Overview of the Business

Fruit d’Or is a Quebec-based company that specializes in the marketing of cranberry products. Starting in the early 1990s, it is now North America’s largest processor of organic cranberries. In addition to marketing fresh and frozen cranberries, Fruit d’Or has developed a dried product similar in texture to dried raisins. This has become very popular both as a snack food item and an ingredient in salads, baked goods and cereals. Significantly, the recent consumer demand for foods high in anti-oxidants, an attribute specific to the cranberry, is driving a very strong demand for this product.

The cranberry is a specialized crop that requires a very specific growing environment, agronomic practices and harvesting methods. The plant is a low-growing woody vine that is native to open bogs and wet areas found in the northern U.S. and southern Canada. Cranberry production actually takes place in ‘bogs’ that include drainage systems (ditches) to enable periodic flooding. These growing bogs are typically designed into two-hectare blocks encompassed by dykes from which agronomic activities (such as fertilizing and weed control) are applied. Harvesting involves the ‘shakedown’ of the plant to release the berries that fall onto the ground, which is then flooded and subsequently ‘corralled’ and floated to a collection area and vacuum pumped into trucks to be hauled to the processing plant. Flooding is also used as a measure to protect the plants from freezing prior to harvest.

While cranberry beds remain productive for many years, it takes three to five years from the time seedlings are planted to produce commercial quantities of fruit. Yields average around 22,000 pounds per acre. These will of course vary and can be twice as high or substantially lower depending upon annual growing conditions. Cranberry production is also very capital intensive and requires investment levels in the order of $25,000 per acre. Operations have also grown larger. Thirty years ago Quebec growers averaged 30 acres; current average size is now more than double that size at 75 acres.

Historically the demand for cranberries has been seasonal and centered on Thanksgiving and Christmas. More recently, new growth was driven by the development of new products – namely cranberry-based juice blends led by Ocean Spray, the Massachusetts based cooperative. This began in the 1960’s with the introduction of the cran-apple drink followed by the development of a variety of additional cranberry fruit blends in the 1980’s.

The success of Fruit d’Or combines several individual players, conditions and a prevailing vision that is fundamental to its formation and success. They include:

• An entrepreneurial producer – Mr. Martin Le Moine, who continues to seek out new and innovative ways to produce and market agricultural and food products. He has a very open-minded approach and embraces research to explore new opportunities. Martin started his career as a feed-company sales representative, became a partner in a hog production operation (where he continues to be involved), and entered the cranberry business in the 1980s as a member of the Ocean Spray Cooperative. Martin has a strong commitment to his local community and seeks to develop business opportunities that are of benefit to that community.

• An innovator – Mr. Mario Carrier began his career in product development by drying assorted fruit and vegetable products on a small scale. Of particular note was Mr. Carrier’s drive to develop drying and preservation processes without the use of preservatives that led to the development of the organic product line of cranberries.

• An experienced marketer and business development specialist – Mr. Sylvain Dufour – a food industry consultant who worked with Fruit d’Or to develop new marketing and sales opportunities. Sylvain is based out of Quebec City and has a keen understanding of product differentiation and what it takes for a product to create unique value in the marketplace.

Marketing Strategy

Fruit d’Or’s marketing strategy is fundamentally built on market differentiation and creating unique value. The strategy is summarized as follows:

• Supply a unique product that cannot be easily copied. In the case of Fruit d’Or, this is the organic cranberry sold in consumer-sized snack paks. Organic products represent 30% of total sales for the company. The availability of this unique and sought after product creates two opportunities: (1) it is unique and serves as the ‘door opener;’ (2) further it opens the door even wider for the sale of conventional products. Sylvain refers to this dynamic as the ‘leverage’ principle – the ability to sell standard product by leveraging a specialty product.

• Develop a dedicated sales and marketing capability – the founders of Fruit d’Or recognized quickly that they were a production business with no customers. Thus they contracted with a specialized food marketing consultant to develop and implement a marketing plan and establish a sales capability.

• Commitment to quality – Fruit d’Or is fully committed to being a leader in quality control and traceability. It is an approved member of the American Institute of Baking (AIB) and its plant meets all Hazard Analysis and Critical Control Point (HACCP) requirements.

Marketing History

Fruit d’Or is a classic example of how adversity creates new opportunity. Cranberry production took root in Quebec more than 50 years ago with one grower. This expanded to 50 growers by the 1980s. During this time period, industry growth correlated with the rise of one major customer – the Ocean Spray Cooperative located in Massachusetts, U.S.

By the late 1990s the industry found itself in crisis. Over production was rampant and prices collapsed. The enormity of this collapse can be appreciated by the magnitude of the drastic and rapid price change: from a high of $.85 per pound to a low of $.19 per pound within two years. At the same time, Martin Le Moine, a member of the Ocean Spray Co-op, was undertaking to negotiate premium pricing for his organic production. However, Ocean Spray did not appreciate the added value of these cranberries and was only willing to pay the same price as they were paying for the conventional crop.

Given that organic production yields can be 50% of conventional production, the inability to obtain a price premium posed a major challenge. In response, Martin Le Moine agreed to work with a U.S. based organic grower group (4 growers) who set themselves up to market their own production. Although well intended, it soon became apparent that this group did not have the capacity to market his production. This led Martin to contact Sylvain Dufour in the fall of 1997. The imperative was very straightforward and urgent:

“We have cranberries (organic and conventional) and no customers! What can be done?”

Further to an analysis of the situation, Sylvain suggested a two-pronged approach:

1. First, develop a fresh market cranberry product in a package. At that time, there was essentially no ‘product’ to sell, only bulk cranberries destined for the Ocean Spray juice plant. This led to the purchase of a packaging machine and the capability to supply a packaged product (cranberries for the fresh market – Thanksgiving and Christmas)
2. Start a marketing study beginning with a major Quebec retailer (Provigo) to determine the nature of the market for cranberries.

At the same time, Sylvain challenged Martin to address a most fundamental question: “What makes your cranberries different?” The question led to the following answer: “Picked dry and therefore a longer shelf life”. Using this positioning strategy, Sylvain prepared a basic sales sheet and began his sales odyssey asking prospects a key question: “If we are able to source a dry, fresh cranberry product that keeps longer at the same price as your current supply, would you buy our product?”

The answer came quickly – Provigo wanted 400 cases before Christmas. This required setting up a very basic processing system that worked day and night. But the order was filled! More importantly, the ‘seat of the pant’s experience’ pointed out the need for a more systematic market plan. Sylvain’s exercise clearly identified that a major gap was the lack of connection to the market. Two decisions ensued:

1. Commit to develop a sales capability and establish contacts with targeted customers.

2. Identify and build relationships with other key marketers such as a specialized exporter. This led to a relationship with Frutex Group – a Montreal-based exporter that now ships cranberry products on behalf of Fruit d’Or to more than 12 countries.

The drive for uniqueness further drove a search for the development of new value-added products. In 1998, at the Natural Product Expo in Baltimore, Sylvain observed that ‘dried cranberries’ marketed as a health snack appeared opportunistic. However, this required very specific drying expertise and technical capability. These requirements led Martin to seek the required expertise, which led to Mario Carrier, who at that time operated a small, independent dried-vegetable business in south central Quebec. With the help of research funding, Martin challenged Mario to develop a process to dry cranberries. This ‘marriage’ ultimately led to the amalgamation of Martin’s cranberry business with Mario’s dry vegetable processing business and Fruit d’ Or as a marketer of dried cranberries was born. Initial research focused on developing a uniquely Quebec product: dried cranberries sweetened with maple syrup[1].

It didn’t take long for the demand for dried cranberries to outstrip the capacity of the small plant. Thus came the next big decision: construct a much larger plant. This led to the contracting with engineers – a specialized consultant with food processing expertise and the design of a new processing plant. Over the next 5 years, Fruit d’Or invested more than $7 million in the construction of a state of the art processing and drying facility located in Notre-Dame-de-Lourdes.

Current State of the Business

Fruit d’Or is now thriving with more than 100 employees and sales of over $30 million. The company now sources cranberries from 22 growers and accounts for almost one-third of the total Quebec crop. Fruit d’Or expects that it will soon process 50% of Quebec’s cranberries.

Fruit d’Or has five major product lines that it markets to the retail and wholesale food markets:

1. The largest marketer of organic cranberries in North America.
2. Dried cranberries packed and sold in consumer packages.
3. Fresh cranberries sold to supermarkets in the fall.
4. Frozen cranberries supplied to the industrial (baking) and wholesale market.
5. Cranberry juice and cranberry juice concentrates.

Key Information Sources/Influences

As a differentiated product marketer, Fruit d’Or is committed to be a leading edge company and is constantly looking for new ideas and opportunities. Key information sources include:

• Customers and potential customers – the constant interplay with customers is a vital and critical source of information. Customers not only tell you what they are looking for, they will tell you about the innovations and new ideas that are being shopped around to them. Also potential customers (such as a retailer) will tell you which distributors in your product category they rely on. This will guide your choice of partners.

• Trade Shows – trade shows are also important. For example, the idea for a dried cranberry product came from a visit to the Natural Products Expo in Baltimore. The company is currently attending shows in Europe as it seeks to expand its customer base.

• Industry at large – always look around for what is going on within your industry sector as well as other industries. Martin Le Moine had a strong sense that it would only be a matter of time before consumers would be receptive to and demand organic food products. Thus he made the decision to establish a major proportion of his operation to organic cranberry production.

Key Challenges

Like all companies, Fruit d’Or has faced many challenges and continues to face new challenges. The history of the company speaks to the many obstacles that have arisen and overcame. These include:

• Marketing – clearly, the knowledge that an existing customer (Ocean Spray) was no longer interested in organic cranberries drove the founders of Fruit d’Or to create a new market. In effect, the crisis was the factor that converted the producer to a product marketer and innovator.

• Financial – while the company is now quite stable, it has faced major challenges and set backs. During the initial expansion stage (2001), freezer equipment was slow in arriving. As a consequence, large product losses resulted in spoilage and financial difficulty, which in turn required the company to raise new equity and find private sources of financing.

• Changing market conditions – probably the biggest current concern is the continued rise of the Canadian dollar. This places pressure on export sales and on margins. Thus the company needs to carefully examine pricing policies, competitive positions and costs to ensure continued profitability.

Lessons Learned

On the basis of the Fruit d’Or experience, Sylvain Dufour offered a number of lessons that have been learned along the way. These include:

1. Never stop learning – the prevailing imperative one must take is this: “there are so many things you need to learn! Go outside your world, visit trades shows, ask questions, always look for new ideas and ask yourself: how can we do better?”
2. Commit to continuous improvement – always ask “what can we do to improve our service?” Commit to improvement. This involves employee training, talking to customers, suppliers and staff, and always looking for better ways to do things.
3. Find a way to make yourself indispensable – this adage is key to the differentiated market strategy. The lesson is this: strive to implement the ultimate differentiation strategy that is difficult or impossible to duplicate. In the case of Fruit d’Or, it is the ability to supply large quantities of organic product.
4. Leverage your specialty product – Fruit d’Or uses its organic product – its specialty, to sell traditional cranberries. In other words, the availability of a product that no other suppliers might have creates the opportunity to supply a wider range of conventional products. However, without the specialty product, it would be difficult or very difficult to sell the conventional product.
5. If there is a big player, there is always room for a small player – this is an important adage for any prospective niche market. It is important to understand that large-volume marketers have to deal with large customers by necessity. This creates opportunity for suppliers who are able to deal with customers who do not want to deal in this manner.
6. Commit to a culture of planning – take the time to review how things are going and, more importantly, take the time to anticipate and plan for the future. The Fruit d’Or team meets for two full days offsite in a secluded location and commits to a serious review of the year past and developing a plan for the future. The key questions: What can we do better? What new products or services can we offer? What new opportunities and challenges might we be facing in the next year?

[1] Cranberries are naturally bitter. To sweeten the taste requires a process that removes the juice and in turn draws in a sweetener using reverse osmosis. Over time, maple syrup proved to be too expensive. A sugar based sweetener is currently used.