The Journal. - Canned or Homemade? America’s Biggest Cranberry Company Wins Either Way

Episode Date: November 22, 2023

Ocean Spray’s farmers are responsible for 65% of the world’s cranberries. It’s not a publicly traded company. It’s not a traditional private company, either. It’s a cooperative founded nearly a century ago and owned by roughly 700 families. WSJ’s Ben Cohen tells the story of how the cranberry got into the can, and how the company is planning for a future beyond your Thanksgiving table.  Further Reading: - These People Are Responsible for the Cranberry Sauce You Love to Hate  Further Listening: - Are Rotisserie Chickens 'Inflation-Proof'?  - The Twinkie: From Bankruptcy to Billions  Learn more about your ad choices. Visit megaphone.fm/adchoices

Our colleague Ben Cohen won't stop talking about cranberries. I was so fascinated by Big Cranberry. Like everything I learned about cranberries, I was just like going around to everyone last week being like, did you know this about cranberries? Yeah, you sound like you're becoming a cranberry stan. Do you know what the top five selling cranberry products in 2022 were? I do not. Please enlighten me. Okay.

Number one. I'm not going to do it in order, actually, because I want to save the best for last. 64-ounce cranberry juice cocktail. Okay? 100% cranberry juice is also on the list. Okay. 64-ounce cranberry grape juice. Cranberry grape is a fan favorite.

I would not have guessed that. Three liters cranberry juice cocktail. So the three liters and the 64-ounce both make it on the list. And then also on the list, 14-ounce jellied cranberry sauce, that good old classic. And this week is huge for that good old classic canned cranberry sauce. They really do appear on the table of like every home in America during Thanksgiving. It's like, you know, this thing like pops up out of nowhere once a year and it has this place in all of our hearts and, you know, maybe some of our stomachs. The company that invented it is Ocean Spray.

our stomachs. The company that invented it is Ocean Spray. It does $2 billion in cranberry sales a year, and it produces 65% of the cranberries in the world. The ingredients to its success include 700 families, a major berry panic, and some very hip grandmas. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, November 22nd. Coming up on the show, the company behind your can of cranberry sauce. We'll see you next time. You grab a can and take a sip. Suddenly you're on a fresh adventure, becoming the hero of your own night. Unapologetically full-flavored cocktails with a 13% punch. Seagram 13.

Dare to make your own luck. Must be legal drinking age. Please enjoy responsibly. Available at the LCBO. Sean Cutts is a cranberry farmer in the Pine Barrens of southern New Jersey. He worked there for his father when he was younger, and now he works with his own kids. Do you have a favorite time of the season? To me, October is the most beautiful month of the year.

It's fall. The weather is beautiful. The leaves are starting to turn. And then when you have a cranberry bog that's just covered in crimson fruit floating on top, there's really not much more beautiful than that, in my opinion. Sean's family have been cranberry farmers since 1901. They work pretty much all year long, from winter to fall. In the wintertime, the bogs are flooded to protect the cranberry vines. And then in April, we drain the flood. And the cranberries stay dry for the rest of the growing season until we harvest.

What's the Thanksgiving season like for you? Well, the Thanksgiving thing, we're kind of winding down from the harvest. We've got a few little fall jobs that we do, cleaning our ditches and such, but we're pretty much in recovery mode. For our family, harvest is seven days a week, and it's night and day for a month straight. And so by the end, we're pretty wiped out. Hopefully, we're still all talking to each other and whatnot. But the month of November is a good time for us to rest a little bit and gather together as a family and be thankful for our blessings. Sean's farm is part of Ocean Spray, which works a little differently than your average food conglomerate. So Ocean Spray is a cooperative, which means that it is owned by the growers.

And in the case of Ocean Spray, the growers are about 700 family farms scattered across North America. Those families are the company's shareholders. 14 growers make up the board of directors, and they hire the executives that run the business. Here's our colleague, Benigan. So I think the best way to think about it is that these people grow the cranberries, and then they hire people to grow the business. And what that really means is that in a cooperative,

every cent of profits goes back to the farmers. Ocean Spray has been set up this way almost from the beginning. How did Ocean Spray get started? Ocean Spray was started in 1930 by three farmers who Ocean Spray today calls three maverick farmers. One of them felt this frustration, which is that there was really no way to sell cranberries year-round. He ends up coming up with this sort of brilliant invention, which is cranberry sauce in a can. And it turns out the market for canned products was so large and the competition among cranberry farmers was so fierce that a few of them decided that they were sick of competing with each other

and they would band together. And so 1930 brings the Ocean Spray Cooperative. And that was really the beginning of this company that dominates the market for Thanksgiving cranberries today. You can see why the families, these farmers, would prefer this model. But you mentioned that, you know, this company and these families, as a result, are sort of responsible for growing a majority of the cranberries in the world. How is that not a monopoly? The reason why Ocean Spray is able to exist and the reason why there are many agricultural cooperatives from the Dairy Farmers of America to Lando Lakes to Blue Diamond Almonds. The reason they're able to operate is because of

a law passed in 1922, which essentially exempts these agricultural cooperatives from monopoly and antitrust practices. For the first 30 years, Ocean Spray's business was pretty successful. But it relied almost entirely on one day. Thanksgiving. I'm ready to talk about the Great Cranberry Scare of 1959. What was that? What happened? Okay, the Great Cranberry Scare of 1959. This topic that, you know, should have inspired, like, you know, competing Netflix and Hulu docs by now, and I'm shocked that it hasn't.

1959, Thanksgiving is still the cash cow for ocean spray. One day in 1959, early November, federal government finds that a batch of cranberries in Oregon and Washington has trace amounts of an herbicide linked to cancer in lab rats. So now, you know, suddenly, instead of looking at cranberries and seeing all the health benefits, people are walking down grocery market aisles and seeing cancer when they think of cranberries, right? The U.S. Department of Agriculture reported fresh cranberry sales for 1959 that year as zero dollars, a big fat zero. Like, that is how huge of an impact the Great Cranberry Scare had on Ocean Spray's entire business. And it was really a wake-up call for this business cooperative. What they realized was that they could no longer be so reliant on selling one product for a single day of the year. And in order to survive, it would have to innovate, it would have to develop new products,

and it would have to diversify beyond jellied cranberry sauce in a can for Thanksgiving. And so what did they wind up inventing? A lot of stuff. up inventing? A lot of stuff. Basically, every use of cranberry has been invented since the great cranberry scare of 1959. So in the early 1960s, they bring out their first juice blend. Ocean spray cranapple. Not too sweet, not too tart. With lots of vitamins. In the early 1980s, ocean spray is the one leading the charge on bringing juice boxes into our stores. They proudly present the package of the future. Today, the paper bottle with a cranberry apple drink.

In the 1990s, they come out with possibly the most lucrative innovation in the history of the cranberry industry, which is dried and sweetened cranberries that we know as craisins. Craisins, the sweetest way to eat a cranberry. Ocean Spray was figuring out how to capture a bigger market. But for its growers, a major decision was on the horizon. That's next. With Uber Reserve,

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At participating Tim's restaurants in Canada for a limited time. It's time for Tim's. In 2004, the giant food corporation PepsiCo offered to buy a 50% stake in Ocean Spray. That would mean a big payday for the growers, but a potentially huge change in how the company worked. The co-op put it to a vote. Sean Cutts, the cranberry farmer, was just out of college at the time. Those of us who have future generations that we envision coming into the business in the future, we're generally in favor of keeping the brand as a co-op, simply because even though we would have gotten a nice payout up front, long-term, that's probably not what was best for our farms. And one of the great things about the cooperative for us farmers is,

because we own it, we keep all the profits. But there was something attractive about the offer from PepsiCo. Here's Ben. A lot of the farmers were actually quite interested in this proposal because they wanted to broaden product distribution and just generally have the scale that it's really hard for like 700 cranberry farmers to accomplish on their own. It was an existential vote for the future of this company,

of this cooperative that had such an interesting past. And so the vote was a 52-48 split in favor of remaining farmer-owned and independent. But really close, about as close as you can get. And I think it took a long time for the cooperative to recover from that split. Since that vote, Ocean Spray has stuck with the co-op model, though it did eventually partner with PepsiCo for marketing. Today, Ben says Ocean Spray is focused on a future full of cranberries.

In recent months alone, they have unveiled a zero-sugar juice line. They have a deal with Hershey's to produce chocolate-dipped and cherry-infused craisins. They have a deal with Absolute for ready-to-drink cranberry vodka. Vodka cranberry. And it sounds like, as you say, the ocean spray has really expanded beyond Thanksgiving. But how much of their business still relies on the holiday? They've never relied on the holiday less than they do today. So, you know, what percent of the business is Thanksgiving?

It's really hard to say. It's a private company. They don't have to reveal financials. You know, I talked to one cranberry farmer who said that when he was growing up, Thanksgiving and Christmas was like 100% of their business. And today, he said that it's like 5% of where their crop goes. So it is no longer about selling one product on one day. It is about selling a whole bunch of cranberry products every day of the calendar. Do they still see it as the most important day in the business, though? They still call it their Super Bowl, yes. It used to be like the entire football season wrapped up into one day, and now it's just one day. And so are there any threats

on the horizon? Any challenges? You know, when I asked Tom Hayes, the CEO of the company, he said, you know, one of the great things about Ocean Spray is that it's like a company that thinks in family generations and not financial quarters, right? The average farm in the Ocean Spray cooperative has been passed down between two and three generations. But, you know, there are some drawbacks. Like, you know, if they want to go out and acquire a company, they don't necessarily

have the access to capital that they would if they were a public company or if they had shareholders who were not cranberry farmers, right? Because they do have that one product, like you said. But, like, said. But it is interesting to think about how that might limit innovation, which sounds like is crucial to their survival in the next century. For sure. I mean, you know, one of the cranberry farmers told me, like, we are a single threat company. I feel like every company these days is like, we're a double threat, we're a triple threat. This is a company that does one thing and it has to keep finding ways to do that one thing. Product innovation is one part of that.

Reaching more consumers is another. One way that Ocean Spray is trying to get younger or at least appeal to younger consumers is through its marketing and, you know, being a little bit more edgy in the way that it presents these very old products. You know, Ocean Spray had this viral marketing moment in 2020 where a guy, his car broke down on the way to work and he filmed himself skateboarding to work, singing Fleetwood Mac. That Fleetwood Mac song. Where do you go? Can you say we want your freedom? Yeah, dreams while swinging from a bottle of ocean spray. I remember that.

Yeah, a lot of people do. It turns out this TikTok went so bananas that they had this improbable sales bump that they saw at the company level, and they took advantage of this marketing opportunity. They were like surprisingly nimble for a 90-year-old company at the time. They sent the guy a cranberry-colored pickup truck filled with Ocean Spray juice. The CEO of the company jumped on a skateboard himself and filmed a copycat video to post on TikTok where

he's drinking ocean spray and discovers how hard it is to skateboard while trying to drink from an open container of ocean spray. So, ocean spray is using social to, like, carve out a spot at the kids' table. But in a lot of ways, we still think of cranberry sauce as old-fashioned. Like, it makes you think of Jell-O and your grandparents. So what has the company's strategy been this year? One way they're trying to get younger is by getting a whole lot older. So their marketing campaign for this year's Thanksgiving holiday is hiring two grandfluencers.

Grandfluencers. Influencers who are grandmothers. Grandmothers. Okay. Food not allowed at my funeral. Homemade cranberry sauce. If you bring it in, I will haunt you. If you can't tell, I'm

team homemade cranberry sauce. Grandfluencers. And their whole campaign this year is are you team homemade or team canned, right? Ocean Spray wins either way, right? Like, if you're team canned, you're buying Ocean Spray canned cranberry sauce. And if you're team homemade,

you're buying Ocean Spray's cranberries to make that homemade sauce. So, Ben, for Thanksgiving... Don't ask. Don't do it. Don't do it. I gotta. I gotta. We can't not. Are you team canned or are you team homemade?

You know, this is so embarrassing, but like, I don't even look at the cranberry sauce on our Thanksgiving table. And I knew you were going to ask that question. And I texted my sister before coming on saying, what do we even have at Thanksgiving? And she said, mom always makes homemade cranberry sauce. Your whole life, Ben, your mom has made homemade cranberry sauce. My mom is going to kill me when she hears this. This year, in the spirit of Thanksgiving and cranberry farmers everywhere,

I will try the cranberry sauce on our table. That's all for today, Wednesday, November 22nd The Journal is a co-production of Spotify and The Wall Street Journal The show is made by Annie Baxter, Kylan Burtz, Catherine Brewer Maria Byrne, Victoria Dominguez Pia Gadkari, Rachel Humphries

Ryan Knutson, Matt Kwong Kate Leinbaugh, Annie Minoff Laura Morris, Enrique Perez de la Rosa Our engineers are Our theme music is by So Wiley. Additional music this week from Our engineers are Griffin Tanner, Nathan Singapak, and Peter Leonard. Our theme music is by So Wiley. Additional music this week from Peter Leonard, Bobby Lord, Emma Munger, Nathan Singapak, and Blue Dot Sessions. Fact-checking this week by Melvis Acosta-Cresostomo and Sophie Hurwitz. Thanks for listening, and happy Thanksgiving. We'll be back with a new episode on Monday.

See you then.