MKT3017 Principles of Marketing Management

MODULE: MKT3017 Principles of Marketing Management

MODULE: MKT3017 Principles of Marketing Management
Order Instructions:
Assignment title: “Project Report” – PJ1
Assignment weighting: 60% of module grade
Hand-in date: 06-07-2015
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.
Examples of its juice product range include:
Cranberry Original Juice
Cranberry Mixed Juice Drinks
Juice Max – pure Juice
Grab ‘n’ Go – Single Serve
Examples of its non-juice drinks range include:
Cranberry Sauces
Cranberry Cordial Juice Drinks
Fresh Cranberries
New Dried Cranberries
New Conserve
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.

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