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Marketing Strategy of Dole Food Company, Inc.
Marketing Strategy of Dole Food Company, Inc. - December 17th, 2010
Marketing Strategy of Dole Food Company, Inc : Dole Food Company, Inc. (NYSE: DOLE) is an American-based agricultural multinational corporation headquartered in Westlake Village, California. The company is the largest producer of fruits and vegetables in the world, operating with 75,800 full-time and seasonal employees who are responsible for over 200 products in 90 countries. Dole markets such food items as bananas, pineapples (fresh and packaged), grapes, strawberries, salads, and other fresh and frozen fruits and juices.
Dole's Chairman founded the Dole Nutrition Institute, a nutritional research and education foundation.
Incorporated: 1894 as Castle & Cooke Co., Inc.
Sales: $4.77 billion (2003)
NAIC: 11121 Vegetable and Melon Farming; 111211 Potato Farming; 111219 Other Vegetable (Except Potato) and Melon Farming; 111310 Orange Groves; 111320 Citrus (Except Orange) Groves; 111331 Apple Orchards; 111332 Grape Vineyards; 111333 Strawberry Farming; 111334 Berry (Except Strawberry) Farming; 111335 Tree Nut Farming; 111336 Fruit and Tree Nut Combination Farming; 111339 Other Noncitrus Fruit Farming; 111422 Floriculture Production; 311411 Frozen Fruit, Juice, and Vegetable Manufacturing; 311421 Fruit & Vegetable Canning; 311423 Dried and Dehydrated Food Manufacturing; 311520 Ice Cream and Frozen Dessert Manufacturing; 311911 Roasted Nuts and Peanut Butter Manufacturing
Dole Food Company, Inc. is committed to supplying the consumer and our customers with the finest, high-quality products and to leading the industry in nutrition research and education. Dole supports these goals with a corporate philosophy of adhering to the highest ethical conduct in all its business dealings, treatment of its employees, and social and environmental policies.
1851: Castle and Cooke obtain licenses to sell wholesale products in Hawaii.
1858: Castle and Cooke enter the food business with an investment in Hawaii's sugar industry.
1894: Castle & Cooke Co. is incorporated.
1901: James Dole begins growing pineapple and incorporates his company as the Hawaiian Pineapple Company.
1932: Castle & Cooke acquires a 21 percent ownership of Hawaiian Pineapple Company.
1961: Castle & Cooke and the Hawaiian Pineapple Company merge.
1964: Castle & Cooke enters the banana business.
1986: The Dole brand enjoys a worldwide recognition rate of 98 percent.
1991: Castle & Cooke changes its name to Dole Food Company, Inc.
1996: Dole pioneers packaged fresh salad mixes.
2003: CEO David Murdock completes deal that converts Dole to private company.
Best known for its pineapples, Dole Food Company, Inc., is promotes its Dole brand of fresh and packaged food and nonfood products through what it calls its 'Dole Standard.' With its fully integrated operations of sourcing, growing, processing, distributing, and marketing, it is the world's largest producer and distributor of fresh fruits and vegetables. Specifically, the company is one of the world's leading producers of bananas and pineapples, along with being a major marketer of apples, grapefruit, oranges, pears, plums, table grapes, other tropical and citrus fruits, dried fruits, canned fruits, fresh-cut flowers, and nuts. In recent years, Dole has added value-added products, such as packaged salad mixes, fresh vegetables, and novelty-canned pineapple shapes. As of 2004, Dole became one of the largest importers and marketers of fresh-cut flowers in the United States. The Dole brand, which was introduced in 1933, is one of the most recognized brands for fresh and packaged produce in the United States. In all, Dole sells or sources over 200 products in more than 90 countries around the world.
In 1851, Samuel Northrup Castle and Amos Starr Cooke established in Hawaii the company that eventually became Dole Food Company, Inc. Cooke and Castle set up business to sell wholesale goods, and in 1858 the pair entered the food business, investing in Hawaii's sugar industry. The business continued to grow, and in 1894 the company was incorporated as Castle & Cooke Co., Inc. A few years later, James Drummond Dole, a 21-year-old graduate of Harvard, arrived in Hawaii. With degrees in business and horticulture and a keen interest in farming, Dole hoped to make a living by growing the exotic pineapple. His cousin, Sanford B. Dole, an influential politician who became governor of the newly acquired territory of Hawaii, encouraged James's ambition to market pineapple commercially.
By 1901 James Dole had acquired 60 acres of land 18 miles north of Honolulu, in Wahiawa, and had formed the Hawaiian Pineapple Company. His groves of smooth Cayenne pineapples were ready to be harvested two years later. Rather than trying to export the fresh fruit, Dole decided to market his pineapple in cans. He established a cannery near the pineapple groves, which allowed him to achieve the best results by canning soon after the ripened produce was harvested. The Hawaiian Pineapple Company packaged and marketed nearly 2,000 cases of canned pineapple in 1903.
Two years later Dole was shipping 25,000 cases of canned pineapple. The company's success was facilitated by a new railroad constructed between Wahiawa and Honolulu, and the availability of ample, cheap labor allowed the company to keep its costs low. In addition, Dole persuaded the American Can Company to establish a manufacturing plant next to his cannery. For Dole this eliminated the expense of importing cans from the mainland and allowed vast quantities of pineapple to be processed quickly and cheaply. The company's increasing supply, however, required a corresponding growth in demand, but few Americans outside those living on the California coast had ever seen, much less tasted, a pineapple. Thus, the company's existing market was approaching saturation.
The Mainstreaming of Pineapple in the United States: 1910-30
In 1911 engineer Henry Ginaca, an employee of the Hawaiian Pineapple Company, invented a machine capable of processing 100 pineapple cylinders a minute. Such production facilities enabled the company to market its produce across a large portion of the United States. Developing a successful marketing strategy became a high priority for the company during this time, particularly important if Dole was to attain his goal of making pineapple available throughout the country.
Together with several smaller companies that were also involved in the processing of pineapple, Dole financed an advertising blitz in magazines and newspapers on the mainland, promoting canned pineapple products under exotic, foreign brand names such as Ukelele and Outrigger. As a result, demand increased significantly. Toward the end of World War I, in 1918, Dole's Hawaiian Pineapple Company was producing one million cases annually and had gained a reputation as the largest processor of pineapples in the world. During this time Dole purchased more land in order to expand his business and in 1922 purchased the island of Lanai for a pineapple plantation. To finance the purchase, Dole sold a third interest in his company to Waialua Agricultural Company, which was a division of Castle & Cooke. By the mid-1920s Castle & Cooke had evolved into a Hawaiian real estate and land development company.
Surplus supply in the 1920s compelled Dole and other pineapple growers to pool their resources to mount an even bigger national advertising campaign. Using the new medium of radio, the company aired advertising using slogans such as "It Cuts with a Spoon like a Peach" and "You Can Thank Jim Dole for Canned Pineapples." As a result, sales and profits increased dramatically.
New Products and Continued Growth: 1930-70
With the onset of the Great Depression, the company's sales declined, and its advertising budget was depleted. The introduction of a new product, pineapple juice, was unsuccessful when the company could not promote it. In the first nine months of 1932, Hawaiian Pineapple lost more than $5 million, and the principal stockholders, Castle & Cooke, took over Dole's company by acquiring an additional 21 percent. Thereafter the Hawaiian Pineapple Company became Castle & Cooke's principal business, and beginning in 1933 the Dole name was affixed to the company's products.
The new owners managed to reverse the downward trend of the Hawaiian Pineapple Company. With greater financial resources at its disposal, the company launched a major advertising campaign for pineapple juice, boosting sales and putting the company back on a profitable footing by 1936. The end of Prohibition also facilitated sales of pineapple juice, as the company promoted pineapple juice as a mixer for liquors, particularly gin.
The company continued to report healthy profits over the next two decades. By the 1950s Americans were spending more on food than the people of any nation on earth, and food companies were quickly expanding their markets to accommodate demand. In 1961, three years after the death of James Dole, Castle & Cooke purchased the remainder of Hawaiian Pineapple. Dole products retained the Dole name because of its strong brand image.
Castle & Cooke introduced several new pineapple products during the 1950s and 1960s, including both fresh and canned pineapple processed in chunks and slices or crushed, in addition to expanding its markets to include citrus fruits, macadamia nuts, vegetables, and even tuna. Particularly noteworthy was Castle & Cooke's entrance into the banana business. The company established pineapple and banana farms in the Philippines in 1963 to serve markets in East Asia. A year later the company bought 55 percent of the Standard Fruit & Steamship Company, one of the largest U.S. producers and importers of bananas. In 1968 Castle & Cooke bought the remainder of Standard Fruit.
Given the tremendous diversification of Dole products, advertising became critical to ensuring the company's dominance in the marketplace. In order to capitalize on public recognition of the Dole brand name, Castle & Cooke decided to use it on the labels of several of its non-pineapple food products. In addition, television became an important medium for the company's advertising, and by the 1960s James Dole's dream of making pineapple as familiar as apples and oranges had been realized.
Expansion and Sustained Success in the 1970s-80s
During the 1970s Dole continued to diversify and grow. In 1972 Standard Fruit's bananas began carrying the Dole label, and in the same year all food activities except sugar were organized into a single division--Castle & Cooke Foods. The company branched into mushrooms in 1973 with the acquisition of West Foods, Inc., the biggest producer of mushrooms in the western United States. Also in 1973 Castle & Cooke became the nation's leading banana producer, adding two large banana plantations to its roster. In addition, the company took advantage of the increasing demand for nutritious foods, advertising its products as healthy additions to the diets of adults and children.
Despite the company's accelerated growth, Castle & Cooke suffered financial setbacks in the early 1980s. The company was heavily in debt and had barely escaped two hostile takeover attempts. Its problems were largely resolved when it merged with Flexi-Van Corporation, a business that leased transportation equipment, in 1985. Flexi-Van's owner, David H. Murdock, became the chairman and CEO of Castle & Cooke, and the company continued to expand and build equity in the Dole brand.
In 1986 Dole's logo was redesigned. The resulting yellow sunburst logo was intended to convey quality, freshness, and wholesomeness. The Dole brand name came to be used to promote additional products as Dole Fresh Fruit operations extended its line to include table grapes, strawberries, nuts, raisins, cherries, and strawberries. In 1988 Dole introduced a new line of dried fruits and nuts. The following year, Dole Fresh Vegetables began marketing produce under the Dole name, dropping the Bud of California name it had been using since 1978, and the company purchased two apple growers in Washington State. By the late 1980s Dole had a global recognition factor of 98 percent.
Innovation in the 1990s
In the early 1990s Dole launched a major multimedia advertising campaign accompanied by the slogan "How'd You Do Your Dole Today?" The campaign was designed to encourage consumers to eat more vegetables and fruits, including pineapple, regularly. As a result of its effective advertising, Dole maintained the largest market share of pineapples and bananas in North America. The company also continued its tradition of diversification and innovation, introducing a line of packaged fresh vegetable products in 1990. The convenience of precut vegetables and salads appealed to consumers and soon became the fastest-growing division in grocery stores.
In 1991, under the direction of Murdock, Castle & Cooke's stockholders voted to use the Dole name to represent all of the company's fruit and vegetable operations, reorganizing under the name Dole Food Company, Inc. The Castle & Cooke name was retained solely for the company's real estate business, which became a subsidiary of Dole Food Company. In the early 1990s ice cream bars were added to the list of Dole products. The company also retained interests in beer processing in Honduras, sugar refining in Hawaii, and tropical flower marketing in the Philippines. In addition to the individual consumer, Dole's market expanded to include other food processors, which used Dole products as ingredients.
Dole began to expand more aggressively into international markets in the 1990s. While Dole products had the leading market share in the United States, Canada, Mexico, and Japan, the company began to gain a significant share of the European market. In 1989 a division of Dole Food Company was established in London, poised to take advantage of imminent changes in the integrated European market. Dole's international growth strategy included expansion into eastern Europe, South Korea, and the Middle East. In 1992 Dole bought SAMICA, a dried fruits and nuts firm in Europe, and in 1994 acquired an interest in Jamaica Fruit Distributors. A year later the company purchased the New Zealand operations of Chiquita Brands International, Inc. Dole's international expansion continued in 1996 with the purchase of Pascual Hermanos, the largest grower of fruit and vegetables in Spain, and in 1998 with the acquisition of 60 percent of SABA Trading AB, a Swedish importer and distributor of fruits and vegetables. Dole also established operations in South Africa following the deregulation of that country's fresh fruit industry.
In 1995 Dole sold its juice and beverage business, except for pineapple juice, to the Seagram Co. Ltd., which planned to market the juices under its Tropicana brand. In the same year Dole separated its food and real estate business, and Castle & Cooke began to operate independently of Dole as a real estate development firm. Dole was thus focusing solely on its operations as a producer and distributor of food products. By the end of 1995 the company served more than 90 countries, and its product line included more than 170 food products.
Taking advantage of the growing interest in packaged fresh produce, Dole introduced packaged salad mixes in 1996 and set off a major trend. Dole's salad operations plant in Soledad, California, received Food Engineering Magazine's Plant of the Year Award in 1996 for its design quality. The salad business grew rapidly, and Dole founded a processing plant in Ohio to service states in the Midwest and the East. Plans for new salad products were implemented to ensure continued growth through the first few years of the 2000s. The company also established a salad plant in Japan in 1998 to introduce the packaged product to Japanese consumers.
To further diversify its product line, Dole entered the fresh flower market through several major acquisitions in 1998. The company bought Sunburst Farms, Inc., the largest U.S. importer and marketer of fresh cut flowers, as well as Finesse Farms, an importer and marketer of roses, Four Farmers, Inc., a bouquet company, and CCI Farms, a Miami-based producer, importer, and marketer of fresh-cut flowers. Dole hoped that its new flower division would generate revenues of more than $200 million a year in the United States, which, with sales of about $7 billion, was the largest floral market in the world. The floral industry's growth was attributed in large part to the increased availability of fresh-cut flowers in supermarkets, an arena in which Dole already held a commanding position.
Although the company moved forward in its acquisitions and innovations in 1998, Dole faced numerous challenges, some presented by unpredictable weather conditions and others by unstable economic conditions in key markets. The economic crisis afflicting East Asia significantly affected Dole, as the Asian market had played an important role in Dole's growth in the 1990s. Russia accounted for about 8 percent of the global banana business, and when the Russian economy collapsed in late 1998, Dole lost an important market for its bananas. El Nio adversely affected farming weather patterns, which generated unpredictable and uncommon weather, including heavy rains in California, flooding in Ecuador, and drought in the Philippines and Thailand. In October, Hurricane Mitch wreaked havoc on Dole operations in Honduras, resulting in $160 million in damages. In December a severe freeze in California destroyed most of the state's citrus crops, with Dole taking a $20 million charge for losses. As a result of these events, net income declined in 1998 to $12 million, down from $160 million in 1997.
Despite Dole's struggles in 1998, the company prepared to continue as the world's largest producer and marketer of fresh fruits, vegetables, and flowers. Dole Fresh Vegetables attained record sales in 1998, and by mid-1999 Dole's share of the fresh-cut salad category was 33.3 percent. Canned pineapple continued to be one of Dole's strongest performers, with a leading market share of 45 percent. In the first half of 1999 revenues climbed 15 percent over sales during the same period in 1998, boosted by the acquisition of flower businesses and the investment in SABA Trading AB. Weak banana pricing affected sales in North America and Europe, however, and Dole's net income for the first half of the year, ending June 19, 1999, was considerably lower than for the same period in 1998.
Striving for Growth and Earnings in 2000s
During the first half of the 2000s, Dole benefited from an excellent demand in fresh produce worldwide. In fact, the fresh produce market grew at a rate that was above the rate of population growth, which was due primarily to increased retail emphasis on attracting customers with fresh produce; consistent trends in greater consumer demand for healthy, fresh, and convenient foods; and increased retailer area devoted to produce. However, during this same period of time, Dole continued to suffer from adverse weather and worldwide economic shifts. Its revenues only slightly increased from 1999 to 2003.
Net revenues in 2000 were less than in 1999 due to a reduction in banana profits caused by a deterioration in the euro-to-U.S. dollar exchange rate; a large price increase in fuel rates; an oversupply of bananas; and a longer-than-expected time period to achieve profitability of its consolidated flower operations. As a result, performance improvement and cost reduction plans were enacted in the Fresh Fruits and Fresh Flower segments. These activities helped to improve net income. Dole's other segments--Fresh Vegetables, Packaged Foods, and Beverages--performed well in 2000. Fresh Vegetables announced record earnings as a result of reliable growth in the fresh-cut salads business and favorable pricing in the commodity vegetables business. The canned pineapple business--within Packaged Foods--maintained its 50 percent market share in North America with the introduction of "Fruit Bowls" plastic cups. The beverage business in Honduras returned to normal after Hurricane Mitch. To better concentrate on its primary businesses of fruits, vegetables, packaged foods, and flowers, Castle & Cooke, Inc., a diversified real estate company within Dole, was privatized in 2000.
In 2001, Dole began a concerted effort to reduce operating costs and to liquidate non-core and/or under-performing businesses. As a result, Dole discontinued its Beverages segment when it sold its 97 percent stake in the Cerveceria Hondureña S.A. beverage operations. Cash proceeds of $537 million from the sale were used to reduce its debt. In December, Dole's Florida-based fresh-cut flowers distribution operation was transferred into a new 328,000 square-foot building. Net revenues for 2001 were much higher in most of Dole's core businesses primarily as a result of higher prices and volumes for its Premium Select pineapples in North America and Europe; increased volumes for its North American packaged salads business; higher prices and volumes for North American bananas; and increased volumes of its "Fruit Bowls" and "Fruit-n-Gel Bowls" in North America. These increases were offset by the negative impact on revenues from asset sales and business shutdowns.
In 2002, Dole continued its efforts to reduce costs and to eliminate undesirable businesses. Financial results in 2002 were somewhat improved over 2001, with net revenues up while net income went down, being adversely effected by a one-time business reconfiguration charge. Dole's Fresh Fruit segment received strong returns especially in North America, Europe, and Asia, primarily due to its programs in Premium Select pineapple and organic banana. In Dole's Fresh Vegetables segment, its packaged salads increased its market share by 1 percent, to 38.2 percent. Overall, weaker commodity prices were balanced by continued growth in its packaged salads business. In Dole's Packaged Foods segment, financial results improved, gaining market share in canned pineapple and Fruit Bowls (up 4.2 share points from last year, to 43.9 percent). Dole's Fresh Flowers segment reduced its operating loss as a result of an improved cost structure. Dole completed its selling activities of non-core and/or unprofitable businesses, when it sold its Pascual Hermanos vegetable business in Spain and its Saman dried fruit and nut business in France.
Cost-cutting measures in the early 2000s, including job deductions and sale of non-core/unprofitable businesses, helped to increase Dole's earnings so that net revenues grew to $4.77 billion in 2003. In order to maximize future long-term growth and to minimize uncertain short-term exposure to the public equities market, CEO David Murdock and his management partners took the company private in 2003. Murdock and his partners acquired 76 percent of the company's shares as part of a buyout valued at about $2.4 billion ($1.4 billion in stock, plus debt assumption of $1 billion), which gave them total ownership. Subsequently, the company expanded with increased 2003 sales of nearly 9 percent and increased earnings of about 18 percent. In addition, Dole repaid over $200 million in bank debt. Also, in 2003, Dole opened its Dole Nutrition Institute, a group dedicated to educating the public about the health benefits of fruits and vegetables. Dole also broke ground on the new Dole Wellness Center, Spa, and Hotel, which will consist of medical facilities with state-of-the-art diagnostic services, 267-room hotel, conference center, full-service spa and fitness center, and television production facility.
As of 2004, Doles' primary business segments were: Fresh Fruits, Fresh Vegetables, Packaged Foods, and Fresh Flowers. During 2004, Dole purchased J.R. Wood, Inc., a manufacturer and marketer of fresh frozen fruit products, and Coastal Berry Co. LLC, one of the largest producers of strawberries in the United States.
By holding the number one or number two position within its industry with regards to many of its major products, Dole has positioned itself to meet the future requirements of retailers through the delivery of high-quality and innovative produce, competitive product pricing, and reliable service. The company has also diversified globally so that its operations in 28 countries now distribute products to more than 90 countries; a plan that helps Dole reduce losses from natural disasters and political problems. Dole has built a state-of-the-art production, processing, transportation, and distribution structure and has become among the lowest cost producers within many of its major product lines. Over many decades, Dole has built a strong global brand that is easily recognized by consumers worldwide. Over the last few years, the company has begun to focus its operations on identifying to consumers why fruits and vegetables are beneficial to good nutrition.
Principal Subsidiaries: Dole Fresh Fruit Company; Dole Fresh Vegetables; Dole Packaged Foods; Royal Packing Co.; CCI Farms; Finesse Farms; Coastal Berry Co. LLC; Four Farmers Inc.; Floramerica Co.; J.R. Wood, Inc.; Sunburst Farms Inc.; Beebe Orchard Co.; Wells & Wade Fruit Co.; SABA Trading AB (60%; Sweden).
Principal Operating Units: Dole Latin America; Dole Asia; Dole Europe; Dole Worldwide Packaged Foods; Dole Worldwide Fresh Vegetables; Dole Fresh Flowers; Dole North America Tropical Fresh Fruit; Dole Chile.
Principal Competitors: Chiquita Brands International, Inc.; Fresh Del Monte Produce Inc.; Del Monte Foods Company; Fyffes plc.
Last edited by bhautik.kawa; 5 Days Ago at 04:04 PM..
Re: Marketing Strategy of Dole Food Company, Inc.
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