Atlantic Quench Cranberries Inc.
Atlantic Quench Cranberries Inc. (AQC) is an agricultural co-operative based in the United States. It was formed 80 years ago by three cranberry growers from Massachusetts and New Jersey. Florida grapefruit growers joined the co-operative in 1974. It is now owned by about 630 cranberry and 46 grapefruit farmers. The co-operative is justifiably credited with pioneering and developing the cranberry segment. It has become North America’s leading producer of canned and bottled juices and juice drinks, and has best-selling brand name in the canned and bottled juice category since 1981. It has also enjoyed great success in the UK.
Product Range
Atlantic Quench is best known for its fruit juices but it also sells dried cranberries under the brand name Crantanas. Its product range is classified as either juice or non-juice drinks.
The Cranberry Classic range includes juices and juice drinks with cranberry as the core flavour, including a light juice drink as well as a high juice cranberry cordial. In 2002, the co-operative launched the Cranberry Classic in a 250 ml can to target impulse buyers in the convenience sector. In 2003, Atlantic Quench increased its range of ‘light’ low calorie fruit drinks, which included cranberry and blackcurrant, cranberry and raspberry, and cranberry and mango. A white cranberry juice drink was launched in 2004 and was promoted as a sweeter and smoother alternative to the red cranberry juice drinks. In September 2004, the Cranberry Select Premium Chilled Juice Drink was launched in new 1.75 litre packaging, specifically aimed at the fast-growing chilled drinks sector. A cranberry and mandarin juice drink was introduced to the market in 2005.
Common Stock Equity Quota
There is a close working relationship between the farmers and the organisation. Atlantic Quench has to purchase all the crops that the farmers grow at the highest possible price, together with a dividend reflecting the profits of the Atlantic Quench brand. Although most of the farmers are small producers, their combined produce accounts for about two-thirds of the world’s cranberry harvest. However, each farmer has to commit to an annual quota of production under a scheme called the ‘common stock equity quota’. Farmers can be penalised if they fall short on the agreed quota allowing Atlantic Quench Co-operative to redeem (buy Back) share equal to the shortfall, at the original issue price enabling them to reallocate the quota. For example, the share issue price was $25, equal to one barrel of cranberries, although the current market value is closer to $250 per share. This arrangement instils discipline, not always present on co-operatives, and is likely to have contributed to the organisation’s success.
Organisational Issues
The co-operative has not been without its problems. The market for farm produce is volatile, reflecting changes in climate as well as market trends. As such it is often difficult to predict harvest yields. Overproduction in 2000 resulted in the price of raw cranberries falling from over $60 a barrel to under $20. Atlantic Quench responded to the volatile market by reducing its advertising and marketing budget. In addition to cutting back on expenditure, the co-operative paid the farmers $12 a barrel instead of the $18-a-barrell market price. As a result the relationship between the management of the co-operative and the farmers deteriorated, and the farmers exercised their power as shareholders of the co-operative by voting out four successive Chief Executive Officers (CEOs) between 2000 and 2003.
When Chuck Berrie was appointed CEO in 2003, his immediate priority was to discuss with the farmers whether or not a co-operative approach to managing the business was still an appropriate and preferred option. The CEO had previously spent six years working for another co-operative as Chief Marketing Officer at Welch Foods Inc. During those six years he had contributed to doubling the market share of the organisation. According to Berrie, ‘The beauty of being a co-op is not being judged by quarterly results, but by generations passing on to the next generation.’ Indeed, many Atlantic Quench farmers are third- and fourth-generation owners and one is seventh-generation.
Berrie spent many weeks debating with the farmers, discussing the advantages and disadvantages of remaining as a co-operative. At the same time a buyout offer was presented by Coca-Cola. The farmers voted to reject Coca-Cola’s offer, choosing instead to support Berrie’s vision of a more focused Atlantic Quench that would stay independent. The business plan proposed by Berrie was to retain the successful aspects of the old Atlantic Quench, such as the juice making and innovative new-product efforts, whilst handling over the logistics.
By actively seeking the views of the farmers, Berrie has managed to improve the profitability of the co-operative and also win back their trust.
Strategic Alliances
In 2007, Atlantic Quench and Coca-Cola implemented a long-term strategic alliance in which Coca-Cola North America markets, bottles and distributes single-serve cranberry juice products in the U.S. and Canada under the Atlantic Quench name. The agreement also includes opportunities for the development of the new product innovations across multiple trade channels in the future.
The strategic alliance was viewed as a positive move by both organisations. ‘This is a chance for both Coca-Cola and Atlantic Quench to turn up the dialogue on the health benefits of cranberries,’ said Mary Moore, president and CEO, Coca-Cola North America. ‘Over the past several years, we have built successful, mutually beneficial partnerships with strong brands like Robertsons and Costa, and now we plan to work side-by-side with Atlantic Quench to create a major healthy refreshment business focused on cranberries. When people think of cranberries they think of Atlantic Quench ’
Atlantic Quench President and CEO Chuck Berrie stated ‘As the Atlantic Quench co-operative moves to build its brand, we are seeking out alliances to reach consumers more broadly and powerfully than ever before.’
The UK Market
In 2013 Atlantic Quench signed a licensing agreement with Gerber to manufacture, distribute and market juices and juice drinks under the Atlantic Quench brand in the UK. Gerber is the largest supplier of private-label and branded fruit juice and juice drinks in the UK, with sales exceeding 800 million litres per year.
Atlantic Quench has been very well received by the UK market and has also negotiated three successful contracts with the three largest supermarket groups in the UK to sell all of its product lines.
New Product Development
Atlantic Quench’s creativity in new product development (NPD) has been a contributory factor to the organisation’s success. After encouraging supermarkets in the US to add juice aisles in the 1960’s, Atlantic Quench developed juice boxes, including low-calorie cranberry drinks, and white cranberry juice. Crantanas, the dried fruit snack made from husks that used to be thrown away but are now reinfused with juice, have proved to be very popular too. Other product variations include chocolate-covered Crantanas, ready-to-drink mixed flavoured juices and an energy juice drink called Cranzeal. Atlantic Quench enjoyed annual sales of around $1.7 billion in 2007, of which Crantanas accounts for £150m (source PR Newswire). Sales of this product have doubled in the last two years and are expected to double again over the next ten years.
Niche Market
Cranberries have been promoted for their healthy qualities and for many years Atlantic Quench has had a virtual monopoly in the niche
QUESTIONS
Based on your knowledge of marketing strategy produce an outline marketing plan for the next year for Atlantic Quench.
Your marketing plan should focus on customer attitudes/trends and market growth; therefore segmentation and positioning will be important within your plan
Your plan should also include the application of a range of models theories and concepts from the Principles of Marketing Management course content.
Supporting information can be found in Mintel and Keynote, these databases can be sourced via the online library.
Word Limit: 3000 (+/- 10%)
Objectives
Examine the learning outcomes (a,b,c,d,e,g,h)
Learning outcomes
LERNING OUTCOMES*: (Max of 10)
Knowledge and Understanding
a) Appreciate and integrate the value of the analytical tools and techniques available to marketing professionals when evaluating the marketing environment and developing marketing strategies;
b) Demonstrate and evaluate the vital necessity of focusing on the customer and the marketplace as the foundation of marketing planning;
c) Critically evaluate the marketing mix of an existing organisation contrasting application to theory;
Subject-specific Skills
d) Propose and present an outline marketing plan;
e) Critically appraise tactical marketing decisions based on situation analysis and in line with strategic marketing plans.
f) Exammine and appraciate the tools of Strategic marketing and apply in practise within a global context
g) Explain and appraise marketing concepts, theories and models clearly and apply these critically to existing organisations;
Key Skills
h) Concise dissemination of information relating to investigative actions required for a coherent marketing plan;
i) Produce a written report following academic convention that synthesises clearly theoretical perspectives and distinguishes between conceptual frameworks which focuses on a practical marketing plan application for different scenarios
Mode of working
This is an individual assignment. The University of Northampton policy will apply in all cases of copying, plagiarism or any other methods by which students have obtained or attempted to obtain an unfair advantage.
Format for the submitted work
The assignment should be written for a business audience and presented appropriately in a report format. The word limit is 3000 words (+/- 10%). Harvard referencing must be used throughout.
Hand-in procedure
You must submit your assignment electronically.
You will receive an email confirmation and the system will record the date and time you submit. In the unlikely event of work getting lost, the receipts will show that work has been submitted. Without a receipt there is no evidence to show that the work has been undertaken, and you may be given a “G” grade.
All e-copies must be sent by 11:59pm of the deadline day.
An area to submit your assignment will appear on NILE as the assignments become available.
Grading / feedback guidance
The table at the end of this document serves as a general grading guide for students to assist in the self-assessment of their work. Lecturer feedback will also include specific remarks on strengths and aspects for improvement as well as overall comments on the assignment as a whole.
Weighting
This assignment carries a weighting of 60% for The Principles of Marketing Management module.
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