Chiquita Brands International Inc.

views updated

Chiquita Brands International Inc.

founded: 1870

Contact Information:

headquarters: 250 e. 5th st.
cincinnati, oh 45202 fax: (713)784-8030 phone: (513)784-8000 url: http://www.chiquita.com

OVERVIEW

Thanks to its very successful Chiquita Banana ad campaign and a jingle that most baby-boomers know by heart, Chiquita Brands is a household name that almost everyone associates with bananas. The company likes to point out that although bananas are still a huge chunk of its business (60 percent of annual sales), there is much more to it than bananas. Chiquita markets and distributes a variety of other fresh and processed food products. It markets these products under a number of brand names, including Chiquita Jr., Amigo, Chico, Frupac, Pacific Gold, and Consul.

Chiquita has worked hard to be a good citizen wherever it operates. In countless communities around the world, Chiquita strives to make a positive contribution, particularly on social issues and the environment. Some neighborhoods provide the local infrastructure Chiquita needs to do business efficiently. Yet all of these benefit the citizens of the communities where the company is located.

COMPANY FINANCES

In 1997 Chiquita Brands posted net earnings of $300,000 on revenue of $2.43 billion, compared with 1996's net loss of $50.0 million on revenue of $2.44 billion. For the first quarter of 1998, Chiquita reported net income of $41.1 million on sales of $717.2 million. In 1995 the company reported net income of $9.0 million on revenue of $2.57 billion, compared with 1994's net loss of $72.0 million on revenue of $3.96 billion. In 1997 bananas accounted for 60 percent of Chiquita's total sales, with other products generating the remaining 40 percent. Sales in North America accounted for 55 percent of total revenue, while sales in Central and South America brought in 2 percent, and sales to Europe and other regions generated 43 percent.

HISTORY

Chiquita had its origins in the Boston Fruit Company, founded in 1870 by partners Captain Lorenzo Baker and Andrew Preston. The idea for the enterprise came to Captain Baker after a voyage to Jamaica during which he purchased 160 bunches of bananas. Sailing back to the port of Jersey City, New Jersey, the captain arranged to sell the bananas through Boston produce broker, Andrew Preston. Fifteen years later, Baker and Preston, along with Preston's partners, formed The Boston Fruit Company.

The Boston Fruit Company eventually became Chiquita Brands International, a far-flung international corporation with about 40,000 employees, or associates as they are known within the company in the late 1990s. More than 30,000 of those associates live and work in Latin America, where the company grows the majority of its bananas. Other associates work in the company's Cincinnati headquarters and offices and plants around the world, as well as on ships carrying Chiquita's fruit to global markets.

Chiquita's history also includes Minor C. Keith who traveled in 1871 to Costa Rica where he contracted to build a railroad. Desperate for both cargo and passengers for the new railroad, he planted bananas along the rail-road's rights of way to provide paying fares to inland destinations as well as back to the sea. Twenty-eight years later in 1899, Keith's rail companies and Boston Fruit Company merged to create the United Fruit Company. The new company began importing bananas from a number of Central American plantations to expand its distribution network in the United States. Also in 1899, Fruit Dispatch Company was formed to distribute bananas throughout the United States, pioneering a number of new techniques in the transportation of perishable produce to inland destinations.

In the early 1900s United Fruit built the first refrigerated cargo ship, which soon was part of what became known as the "Great White Fleet." The ships were painted white to reflect the heat of the tropical sun and help maintain optimal temperature for the fruit in transit. That containerized fleet today numbers more than 20 vessels, all of which are owned, operated, or chartered by Chiquita. In 1903 United Fruit Company's stock was first listed on the New York Stock Exchange, and a year later the company put together an unbroken line of wireless communications between company headquarters and South America.

It was not until 1944 that the Chiquita brand name was introduced. To help promote the brand throughout the United States, the company also introduced its Miss Chiquita character and jingle the same year. Three years later, in 1947, the name "Chiquita" was registered in the United States as a trademark.

United Fruit Company was purchased in 1970 by Eli Black, who changed its name to United Brands. Seventeen years later, Carl H. Lindner acquired the company. He changed the company's name in 1990 to Chiquita Brands International. Already a major global player, Chiquita expanded its marketing and distribution to eastern Europe, Asia, and the Middle East in the early 1990s. The company also expanded its product line to include other fresh fruits. In the late 1990s the company was still the world leader in the production, distribution, and marketing of branded fresh bananas.

Chiquita won a face-off with its hometown newspaper in the summer of 1998. The Cincinnati Enquirer published a front-page apology for an "untrue" May 3 story lambasting Chiquita business practices. The newspaper also agreed to pay Chiquita $10 million. The story was based on company voice-mail messages that allegedly were obtained illegally by lead reporter Michael Gallagher. On July 2, 1998, Chiquita sued Gallagher, accusing him of stealing the voice-mail messages. The company's suit sought damages for defamation, trespassing, conspiracy, fraud, and violations of electronic-communications privacy laws.

STRATEGY

Fearful of relying too heavily on bananas for its fortunes, the company, known then as United Fruit, launched a program of diversification in the 1960s. In 1966 United Fruit purchased the A&W product line, which included bottled soft drinks and drive-in restaurants. The following year, the Baskin-Robbins ice cream empire was added to the company's holdings. The diversification process was reversed somewhat during the 1970s and 1980s after the company's acquisition by Eli Black, founder of AMK Corporation, which included the John Morrell meat packing business. Black changed the company's name to United Brands and sold off many of the diversified holdings United Fruit had acquired during the latter half of the 1960s. Baskin-Robbins was sold in 1973. The A&W restaurant chain was sold in 1982. Five years later, United Brands sold off the A&W soft drink product line.

In 1987 United Brands was acquired by Carl H. Lindner's American Financial Corp. In 1990, Lindner changed the company's name to Chiquita Brands International in an attempt to capitalize on the worldwide brand name recognition. In 1992 Chiquita diversified once again with the acquisition of Friday Canning Corporation, a leading private label vegetable canner. The company's expansion into canning operations accelerated in 1997 with the acquisition of Owatonna Canning Company and American Fine Foods. The company also announced that it had agreed to acquire Stokely USA Inc., a leading producer of canned vegetables, for $110 million in a stock-and-debt deal. The Stokely acquisition was formally completed in 1998.

Although the emphasis has been on diversifying its product line under Lindner, Chiquita began to move out of the meat processing business in 1992. By 1995 the company had completed the sale of the John Morrell meat packing operation.

INFLUENCES

One of the key influences on Chiquita has been the progression to global business. The company's decision to change its name in 1990 from United Brands to Chiquita Brands International reflected the importance the company attached to the worldwide recognition of the company's Chiquita brand name. Born in 1944, the company's Miss Chiquita character and jingle have won friends for the company's products around the world. In 1994 the company celebrated the 50th anniversary of Miss Chiquita and held a national casting call to select a Miss Chiquita. Three years later, the company decided its catchy jingle could probably use some updating and held a contest to see who could come up with the best new lyrics. The rules stipulated, however, that the tune of the jingle and its opening line ("I'm Chiquita Banana, and I've come to say . . .") had to remain the same.

CURRENT TRENDS

Chiquita Brands continues to diversify, moving slowly and deliberately to find businesses that fit with the company's existing divisions. Even as it has moved into other product lines, the banana, which gave the company its start, is certain to remain the heart of its business.

The growing worldwide trend away from trade protectionism was considered likely to help Chiquita increase its international sales more vigorously than in the past. In the late 1990s trade barriers were falling at an increasing rate. Countries would continue to band together in trade blocs, and under international trade agreements. In 1997 Chiquita won an important trade victory. The World Trade Organization (WTO) ruled that the European Union's (EU) trade policy giving preferential treatment to bananas from former European colonies, such as Jamaica, was illegal. The EU policy, introduced in 1993, was challenged in a 1996 filing by Chiquita, Guatemala, Mexico, and Honduras to the WTO.

PRODUCTS

Best known for its bananas, which continue to generate about 60 percent of total annual sales, Chiquita also markets a number of other fresh and processed foods. Its fresh produce line includes peaches, pears, plums, peppers, tomatoes, cucumbers, kiwifruit, citrus, and man-goes. Among the processed products the company markets include canned vegetables, fruit and vegetable juices, candy, cookies, milk, ready-to-eat salad, and teas. These products are distributed under a number of brand names other than Chiquita including, Amigo, Consul, Chico, Frupac, Pacific Gold, and Chiquita Jr.

CORPORATE CITIZENSHIP

Chiquita has taken significant pride in its contributions made in the communities where it operates. With more than 75 percent of its employees, also known as associates, based in Latin America, the company has done a great deal in this region to improve the quality of life. Prominent among its contributions throughout these countries has been the building of hospitals, schools, and power plants. It has also built ports and railroads to assist in doing business more efficiently. These additions to the local infrastructure have proven beneficial to local residents as well.

In the United States, Chiquita has been a strong supporter of efforts to protect the environment. It also has contributed generously to domestic programs to fight hunger, such as Second Harvest, the nation's largest hunger relief organization with a national network of 187 regional food banks. At Second Harvest's annual Hunger's Hope awards dinner in June 1998, the company was one of several U.S. corporations presented with a Hunger's Hope Partnership Award for their contributions of food, funds, services, technical assistance, or personal commitments.

GLOBAL PRESENCE

Chiquita Brands has been generally viewed as an international company, with 40,000 employees and a variety of operations in every continent except Antarctica. Until the late 1990s, the company owned or leased nearly 150,000 acres of land, primarily in the Central American countries of Costa Rica, Honduras, and Panama and the South American country of Colombia. Most of this land has been used for growing, packing, and shipping its bananas. Marketing operations are located around the world.

FAST FACTS: About Chiquita Brands International Inc.

Ownership: Chiquita Brands International Inc. is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: CQB

Officers: Carl H. Lindner, Chmn. & CEO, 78, $215,000; Keith E. Lindner, VChmn., 38, $380,000; Steven G. Warshaw, 44, Pres. & COO, 44, $1,150,000; Robert W. Olson, Sr. VP, Secretary, & Gen. Counsel, 52, $765,000

Employees: 40,000

Principal Subsidiary Companies: Friday Canning Corporation of New Richmond, Wisconsin; Solar Aquafarms Inc. of Sun City, California; and Chiquita Banana Group of Cincinnati, Ohio, are subsidiaries of Chiquita Brands.

Chief Competitors: Chiquita's principal competitors include: Bestfoods; Cadbury Schweppes; Coca-Cola; Del Monte; Dole; Fresh America; General Mills; Goya; Smucker; Ocean Spray; PepsiCo; RJR Nabisco; Seagram; TLC Beatrice; United Foods; and Universal Foods.

EMPLOYMENT

The company has always considered its employees its most important asset, providing many opportunities for career advancement. According to 1998 Chiquita company literature, "our multi-tiered operations allow us to offer rewarding positions with global opportunities. Our philosophy is to develop high-potential associates and provide them the broadest path for success. Each year, Chiquita sets it sights on a new level of excellence. For this, we have our associates to thank. For they are the people who have made us what we are today and what we will be tomorrow."

Chiquita looks for ambitious people who are results-oriented. Because it is a global company with opportunities in a number of disciplines, including administration, finance, field operations, information systems, marketing, production management, purchasing, quality control, and human resources, Chiquita needs people with a variety of skills, educational backgrounds, and interests.

CHRONOLOGY: Key Dates for Chiquita Brands International Inc.

1899:: The United Fruit Company is created to produce and ship bananas in the United States
1903:: United goes public; begins using refrigerated vessels for shipping
1910:: Initiates research to develop disease-resistant bananas
1944:: The name Chiquita and the Miss Chiquita character are introduced
1947:: Chiquita is registered as a trademark in the United States
1958:: Scientists recommend new disease-resistant varieties of bananas
1963:: Chiquita begins the biggest branding program ever undertaken by a produce company; the blue sticker is introduced
1970:: Merges with ATK corporation and the company name becomes United Brands Company
1984:: American Financial Corporation becomes the majority shareholder
1998:: Acquired Stokely USA Inc.

The company insists on excellence from its associates, and it is generous in the rewards it has offered for such excellence, including an outstanding compensation and benefits package. Chiquita has been dedicated to the concept of promotion from within, which has given employees an opportunity to advance based on their abilities and their contributions to the company.