.

also known as: ocean spray

founded: 1930

Contact Information:

headquarters: 1 ocean spray dr.
lakeville-middleboro, ma 02349 phone: (508)946-1000 fax: (508) 946-7704 toll free: (800)662-3263 url: http://www.oceanspray.com

OVERVIEW

Ocean Spray Cranberries, Inc. harvests, processes, packages, promotes, distributes, and sells almost all of the cranberries grown in the United States and Canada. In 1997 it had more than 950 growers who elect a 25-member board of directors from within the membership, which is charged with hiring company management responsible for finding markets for the growers' fruit. Ocean Spray is best known for its fresh and processed cranberries, but this grower-cooperative also counts grapefruit growers among its members. The organization is the marketing arm of its grower-members. Ocean Spray's trademark blue and white logo can be sound on supermarket shelves in many countries worldwide.

The Ocean Spray cooperative was formed in 1930 to centralize marketing of cranberries and cranberry products. The company develops and markets products and devises better ways to grow and harvest their growers' crops. The company has also been an innovator in containers, producing the first juice boxes and plastic containers for juices.

Ocean Spray's primary objective is to create increasing demand for cranberries and grapefruit. In addition to introducing new juice blends every year, the company has developed a line of 100 percent fruit juices and licenses its name to other companies that put Ocean Spray cranberries in their products, such as cookies, gelatin, and candy. Looking ahead, the cooperative wants to continue expanding its product line and develop new products with health and nutrition claims.

COMPANY FINANCES

Ocean Spray reported record sales of $1.44 billion in 1997, up just 0.35 percent from sales of $1.43 billion in 1996. Profits were up 9.2 percent in 1997 to $273 million. The company's 1996 sales were 5.3 percent higher than 1995, a reported $1.36 billion, while profits were down 9.4 percent for the year, $250 million from $276 million in 1995.

ANALYSTS' OPINIONS

Some analysts look favorably upon Ocean Spray, pointing to the cooperative's willingness to experiment. Instead of concentrating just on cranberry drinks and blends, the company is willing to explore other fruit combinations. The New York Times proclaimed that "Ocean Spray Cranberries, Inc. has managed to take the homely, tart-tasting little cranberry beyond the familiar sauce of the holiday season to a range of products like sherbet and yogurt, cookies and muffins, and even bagels."

HISTORY

In the early 1900s, Boston lawyer Marcus L. Urann developed a recipe for cranberry sauce that could be preserved in tin cans. He began marketing his product under the name "Ocean Spray." Limiting his product line to whole or jellied cranberry sauce, he acquired a reputation as an expert promoter and producer, and he soon became known as the "Cranberry King." A shrewd businessman, Urann saw the benefits of joining with other cranberry growers to market and sell cranberry products to the general public. In May of 1930 he approached the owners of the Makepeace Preserving Company and Enoch F. Bills Company with a monumental proposal. Urann told the cranberry growers that competition between the three was hurting each company and suggested that they form a partnership. That same year, the companies merged, creating a new grower cooperative called the Cranberry Canners, Inc.

The newly formed company immediately began recruiting independent cranberry growers to join the cooperative. Originally, most growers were from Massachusetts, but by 1940, the cooperative boasted members from Wisconsin, Washington, and Oregon. In 1997 the cooperative contained more than 950 growers across the United States and Canada.

At first, Cranberry Canners produced whole and jellied cranberries, introducing the first cranberry juice cocktail in the late 1930s. During World War II, sugar and tin shortages could have spelled disaster for the cooperative, but it was found that dried cranberries served as a convenient and nutritious food item used by the armed services. After the war, the company introduced fresh, bagged cranberries for purchase by consumers. In the 1950s new introductions included frozen relishes, cranberries mixed with other fruits, and a line of dietetic cranberry products as well as frozen whole cranberries. During this time, the company's name was changed to Ocean Spray Cranberries, Inc. to take advantage of the popular brand name. Near the close of 1959, Ocean Spray had posted sales of $25 million. Trying to expand and create more demand, Ocean Spray introduced a new line of cranberry drinks in the 1960s. First came CranApple, followed by GrapeBerry (now known as CranGrape). Sales soared and in 1974 the cooperative reached $100 million in sales.

With new products being introduced and demand rising, new harvesting methods were developed. Before the early 1960s, growers manually scooped cranberries. After that time, dry harvesting with mechanical pickers became the norm. This method allowed for more cranberries to be harvested, enabling supply to keep up with demand for the fruit.

FAST FACTS: About Ocean Spray Cranberries, Inc.

Ownership: Ocean Spray is a privately owned company.

Officers: Tom Bullock, CEO; Kevin Murphy, Exec. VP & COO; John Henry, VP Grower Relations & CFO

Employees: 2,500

Chief Competitors: Ocean Spray competes against other growers of cranberries and grapefruit. It also competes against makers of fruit juices and other fruit products. Some competitors include: Del Monte; Dole; and Northland Cranberries.

In the 1980s Ocean Spray introduced the first line of non-cranberry juices, with Mauna La'i (a blend of Hawaiian fruits) being the first. Through the 1980s and 1990s new cranberry blend drinks continued to be introduced, as well as a line of grapefruit drinks and blends. The cooperative also developed non-drink products, such as Craisin, a dried and sweetened cranberry, and licensed its name for candy and other products. In the late 1990s, Ocean Spray began testing a new line of single-serve juice drinks called Wild Cider. Targeting 18- to 22-year-olds, Wild Cider came in four flavors: Cranberry Crabapple, Kiwi Watermelon, Peach, and Cherry. During this time, the company also moved into the cereal market. Kraft Foods introduced its Post Cranberry Almond Crunch, which featured Ocean Spray sweetened dried cranberries as a main ingredient.

STRATEGY

From 1987 to 1997, increase in volume has been the route to prosperity. Return has been held at $55 per barrel as the company invested in expanding its business. Through this period, cranberry volume increased 48 percent, while producing acreage increased just 24 percent. The improved productivity resulted in part from better agronomic practice brought about by Ocean Spray research, training, and monitoring on behalf of the growers. Yields at specific sites have been increased from 120 barrels per acre to as much as 300 barrels per acre.

Ocean Spray wants to capitalize on its brand name to expand more into fruit businesses not associated with cranberries or grapefruit. The cooperative would like to make these subsidiaries outside of the Ocean Spray company, taking them public or selling them.

In 1998 Ocean Spray acquired part of Nantucket Nectars, a producer of single-serve juices. Nantucket would operate as an independent unit, making its own drinks and those under the Ocean Spray label. The acquisition gives Ocean Spray a single-serve line popular with young consumers and beefs up its distribution line. Ocean Spray distributes its single-serve products through Pepsi-Cola Company, an alliance that has been uneasy at best. While Ocean Spray extended its agreement with Pepsi through 2001, the acquisition of Nantucket gives the cooperative more options.

INFLUENCES

Ocean Spray was devastated right before the Thanksgiving of 1959, when a U.S. Department of Health, Education & Welfare report was released stating that a newly used pesticide sprayed on cranberries caused cancer in laboratory rats. A simple inconvenience for those wanting to celebrate a traditional Thanksgiving dinner complete with cranberry sauce, it almost bankrupted the company. Grocers quickly pulled all cranberry products off of store shelves, and sales for that year's crop plummeted.

The "cancerberry" scare was unfounded, but it brought to Ocean Spray the realization that it was too dependent on a single product line and needed to diversify. Parlaying market sensitivity and resource-multiplying strategic partnerships, Ocean Spray has completely reinvented the cranberry in new products, distributed into new outlets, and penetrated foreign markets, building a $1.5 billion business without the acquisitions typical of the industry.

The 1970s brought increasingly health-conscious consumers looking for alternatives to soda pop. Ocean Spray had the answer, and marketed its juice line with the slogan "It's Good for You, America!" Responding to this growing concern over healthy diets and the company's desire to diversify its product line, Ocean Spray joined with citrus growers in Florida's Indian River to market the first shelf-stable citrus beverage in 1976.

In the early 1990s, growers from outside the cooperative received 10 to 15 percent more per barrel from independent buyers than Ocean Spray paid its members. The independents were able to do this by capitalizing on Ocean Spray's successful marketing of cranberry products. Ocean Spray's market share dropped from 90 percent to 78 percent in about a four-year period, as more private-label (those used by supermarkets) cranberry drinks appeared. Ocean Spray executives predicted that in the near future, cranberry supplies would increase and prices to independent growers would lower, all to the benefit of Ocean Spray. However, in 1997 Ocean Spray's market share dipped to 75 percent and a shortage of cranberries hampered the cooperative's quest for global expansion. Instead, the cooperative expanded domestically, adding cranberries to more than 200 products, including gelatin, bread, cereals, vodka, and candy.

CHRONOLOGY: Key Dates for Ocean Spray Cranberries, Inc.

1912:

The Ocean Spray name is conceived by Marcus L. Urann for his cranberry sauce

1930:

Three major cranberry companies merge under Urann to form Cranberry Canners, Inc. marketing the Ocean Spray brand

1939:

Cranberry Juice Cocktail and Ocean Spray Cran debut

1941:

Wisconson, Oregon, and Washington growers join the cooperative

1944:

Cranberry Canners becomes National Cranberry Association

1959:

Department of Health, Education and Welfare found a weedkiller used on Washington and Oregon berries caused cancer, ruining sales for that year; company name changes to Ocean Spray Cranberries, Inc.

1963:

Ocean Spray introduces its first ever juice blend with Cranapple

1974:

Sales reach $100 million for the first time

1979:

The Federal Trade Commission decides not to file antitrust proceedings against Ocean Spray

1985:

Acquires Milne Fruit Producers

1992:

Ocean Spray signs an agreement with PepsiCo for distribute single-serve juices

1993:

Nabisco and Ocean Spray team to make Cranberry Newtons

1998:

Ocean Spray purchases Nantucket Nectars

CURRENT TRENDS

Ocean Spray led the way in drink packaging, being the first to introduce what are called juice boxes. The company also was the first to offer drinks in plastic, recyclable bottles and now also offers a plastic gallon container.

An area with potential is selling functional foods with health and nutrition claims. CEO Tom Bullock has urged the industry to spend more on research and development to give the public the nutritious drinks it wants. Bullock is afraid consumers will become jaded from products not producing the benefits they claim. Bullock stated that open and honest communication with the public is the way to stave off unscrupulous producers and retain brand loyalty.

PRODUCTS

Ocean Spray products include fresh and frozen cranberry products, particularly blended fruit juices of cranberry and grapefruit. There have been a total of 48 new Ocean Spray products introduced since 1989. Of these, 70 percent remain on the market. The industry standard is that about 10 percent are on the market after a few years.

Ocean Spray has also taken its name and reputation to other companies, such as with cereal companies, Duncan Hines baked goods, and Warner Lambert, who now has Ocean Spray-branded Fruit Waves candy. These types of arrangements in which cranberry is used as a flavoring or food ingredient increased its use from 2 million pounds in 1985 to 25 million in 1995.

I, LITTLE WHITE HEN, TAKE YOU, LITTLE RED CRANBERRY

The end of World War II found Ocean Spray putting renewed energy into its advertising and publicity for its broadening product line. The 1948 Massachusetts Cranberry Festival was enlivened by a humorous skit featuring the "marriage" of chicken and cranberries. In a ceremony that brought the festival to a close, "the Little White Hen and the Little Red Cranberry became flavor-mates forever and vowed always to appear on the dinner tables of the nation," according to Ocean Spray. The wedding was preceded by a one-year courtship between chicken and cranberry sauce fostered by the National Cranberry Association in an effort to make the combination "as inseparable as lamb and mint jelly, pork and applesauce." In 1952 Ocean Spray launched its first television commercial—a spot plugging the year-round use of chicken and cranberry sauce.

THE EARLY YEARS OF THE CRANBERRY

Aside from blueberries, cranberries are the only fruits indigenous to America's wetlands environment. There are more than 100 different varieties of the fruit, which once provided the North American Indians with a rich source of Vitamin C and were a main ingredient in pemmican, a high-energy cake of crushed cranberries, venison, and melted fat. The Wampanoag tribe members also presented the Pilgrims with the fruit as a sign of peace, and the red berries were very likely on the menu during the first Thanksgiving feast in 1621. Early American colonists named the unusual fruit "crane-berry" because of the resemblance of the cranberry bush's flower to the head of a crane.

The fruit became popular and was exported to Europe in the eighteenth century. Whaling ships carried barrels of cranberries to supplement crews' diets; the fruit's high Vitamin C content helped ward off the scurvy that plagued sailors during the long months at sea. It wasn't until 1810, however, that they were cultivated on a large scale. Captain Henry Hall of East Dennis, Massachusetts, noticed that wild cranberries growing near his home flourished after the wind blew a covering of sand over the young spring growth. The covering caused the new shoots to root and the vines to spread more rapidly. Hall experimented by transplanting some of the vines and covering them with sand. The process worked and wholesale cranberry cultivation began soon thereafter.

Ocean Spray continues to introduce new juice blends and has announced a line of 100 percent juice drinks. New products for 1997 and 1998 include CranTangerine and CranMango. In the 100 percent juice line, Cranberry and Granny Smith Apple, Cranberry and Key Lime, and Cranberry and Georgia Peach juices have hit the shelves.

GLOBAL PRESENCE

Foreign sales account for 6 percent of Ocean Spray's total sales. The company's overseas markets include the United Kingdom, Australia, and Switzerland. The company typically establishes partnerships in which it ships unprocessed fruit to a local bottler for creation of the drinks, then works with a local marketing organization to promote its products. In some nations, Ocean Spray exports its pre-bottled juice to a local distributor.

Ocean Spray often has had problems in new markets outside the United States because the cranberry is an unknown fruit, as is the brand. The company has entered these markets with its grapefruit drinks to build brand loyalty before introducing its signature cranberry blends.

SOURCES OF INFORMATION

Bibliography

"Bogged Down." Forbes, 6 December 1993.

"The History of Ocean Spray Cranberries, Inc." HARVEST Magazine, spring 1981. issues.

Khermouch, Gerry. "OS Seen Close to Buying Nantucket." Brandweek, 1 December 1997.

"Ocean Spray Cranberries, Inc." Hoover's Online, 29 May 1998. Available at http://www.hoovers.com.

The Ocean Spray Cranberries, Inc. Home Page, 2 June 1998. Available at http://www.oceanspray.com.

Stevens, Tim. "Making Waves: Product Innovation, Widespread Distribution, and Global Expansion Set the Table for Growth at Ocean Spray." Industry Week, 18 November 1996.

For additional industry research:

Investigate companies by their Standard Industrial Classification Codes, also known as SICs. Ocean Spray's primary SICs are:

0171 Berry Crops

0174 Citrus Fruits

2033 Canned Fruits and Vegetables

2086 Bottled and Canned Soft Drinks