University of Wisconsin Center for Cooperatives
Rural Cooperatives, July/August. 1998, pp. 24-26.
Published by the Rural Business and Cooperative Development Service
A Star is Born
Ever since a sunlit group of Florida citrus growers hit national television screens with, "They own the land, they own the trees, they own the company," their premium-brand orange juice has been brimming over with market success.
Apparently, Americans really can "taste the difference," because Florida's Natural@, the not-from-concentrate (NFC) juice in the commercials, has blossomed into the Sunshine State's second most popular orange juice brand—a major marketing success in the state's highly competitive juice market. Furthermore, Florida's Natural now holds an 18-percent share of the NFC orange juice market in the United States.
While consumers have been charmed by the commercials and pleased with the orange juice, what's really positioned Florida's Natural for its fast-track success has been the guiding force of Citrus World Inc.
Celebrating its 65th anniversary this year, Citrus World is a federated cooperative of 13 members, 10 of which are packinghouses. Together, they represent 1,000 growers who control more than 60,000 acres of citrus groves across Florida. Based in Lake Wales, Fla., Citrus World not only owns the land, the trees and the company through its grower-members, but the Florida's Natural label as well.
Today, Citrus World's total juice products bring in $450 million a year in sales. The co-op packs almost 6 percent of all Florida orange juice and some 15 percent of the state's grapefruit. It exports juice to 50 countries around the world, with the United States its single largest market.
In an industry "where everything changes every day," says Florida citrus grower Bill Raley, Citrus World has climbed the citrus charts like a hit single. Despite huge swings in world citrus production, the arrival of Brazil as a major player in the global citrus market and the looming presence of Tropicana—Florida's No. 1 juice processor—Citrus World has managed to gain major prominence in a state filled with dozens of citrus processors.
Yet just 10 years ago, Citrus World was just a relatively simple citrus production cooperative best known for its Donald Duck@) brand of frozen concentrate orange juice. The company also was a major supplier of juice to supermarket chains and others for their private-label products.
"Back then, Citrus World was basically a small production company that took care of the fruit that we couldn't sell on the fresh-fruit market," says Raley, who's been a member of Citrus World through Dundee Citrus Growers Association since 1948.
But all of that changed a decade ago when Citrus World decided to shift its focus from production and processing to marketing. It was a move that was all about value-added processing, "about getting true value for the fruit we process for our grower members," says Steve Caruso, Citrus World's CEO since 1993.
The move into value-added processing
Citrus World members had long recognized that value-added products were necessary if they ever wanted to receive more than bulk commodity prices. A premiumbrand label for juice was a logical choice for Citrus World. After all, its members produced the sweet, juicy citrus Florida is known for. Unlike California citrus, which is predominantly sold as a freshfruit product, some 95 percent of Florida's citrus makes its way into juice.
"But for a long time, we were not in a position to move forward into value-added processing," says Frank Hunt, a Florida citrus grower who's been chairman of the Citrus World board of directors since 1973.
A move into a line of NFC premium juice products would require a hefty investment for the special equipment it required. Not-from-concentrate means the juice has never been evaporated. It's more expensive to hold and store. There would be additional expenses for that, as well as for quality control, packaging and distribution.
But by the mid-1980s, value-added processing had become the buzzword of the future. "A not-from-concentrate product was an opportunity to give consumers convenience and good quality," Hunt says. "Processing technology had improved. The timing was right."
Raley remembers the decision to move to its own private label as a difficult and controversial one for Citrus World's board of directors. "The board wondered whether we could afford the investment of many millions of dollars," he says.
But all doubts have vanished.
"It's been a tremendous success," says Raley, who now serves as vice chairman of the Citrus World board. "Having our own premium brand has been a tremendous asset. It's taken a lot of hard work, a quality product, and putting together a good team of professionals."
Florida's Natural today accounts for 50 percent of all of Citrus World's sales. (The other half comes from juice concentrate sales). Introduced in 1987, the NFC premium juice is produced in a variety of flavors. These include Orange, Home Squeezed Style Orange, Growers' Style Orange, Orange Juice Plus Calcium, and Ruby Red Grapefruit, a premium grapefruit juice made from a unique process produced only by Citrus World.
In 1997, sales of Florida's Natural reached an all-time high of more than $200 million, exceeding the total sales of all other Citrus World branded products combined.
From vision to reality
Out of its strategy to build on a premium-brand product, Citrus World has taken several bold steps to bring its vision to reality.
It has invested millions of dollars in new equipment and to update its Lake Wales plant. It has branched into national advertising with the popular television commercials, which use real Citrus World employees and growers, not actors. Citrus World has made sure viewers know its product is different, that it comes from "a co-op of Florida growers whose only business is making juice."
"We love those ads," says Raley
Last year, Citrus World developed a mission statement and a set of core values. "We developed a strong training program that teaches core values. such as integrity, fair treatment and respect, to employees," Caruso says. "We really believe strongly in it, and our productivity is getting better."
In fact, employee turnover fell to an all-time low during 1997.
Today, Citrus World employs 900 people at its 540-acre site in Lake Wales, and another 60 at its packaging plant in Southern California. The co-op's commitment to its employees paid off when the United Steelworkers of America appeared at the Citrus World plant late last year, urging workers to join the union. Early in 1998, in a closed ballot election, the union was defeated by a margin of almost three-to-one.
"For growers, the board and employees, the move into value-added processing changed the focus," says Hunt. "There has been a new focus on quality and timing."
Just last year, Citrus World took in a new member for the first time in 20 years. The new cooperative, Orange Growers Marketing Association, is comprised of seven growers who had farmed outside of Citrus World's membership. Combined, the new members will deliver some 1 million boxes of oranges a year to Citrus World.
The entry of Orange Growers Marketing Association came just as Florida was seeing its largest citrus crop ever: 244 million boxes harvested. At the same time, Brazil was harvesting its largest crop ever, more than 400 million boxes. That year, Citrus World handled a record 18.8 million boxes of fruit.
"That inventory put a lot of pressure on the market," says Caruso.
Still, Citrus World managed to gross $450 million, an all-time high. Patronage returns to members of $71.9 million were the second highest payment in its history.
An El Nino turnaround
Just a year later, the record-crop scenario has changed. Last December and January, Brazil suffered a serious drought that reduced its citrus crop by more than 100 million boxes. In Florida, El Nino's extremely wet winter and hot, dry spring resulted in an estimated 10 percent reduction in the state's citrus crop. Production will be down by 25 million boxes. But it should still be a good year for Citrus World.
"With about a 10-percent reduction in supply this year, I think we'll see firmer prices and a stronger market," says Hunt, who belongs to the co-op through Hunt Brothers Cooperative, a charter member of Citrus World in the 1930s. "But there's still sufficient supply so that there's no disruption in the market."
In fact, Citrus World is banking on increased storage needs for the future. The co-op is building eight new 1-million-gallon storage tanks for its premium juice at the Lake Wales plant. Each tank is as tall as a 6-story building When completed, the co-op will have a 12-million-gallon tank capacity—all part of its plan to remain a nationwide presence year-round. In 1997 alone, Citrus World's capital expansion totaled $16 million.
And if weather, crop swings, and price fluctuations weren't enough, just this year, Tropicana, which holds the major share of Florida's juice market, was sold to Pepsi by Seagram Co., Ltd. Citrus World shrugs off any concerns that the new owner might be a threat to the co-op.
"Pepsi is a strong marketer who will be good for the industry," says Caruso. "They will put their marketing effort behind their brand and the category. The bottom line is that Pepsi should be good for the whole industry."
In the meantime, Citrus World continues to sell a variety of juice products. Besides its premium Florida's Natural, there's its oldest brand juice, Donald Duck, which has been marketed by the co-op for 45 years. (The trademark name is licensed from the Walt Disney Company) There are the Bluebird and Vintage brands, sold mostly into the food service market. Then there's Adams, a regional private label, and Texsun, sold in Texas and Oklahoma retail markets.
A boost to rural Florida
In addition, Citrus World will continue to boost the economy of rural Florida. "In the past 15 years, Citrus World has developed 15,000 acres of groves in southern Florida for members," says Hunt. The plantings guard against the disastrous effects of winter freezes.
'That's substantially increased the well-being of that area," Hunt says "We're also one of the larger employers in the Ridge section of central Florida. Citrus World makes a big difference to people in rural areas."
Hunts adds, "Citrus World has tried to be a good citizen here. When there has been need after a severe tornado or with the fires we had here in Florida in late July, we donate juice to those who have been disadvantaged. We also provide juice to various agencies who distribute food to the needy."
Citrus World has won numerous awards and recognition for its respect and treatment of the environment. In particular, the co-op is noted for its modern waste disposal plant that, with 90 acres of pond systems, returns treated water to the aquifer.
Most importantly, Citrus World will continue to serve the needs of its membership.
"Citrus World gives us a home for our fruit, year in and year out," Raley says. "Over a 5-year period, Citrus World has done as well for its members as they could’ve done on the outside. It's a good organization to belong to."
If Caruso has any advice for co-ops, it's this. "It's never too late if you have the vision to go for the value-added product," he says. "Citrus World was 55 years old when we decided to go into value-added processing. In hindsight, it certainly has shown to have paid off."
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