Op-Ed

Middleboro Gazette
12/7/00

The Case Against Ocean Spray

by Hal Brown *

The seed which grew into the current lawsuit against Ocean Spray was planted by a group of Ocean Spray growers who succeeded in soliciting enough proxy votes to elect two of the losers in the Massachusetts Ocean Spray Board of Directors nomination, in place of two of the three winners. Chip Morse, from Middleboro, and Don LeClair, from Duxbury, along with Chris Makepeace, won the Massachusetts nominations.

The result of behind the scene machinations prior to the Ocean Spray Annual Meeting in February, 2000, was that two losers of the regional Massachusetts election, Ben Gilmore and Douglas Beaton, were elected to the Board by a majority of shares (not shareholders) mostly from Wisconsin and New Jersey. Control of the Board was ceded to a few large shareholders who were opposed to a sale. The newly hired CEO, Robert Hawthorne, was charged with turning the company around, and selling the company was off the table.

Unbeknownst to most shareholders, another behind the scene movement began at around the same time. A group of shareholders favoring a sale began legal action in an effort to force the Board to provide the information from various consultants, who studied the sale option,  to all the shareholders, and to put the question of reconsidering a sale to a vote at the 2001 Annual Meeting. While rumors of a lawsuit persisted, and many growers hoped that someone would take up the cause, only those directly involved in preparing the lawsuit knew about it.

More than three individuals worked tirelessly to take up the cause of so many shareholders. The plaintiffs on the Complaint against the Ocean Spray Board and the Ocean Spray Counsel were G. Howard Morse, Lawrence Harju (of Middleboro) and Garfield DeMarco. They are large growers who have taken up the cause of all Ocean Spray growers who feel disenfranchised. They, and those who worked with them, deserve the gratitude of all Ocean Spray shareholders for standing up to the individuals who usurped control of the cooperative and made it into their personal fiefdom. Ocean Spray is a cooperative, and its shareholders are not serfs toiling in the bogs and marshes for the benefit of a privileged few.

Cranberry Stressline has endorsed a sale of the branded portion of Ocean Spray for some time.  This week’s sale of Quaker Oats, which owns Gatorade, to Pepsi, which owns Tropicana,  only confirms that a relatively small company like Ocean Spray will have little clout in today’s competitive beverage industry environment.

We believe that the cranberry industry, especially in Massachusetts where the cost of growing is higher than in Wisconsin, cannot survive unless cranberries are marketed aggressively overseas. Cranberries must be sold, not in merely a half dozen countries; but in dozens of countries from Albania to Zambia. Ocean Spray cannot do this. Only a multi-national giant can, and make no mistake, if a Coca-Cola or PepsiCo doesn't buy Ocean Spray, one or both will market cranberry products worldwide by developing their own source of cranberries.

We have also addressed the issue of what information can reasonably be kept from Ocean Spray shareholders and from the general public. 

The Ocean Spray Board and management have a cult-like obsession with secrecy. They have violated the spirit of the cooperative by not sharing information with its owners. If the SEC regulated Ocean Spray, most of what they claim as proprietary information would be public and easily accessible through the Internet.

Ocean Spray management has tried to make a case for keeping analyses from Dr. Ray Goldberg of the Harvard Business School, Merrill Lynch, and Bain & Co. confidential. They say releasing these reports would give potential suitors information that would ultimately hurt their bargaining position should the company enter into acquisition negotiations. This argument is a blatant attempt to pull the wool over the eyes of shareholders. Any corporation interested in acquiring Ocean Spray will make it their business to know the inner workings and value of the company. Knowledge that Ocean Spray is hiding such information from these corporations will be counter-productive in negotiations.

Consultants have called Cranberry Stressline representing several well-known suitors of Ocean Spray. Every one of them said that they had never dealt with a company that was so difficult to get information from. These are top professionals who deal with the largest companies. They liken trying to get information from Ocean Spray to dealing with a banana republic. If Ocean Spray wants to be perceived as a world class company they should start acting like one.

Ultimately, for the individual cranberry farmer, the hope for survival is in expanding the market for cranberries. With iced teas, sports drinks, bottled water and nutraceutical drinks having made the name "juice aisle" obsolete in the United States, the only way to increase demand is to introduce cranberries to literally hundreds of millions of international consumers. It doesn't matter whose label is on those bottles. It doesn't even matter whether the bottle has a blue wave on it or a big red berry. What matters to cranberry farmers is that they can hang on long enough for somebody to bring demand in line with supply.

* Hal Brown, a Middleboro resident, is the editor and publisher of Cranberry Stressline, www.cranberrystressline.com , a Web site that provides news and opinions about the cranberry industry. His wife, Betty, operates 38 acres of family bogs, Korpinen Cranberries, and is a member of the Ocean Spray cooperative.