By Lynda Kiernan
Massachusetts-based Ocean Spray, the single provider of 65 percent of the world’s cranberries, is taking a new approach amid multiple challenging market fronts, announcing a new business model to seize innovation, growth, and returns.
The shift for the 90-year old farmer cooperative began in May when it moved its innovation and marketing teams from its headquarters in Lakeville, Massachusetts, to a WeWork co-working space in Boston. It also announced a number of changes to its executive team, with Rizal Hamdallah, the former managing director of Tyson’s Innovation Lab, as its new Global Chief Innovation Officer and leader of its Innovation, Research and Development teams.
“At my core I am a creator, and throughout my career I have been guided to understand and build empathy with consumers. Ultimately, that’s how to develop and deliver innovative products that consumers didn’t even know they needed,” said Hamdallah. “I am excited to build upon the foundational legacy of Ocean Spray and create the next era of healthy, delicious products for our farmer-owned cooperative.”
Additionally, Katy Latimer, formerly with Dunkin’ Brands where she served as vice president, Culinary Innovation for both Dunkin’ and Baskin Robbins teams, has been named vice president of Research and Development; and Chris O’Connor, formerly with the global health and wellness brand, Nature’s Bounty, has been brought on as vice president of marketing, and will lead Ocean Spray’s Boston-based Core Beverage, Core Food, Immediate Consumption, Licensing and Partnership, Ecommerce, and Emerging Products teams.
With Hamdallah now at the helm, Ocean Spray has retrenched, and has overhauled how it approaches its position in the market, and the launch of new products. The cooperative admits that it is “moving out of its comfort zone” with the establishment of its new Lighthouse Incubator to rapidly ideate, develop, and commercialize healthy foods and beverages that resonate with a more diversified customer base.
Within Lighthouse, there exist three “startup hackers”, explains Nosh – Josh Weisman, former co-founder and CEO of baby product company Smilo, Niari Kevarian, former co-founder and CEO of Zoos Iced Greek Teas, and Olivia Natola, former director of food and beverage for kiosk company LeanBox. Each “hacker” has a team of between three and five people who every five months will ideate and bring new products to market.
“Our Lighthouse Incubation team is set to tackle the most interesting challenges we face as a food and beverage industry today and position Ocean Spray at the forefront of change,” said Hamdallah.
A Sour Market
Little more than a decade ago, in 2008, cranberry growers could reasonably expect to fetch $58.60 per barrel, according to the USDA. Prices such as these, as well as the cranberry’s booming popularity led to the widespread development of cranberry bogs not only in the U.S., but in new geographies such as Canada and Chile.
This huge increase in production, partnered with a consumer shift away from beverages with added sugar, led to a global glut of the fruit, and per-barrel prices dropping by 62 percent, to $22.30 by 2018.
However, over the course of that decade the Ocean Spray cooperative and the wider cranberry industry did not sit idle. Around 2012/13 the search began to identify new markets for the fruit, and this is when China, with its imported fruit market, valued at $7 billion, came into focus.
With help from a hired public relations firm Weber Shandwick, Ocean Spray began to make headway in China, where nearly the entire population had never heard of a cranberry before. And together with a $1 million per year campaign in China being carried out by the Cranberry Marketing Committee, sales of dried cranberries soared by 1,000 percent to a value of $55 million over the five years between 2013 and 2018, according to NPR.
But then, in July 2018, the U.S. enacted tariffs on $50 billion in Chinese products, and in retaliation, China raised their own tariffs, including those on dried cranberries, which increased from 15 percent to 40 percent. And although the U.S. is known for its high-quality fruit, in recent years the market has expanded to include other alternative suppliers.
“The growth was not only halted, but it was also essentially reversed,” Terry Humfeld, executive director of trade group, The Cranberry Institute told NPR.
In response, Ocean Spray is broadening its horizons, and hopefully its customer appeal, with new, rapidly deployed product launching through its Lighthouse Incubator, and its first new brand has already hit retail shelves.
The Atoka portfolio, which is initially launching in Boston, to be followed by a U.S. launch in January 2020, includes three plant-based beverage lines, Tea Tonics, Oatmilk Elixirs, and Herbal Shots. Each line comes in four flavors:
Blend 01: cranberry, guayusa, ginseng, and ginger
Blend 02: elderberry reishi, rosehip, ginger, and spice
Herbal Blend 03: dark cherry, chamomile, hops, and ginger
Herbal Blend 04: cranberry, linden flower, lemongrass, orange peel, and ginger
“Atoka brings Ocean Spray into an entirely new category of wellness drinks, including a variety of oat milks, tea tonics, and herbal shots offered in different herbal blends,” said Hamdallah.
“Atoka is the first new brand to be incubated here in Boston at the Lighthouse, indicative of our emphasis on an intensely innovative, agile approach to product development and cultivating a culture of innovation throughout the organization.”
– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.