Coriolis Chart Watch Q3 2002

Chart Watch is an online publication featuring a brief view into our latest thinking on the evolving food and fast moving consumer good industry. It is sent to subscribers four times per year.

Top Line: Cranberries were unable to make dramatic inroads, in either a fresh or processed form, against cheaper, more popular fruit.  In 2001 the average American consumed the equivalent of 91.5 pounds of oranges, 51 pounds of grapes, 47 pounds of apples, and so on, down to 1.7 pounds of cranberries.

So what? We regularly talk about our consumers, but forget what the word means: to consume.  Every day consumers walk into a store, hand over their hard earned money, buy your products, take them home, and consume them. 

Obvious, you say.  So when was the last time you calculated consumption per capita of your main products?  Did you benchmark this number against substitutes? Which ones? Did you compare across countries? Which ones?

Which brings me to Ocean Spray and the cranberry industry.  The chart above immediately suggests a number of questions: 

- Is there an opportunity to grow cranberry consumption?  A quick piece of math suggests that cranberries consumption is only 28.3% of strawberries or 1.9% of that of oranges. 

- Why is cranberry consumption so low?  After all the cranberry has been cultivated commercially since 1816.  Is there some barrier to consumption that we haven't identified?  Why are consumers choosing its substitutes?

Because one day in 1998, after decades of constant real growth, the price of cranberries fell like a rock.  Prices fell from $63.70 per barrel in 1997 to $17.20 per barrel in 1999 - a fall of 73%.  As you would expect, the search for a scapegoat began immediately: the marketing department, growers outside the Ocean Spray cooperative, the CEO (they've gone through two since 1997 - they're looking for one right now if you want to apply), the board of directors, even growers in Canada. 

Anyone that's watched agriculture has seen this before: the boom and bust cycle of the latest in farmer fads.  Who remembers ostriches? angora goats? milking sheep? kiwifruit? and all the others.

But you say "My company is different.  We're not an agricultural commodity, we're a branded consumer goods company."  Unfortunately no one is immune to the laws of supply and demand, or to competition from substitutes.  Take McDonalds, for example, they had everything you think you have and more: a strong global brand, loyal customers, clear market leadership.  But at some point people don't want any more hamburgers no matter how many outlets you open.

Understand consumption per capita of your products, your competitors products, close and distant substitutes, and how this varies by country.  Understand how these are changing with time.  Now take those numbers apart - are they made of everyone buying a little or a few fanatics buying a lot.  Like with cranberries, the results may suggest more questions than they answer: can you radically increase existing product sales or are you about to fall off a cliff?

Our complete report on The Rise & Fall of Ocean Spray, as presented at the Monash Produce Executive Program in August 2002, is available as a download.

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