Sun-Maid Growers, the world’s largest marketer of raisins, has rejected a proposal by a grower group to sell the 2018 crop for a record-setting price.
Harry Overly, Sun-Maid’s president, said Monday that the offer of $2,150 a ton by the Raisin Bargaining Association was too high, not sustainable and unrealistic. As a result, he pulled Sun-Maid out of the RBA, a Fresno-based grower group that negotiates the price for each year’s raisin crop.
Last year, the industry’s 12 packers agreed to a price of $1,800 a ton. But this year, Sun-Maid was the only packer to balk at $2,150 a ton, the highest price ever for San Joaquin Valley raisins. Growers have said the higher price is necessary to make up for the rising cost of business and to keep growers from abandoning their vineyards in favor of higher-value crops, like almonds.
Overly, a relative newcomer to the raisin industry, said hiking the price of the 2018 crop by 20 percent does not make economic sense and could hurt the industry’s ability to compete against lower-priced imports.
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“We need to stabilize the price,” Overly said. “We have seen this cycle before, we push the price too high and there is a correction. We need to grow the category and increase consumption, then we could justify the price increase.”
Overly said the industry needs to be concerned about a larger-than-expected global supply of raisins and weak demand. Turkey, one of the world’s largest raisin growers, could more than double its crop, putting downward pressure on pricing.
“And the idea of going up 20 points in price is just not sustainable,” Overly said.
Kalem Barserian, president of the RBA and a veteran of the industry, said that while he appreciates Overly’s concern about pricing, it isn’t too high for the market. He also said Overly should be more concerned about getting his growers a good price for their raisins.
“As an outsider he thinks he knows what is best for Sun-Maid,” Barserian said. “But his growers are not going to be very happy if they don’t get what the RBA growers get.”
Since arriving at Sun-Maid last year, Overly has laid out a strategy of redefining Sun-Maid’s approach to selling raisins, including launching new products and rekindling consumers’ fondness for the iconic brand. Overly, whose background is in marketing, is pushing the venerable Sun-Maid into new territory by competing head-on with other snack products.
Before joining Sun-Maid, Overly was the CEO of the North American division for Deoleo, one of the largest sellers of olive oil brands in the world, including Bertolli olive oil. Before that he was in Chicago as the chief customer officer of TreeHouse Foods, the largest private-label food maker in the United States.