Dole's out, Chiquita's in at area Kroger groceries
Dayton Business Journal - by Rajiv Sekhri News Contributor
Chiquita bananas have slipped back into area Kroger stores, four years after the grocer bumped the Cincinnati-based fruit firm from its 96 southwestern Ohio outlets.
Kroger Co., which plans to buy 30 million pounds of bananas annually from Chiquita Brands International Inc. for its Greater Cincinnati and Dayton-area stores, stopped buying the fruit from the company in early 1995, citing quality problems.
Kroger's 1,400 stores around the country, not including the Fred Meyer Inc. locations it is acquiring, vary in their banana suppliers, with some carrying Chiquita while others carry Dole or Del Monte bananas, company officials said. An exact breakdown was not available.
An official for Kroger's Cincinnati-Dayton division office, who requested anonymity, said Chiquita "has made improvements in production on their farms in Central America (and) the shipping of the product" in the past four years, while also being more flexible on pricing. "We (feel) very comfortable in once again being able to offer Chiquita bananas."
From 1995 until now, Kroger's local division bought bananas from Dole Fruit Co., Chiquita's largest competitor.
Chiquita officials say they are pleased to have their bananas back on local Kroger shelves. However, they maintain that their product has always been quality.
"State-of-the-art transportation and quality programs from the farms to the individual grocery stores (make) a discernible difference in the product that the consumer purchases," said Joe Hagin, vice president of corporate affairs at Chiquita. "We're proud of the many accomplishments our company has made in the area."
Chiquita has weathered tough times since 1992, when a restrictive quota system was implemented for European Union banana imports. From 1992 to 1997, the company has lost more than $350 million.
Analysts say the Kroger switch, which took effect Jan. 11, doesn't mean much in terms of revenue growth for Chiquita. Jeffrey Kanter, an analyst with Prudential Securities in New York, said 30 million pounds translates to about $6.8 million in revenue for Chiquita, or less than 1 percent of its total sales.
Chiquita, which produces and sells bananas and other fresh and processed food, generated more than $2.4 billion in sales in 1997.
However, analysts agree that the renewed relationship between the two Cincinnati-based companies highlights the problems quality issues can create in the fresh food industry.
"From the consumer's standpoint, freshness is an important consideration," said Michael Schroeder, an analyst with Naples, Fla.-based Wasmer, Schroeder & Co.
The Kroger official said his company's decision to sever ties with Chiquita in 1995 was also based on the fact that Dole was willing to offer bananas at a discount more often than Chiquita was.
But now, Chiquita plans to offer five to six promotions a year, he said, which is more than Dole offered.
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