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Sherman Oaks-Based Cooperative Still No. 1 in Citrus : Sunkist Basks in Glow of Trademark Created in 1909

October 29, 1985|ALAN GOLDSTEIN | Times Staff Writer

The secret to Sunkist's success in dominating the American citrus industry is largely in its name.

Devised by clever admen back in 1909, the "Sunkist" trademark, now stamped on each piece of fruit grown by members of the Sherman Oaks-based cooperative, has effectively turned plain old oranges, grapefruits, lemons and tangerines into brand-name products.

Through heavy advertising, Sunkist Growers has helped make people citrus-conscious. It was Sunkist that, with its "Drink an Orange" advertising campaign in magazines in 1916, introduced many people to Vitamin C.

And it was the Sunkist name on bottles and cans of orange soda that became a symbol of California life through "Good Vibrations" television ads featuring surfer music and beach volleyball.

Fruit Viewed as Better

"People hear 'Sunkist' and they think, 'Hey, wow, sunshine,' " said John M. Grether, who farms 130 acres of lemons in the Ventura County community of Somis near Moorpark for Sunkist. "They also think a Sunkist fruit is better than anyone else's."

Sunkist says its surveys confirm that most people in the U. S. and Canada believe fruit stamped with its name is better than other fruit. So the company is focusing its advertising on the next consumer generation by advertising its fresh produce to children. But the name is also promoted through products licensed to other companies, such as the orange soda.

According to Foote, Cone & Belding, the advertising agency that has handled the Sunkist account for 77 years, 60% of citrus fruit in American stores has Sunkist stamps.

Competitors grouse that Sunkist has an unfair marketing advantage. They say that Sunkist, through its support of federal regulations on how much fruit reaches the consumer, is keeping too tight a control on the industry.

Sunkist Oranges Cost More

They also say the company uses its name to charge consumers more--and Sunkist readily acknowledges that its oranges cost at least two cents more apiece than anyone else's.

"Most consumers are more interested in price than name," said Steven W. Sutter, treasurer and secretary of Pure Gold, a citrus cooperative based in Redlands that also stamps its products with its name.

But, if the truth be known, the difference between one citrus fruit and another is mostly cosmetic.

Growers and marketers alike say that consumers want big, perfectly round, deep-orange-colored navels, for example. Oranges are waxed in packing houses just for appearance. Growers say they fear the Santa Ana winds, which bruise their fruit in the fall, almost as much as insect damage.

Industry experts agree that fruit from California and Arizona, where all Sunkist produce comes from, is more attractive. Only 10% of Florida citrus fruit appears unprocessed on store shelves, compared with more than 70% from California and Arizona. The rest is made into orange juice and other products.

Weather Makes Difference

Weather apparently makes the difference. Citrus fruit growing with hot days and cool nights tends to look better than produce raised in around-the-clock balmy weather, which is more the case in Florida and South America.

The California-Arizona region is also the only yearlong citrus-harvesting area in the world. The two states have 330,000 acres of citrus groves, 200,000 of which are owned by the 6,000 Sunkist growers. Citrus groves stretch from Sacramento to Yuma, Ariz.

Unlike other agricultural businesses, Sunkist remains fairly stable from quarter to quarter, cooperative President Russell L. Hanlin said. Of Sunkist's mainstay, oranges, the Valencias are harvested in the summer and navels in the winter.

Nevertheless, some years are better than others. Sales for fiscal year 1983 dipped 8% from the previous year, to $644 million, then rose 16% to $748 million for 1984. In fiscal year 1980, sales were $654 million.

Growers contribute to the cooperative for administrative and marketing costs, advertising and a Sunkist capital fund. Rates vary from season to season, and a grower's commitment lasts only a year.

Growers say they must weigh the charges against the benefits of the Sunkist network. A 40-pound carton of navels brings Sunkist about $8.50, and 55 cents of that goes into marketing and administrative costs. Another penny goes into the capital fund.

66 Members

The company has 66 member packing houses, where the fruit is graded, waxed and stamped. At the Sherman Oaks headquarters, 310 employees manage grower relations and the marketing network.

As a cooperative, Sunkist sells the fruit and returns to its growers the money that doesn't go into overhead and its own income. In fiscal year 1984, Sunkist paid $545 million to its members, up 29% from the previous year. The company retained $4.8 million as income.

During the first nine months of this fiscal year, sales were $630 million, up 10% from the same period a year earlier. Payments to members were $473 million, up 13% from the year before. The company retained $2.6 million as income.

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