Agriculture

Raisin industry moves from alleged death threats to blossoming unity in a few short months

Harry Overly, is the new CEO and president of Sun-Maid

Chicago transplant Harry Overly, the new CEO and president of Sun-Maid, brings new leadership to the iconic raisin brand founded in 1912.
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Chicago transplant Harry Overly, the new CEO and president of Sun-Maid, brings new leadership to the iconic raisin brand founded in 1912.

Millennials just weren’t eating raisins. So Sun-Maid, the century-old company with the iconic little red raisin boxes, hired someone to convince them that they should.

At 38, Harry Overly was decades younger than the tenured raisin man he replaced as the chief executive of Sun-Maid. But he had experience – as the North American head of the company that makes Bertolli olive oil, and in marketing roles at Wrigley and other food companies. He seemed suited to the job.

When he came west, though, he was taken aback by the level of animosity he encountered in the American raisin industry.

Three months into his tenure, which began on Halloween 2017, Overly attended a meeting of some raisin industry players in the back room of a restaurant in Fresno. This introduction left him shaken. “I’m not saying this lightly, because – you can read about this in different spots – people kind of think there’s this raisin mafia out there and that kind of stuff,” Overly said.

He said that he asked the group how they thought they could work together. “And the answer I got back was nothing short of collusion,” he said. While no one was proposing they take action, the anti-competitive tactics discussed in that back room, he said, were “completely illegal.”

As he tried to make changes in the raisin industry and at his own company, Overly said he faced intimidation, harassing phone calls and multiple death threats. With his spouse in the last trimester of a pregnancy, Overly found a note shoved into a crack of his front door that warned: “you can’t run.”

Overly installed a security system at his house in Fresno. At Sun-Maid headquarters, he and other executives discussed the necessity of active shooter trainings. As rumors about Overly’s motives swirled among raisin farmers, raisin packers and raisin bureaucrats, he became increasingly concerned about the safety of the raisins themselves. He feared that the current crop, drying from grapes to a wrinkly, shrunken state in bins on the Sun-Maid campus, would be set ablaze. It was their destruction by “fire, specifically,” that worried him, he said.

“What I figured out fast was that this was not an industry which was interested in figuring out how you grow the size of the pie,” he said. “It is one where they figure out how they just steal different slices of the pie from each other.”

Dancing Raisins and Supreme Court

It makes sense that Sun-Maid and its competitors in the raisin sector, all working and living in the same water-hungry central San Joaquin Valley, might not be the best of friends. But the American raisin industry, which is estimated to be worth about $500 million, is particularly fractious. Other groups of farmers also band together to set prices; while raisin growers do that, they do not tend to cooperate on much else. That includes a reluctance to work together on raisin advertising, which is especially strange given that the raisin industry commissioned and paid for one of the world’s most recognizable advertising campaigns.

The first California Dancing Raisins commercial debuted on television in fall 1986. You may recall the ad with their version of Marvin Gaye’s “I Heard It Through the Grapevine.” These anthropomorphic raisins, conceived as an R&B group in the Motown mold, were some of the first animated characters created with Claymation.

Raisin sales spiked. But success bred discontent. Even as Sun-Maid benefited disproportionately from the ads as the biggest brand in town, Barry Kriebel, then the company’s president, worked to limit his competitors from profiting in the same manner. He was dead set on restricting the way that the dancing raisin was displayed on the packaging of other brands – and Sun-Maid, which now represents about 40 percent of the industry, was big enough to put the pressure on.

Barry Kriebel “and I fought like cats and dogs,” said Kalem Barserian, 81, the leader of the Raisin Bargaining Association, which represents raisin farmers as they negotiate prices with raisin processors, including Sun-Maid. (Barserian has known five Sun-Maid chiefs – and has a long tenure as one of the most formidable men in Fresno.)

Kriebel prevailed, poisoning good feeling in the industry about the Dancing Raisins. In 1994, a majority of raisin packers petitioned to terminate the funding, halting the commercials. (Kriebel, who now works for John Vidovich, a major grower of pomegranates, pistachios, oranges and Sun-Maid raisins, declined to discuss this history.)

Another major episode that helped breed the mistrust that still festers in the raisin community culminated in a 2015 Supreme Court case that nearly leveled Fresno.

horne
Fresno County raisin grower Marvin Horne and other dissident California raisin producers scored a victory in 2015 when a divided Supreme Court said a program that compels some raisins to be held back in a reserve is subject to the just compensation commands of the Fifth Amendment. Associated Press

Marvin Horne, a small, sour man who had married into a raisin-growing family, was known as laconic and stubborn and nothing made him angrier than having to set aside some of his crop every year for the raisin reserve.

Raisin farming (like most kinds of farming) is risky. So, starting in the mid-20th century, raisin farmers began committing a significant share of their crop to a communal supply. This surplus was used to stabilize trade. (Some years, like in 2002, the year that sent Horne through the roof, growers were compelled to turn over almost half their crop.) Though raisin farmers do get paid for selling this supply, the money comes later, if at all.

So in 2002, Horne and his spouse, Laura, stopped sharing, and sued the government for taking their raisins without fairly compensating them. In 2015, the Supreme Court ruled in Horne’s favor, saying that the raisin reserve, in practice, constituted governmental appropriation of private property – illegal under the Fifth Amendment.

To Mike Mikaelian, a third-generation raisin farmer, that was a fundamental misunderstanding, and a huge blow to the industry. “When you first hear this story, you’re always thinking, ‘Oh that government screwing the poor farmers,’ all right?” he said. “But what happened was it was the farmers that made these rules. All the government does is OK it or don’t OK it.”

And through these years, demand for raisins has fallen. The number of acres given over to the Thompson seedless grape, traditionally grown for raisins, has been halved from 2000 to 2019. The U.S. used to provide 50% of the global raisin market. Now it’s about 20%. Turkey exports more raisins than America does. China, Iran and South Africa have become more competitive in this space.

Horne, who will turn 74 this year, knows he is not well-liked in raisin town, but he stands by his decision. “Those guys are still living in the old paradigm,” he said.

As times got bad, representatives for growers felt they had no choice but to push prices as high as possible.

Looking for new consumers

Overly, on coming to Sun-Maid, had no intention of entering a major raisin pricing fray. He wanted to jump feet first into the marketing work he’d been hired to do. He wanted to talk about the future, which, for Sun-Maid, was an ad campaign evoking the past.

The first Sun-Maid spot that has run in more than a decade features overjoyed children thrilled to be eating California raisins. The ads (which test well with millennials!) are predicated on nostalgia — on people’s memories of raisins as the first solid food their parents gave them.

“There’s no other snack brand that has the emotional equity that Sun-Maid has,” Overly said, with pride. The trick now is beating out all the other snack foods in the booming multibillion-dollar snack market. “Thirty years ago when Sun-Maid was a prominent food brand, the competition for share of stomach was much less, particularly in the snacking world,” he said.

But his plan for raisin ascension did also include the drastic step of lowering the baseline price for raisins, even if that meant challenging the Raisin Bargaining Association.

He warned the Sun-Maid board as early as spring 2018 of that possibility. In September, negotiations with the association, and with Barserian, started in earnest.

In 2017, raisins were damaged by extreme heat and in September, rain prevented them from drying properly in their vulnerable, wooden bins. This meant fewer raisins, which meant that raisins were naturally going to be more expensive.

But in 2018, the crop recovered. And still Barserian wanted to raise the base price to a record high – more than $300 higher per ton than the previous year with the disaster crop, and about twice as much as the year prior.

The negotiations between Sun-Maid and the RBA went poorly. Nothing convinced Overly he should accept a second bid that lowered the price by $100 and committed to a two-year price deal.

“I don’t think you guys are understanding the supply-and-demand dynamics here,” the Sun-Maid chief said he thought. So, on Oct. 22, he pulled Sun-Maid out of the RBA.

Showdown at the Expo

Well before the negotiations, Overly and Barserian had agreed to participate in a panel at the Grape, Nut & Tree Fruit Expo on Nov. 13 at the Fresno Fairgrounds. Each would present his view of the state of the raisin industry, and answer questions.

“At the time, it was like ‘Oh, OK, no problem,’” Overly said. But by the time of the event, it was “‘Oh my God, you’ve got the head of the RBA and the head of Sun-Maid are going to go head-to-head on a stage in front of 500 to 1,000 people.’”

“I think everybody was nervous,” said Matthew Malcolm, 27, the assistant editor of American Vineyard magazine, whose father owns the agricultural publisher that organized the event. “The two sides were nervous about meeting up in the first place. But it was something that they needed to do. It’s like going to get your flu shot.”

As Overly had anticipated, the room that day was filled with independent growers and RBA allies. There were only about 20 Sun-Maid people in attendance, including Steve Kister, Sun-Maid’s interim chairman, and Rick Stark, its grower relations manager.

Barserian spoke first. He spoke of the uncertainty of the future, of global competition and of the fallowing of raisin vineyards across the Central Valley. He thanked the non-Sun-Maid packers who had signed with him, who were dedicated to getting farmers the best price. He said that the number of bearing acres would continue to drop.

“Many of us are getting old,” he said.

Malcolm later wrote of the event, “The audience was very attentive.”

Then Overly took the stage.

He spent about 25 minutes talking about the lasting quality of the California raisin and the need to defend its place in the global market. He talked about raising prices sustainably, and growing demand for the product. He said that it was market forces that compelled Sun-Maid’s decision to leave the RBA.

And he called for an end to the turmoil in raisin society: “We need to spend more time focusing on growing the pie than fighting over our piece of the pie within this industry,” he said. “This fighting needs to stop.”

Kister said, “You could have heard a pin drop in that room.”

He and the other Sun-Maid people were proud of Overly. But they had no idea what the response to his presentation would be. Barserian was brought back to the stage. As two of the most powerful men in the industry, one less than half the other’s age, stood feet away from each other, the forum was opened to audience questions.

Jim Phillips stood up. He sells his raisins to Ray Moles of Sun Valley Raisins, and is not a Sun-Maid grower.

Phillips started his speech by saying that he had never been a Sun-Maid guy. But he agreed with Sun-Maid’s position. It was better to band together than stand apart. He turned to Barserian, the raisin titan. “Kalem, you don’t have a plan,” he said.

Grower after grower stood up and agreed. Overly seemed to have convinced the crowd.

Malcolm would not share the recordings he took of the session, citing how rough the language was in the room. But, he wrote in his article: “Many growers left the meeting with their blood pumping fast in excitement for the industry to finally get together and trigger some much needed changes.”

Overly felt vindicated. “This was the first time that I could stand up in front of several hundred people and say, ‘No, these are the facts,’” he said.

The future of raisin unity

Tensions have, for now, eased. Overly said that if he were to rate the strain of the autumn as a 10, he’s now back down to one or two at most. This month, he was part of a delegation that traveled to Washington to give the federal government a sense of what’s going on in raisin world – a delegation Barserian helped to put together.

Before taking the trip, Overly was excited; he thought it would be easier to speak with agriculture officials now that the industry was more united. He seems to have been right. “It went very well,” he said after the trip. “The overwhelming response we got was that it was very unusual for them to see the raisin industry come as one group. I’m not kidding. That was said in three or four of the 10 meetings we had that day.”

Barserian didn’t travel with the group, though he loves Washington. He took his first trip there in 1970 under his mentor, Sox Setrakian, and almost left the raisin industry in the late 1980s to become a lobbyist. But he didn’t return in April because, he explained, he was trying to pass the baton.

“I want us to be successful,” he said. “We’re in a bad position right now for a host of reasons. I think they all could be corrected. It isn’t anything I haven’t seen more than once or twice or 10 times. We’re scrappers, and we’re survivors, and we just have to work through it.”

At the RBA’s annual meeting in March, he said that he was often mad at Overly but that he would get over it. In an interview later in the month, he grew animated discussing Overly occasionally, but also insisted that he was not angry at anyone.

“I need Harry to be the frontman in Washington,” he said.

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