Chiquita seeks stomach share
mAR. 27 09
By James Pilcher
jpilcher@enquirer.com
Share of stomach.
It's a term normally reserved for the restaurant industry, referring to how much food from individual outlets a consumer might eat in a given week or month. It hasn't been associated much historically with Chiquita Brands International - long thought of as a purely commodity-based banana producer.
But as Chiquita's presence throughout the grocery store increases through a variety of products, including four to be launched next month, it has become a new slogan for the downtown-based produce giant, and especially for its chief marketing officer, Tanios Viviani.
"We are out to grab a bigger and bigger share and that will help us become less volatile and more predictable in terms of our results," says Viviani, who heads up the company's innovation and new product development programs. "The goal is to win the customers' hearts and minds with branded healthy fresh foods. We are going to evolve the company from a commodity company to a branded company."
In April, that "share of stomach" could grow further. Chiquita plans to roll out two new products and two enhancements to other recently launched products. The company is launching a frozen concentrate version of a fresh fruit smoothie it has sold in the past, two flavors of a prepackaged "push-up" fresh pineapple snack, a cinnamon crème dip version of its existing apple bites line, and new stackable refrigerated "multi-packs" that include apples, an apple/grape mix, and carrots.
"We want our new products to account for 5 percent of our total revenue, and we are shooting for that very soon, like three to five years," Viviani says. "We're certainly not turning our back on bananas, but we think we have a strong brand and we need to take advantage of the trend toward healthy snacking."
Whether the new launches help the financially struggling company remains to be seen. Chiquita had to take a massive write-down on its 2005 purchase of salad producer Fresh Express last year, and finished 2008 with a $323.7 million loss on total revenues of $3.6 billion. After weathering several bumpy quarters and earnings warnings last year, the company's stock fell from a 52-week high of $25.77 in early June 2008 to just over $7 this morning.
One analyst says that Chiquita already has done a good job of taking some of the volatility out of the commodity side of the business and that bananas could prove to be recession proof.
"So we don't think bananas should be a dirty word at Chiquita," says New York-based Goldman Sachs analyst Karen Eltrich. "That being said, these new products make a lot of sense and are natural extensions of the brand. It probably will take a while, but there should be some definite value added as they capitalize on these trends."
In The Freezer
One of the new products puts the company in a completely new section of the grocery store - the freezer case.
Its fresh smoothie product also marks another first for Chiquita. It's the first time that the company has entered into a cross-licensing program, as the product will be co-branded with Sparta, Mich.-based Old Orchard, the nation's No. 2 juice maker.
"It's also the first licensing deal for us, and we couldn't have picked a better partner," says Old Orchard vice president of marketing Kevin Miller. "Chiquita has an instant connotation with the consumer of being fresh and healthy, and is a fun colorful brand to put on the packaging."
Miller says the product will launch in mid-April in about 1,500 stores nationally, and will be cross-promoted between the produce and freezer sections.
"And we're confident that we could have 2,000-2,500 stores by the end of the summer," Miller says. "I see us having a $2-3 million segment just six to 12 months into the launch."
Viviani says the partnership shows how much Chiquita culture has changed.
"This partnering can be a very important part of our strategy, and get us into places that we wouldn't have been before," Viviani says. "Old Orchard, for example, has all the expertise and distribution for frozen foods, and we bring the produce expertise. The pride now comes not from just building it from within."
The concentrate will cost about $2.50 per 12-ounce can and include three 8-ounce servings. Both Viviani and Miller say the economic downturn could turn in their favor, as consumers look for ways to make products at home that they usually buy at a retail location.
The other purely new product also will hit shelves in mid-April. Chiquita's pineapple bites will come in two flavors: traditional and coconut. The product can be frozen or eaten fresh for about two weeks after being put on sale, and will operate much like a "push-up" popsicle, although the package does not include a stick. The 2.8-oz. packages will sell for about $1 each.
Viviani says the idea came from ongoing discussions with consumers, including one who asked why Chiquita couldn't make fruit portable like ice cream.
"It also hits that mindset of people on the go, but giving them a more healthy, affordable option," he says. "And in the long run, that's our way home as a company."
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