Paramount Citrus is stepping up in the grapefruit category, with plans to go national with an advertising program promoting its Texas-sourced Wonderful Sweet Scarletts.

During the Produce Marketing Association (PMA) Fresh Summit in Anaheim, Paramount's president David Krause told www.freshfruitportal.com the budget for the deal would be somewhere in the realm of US$3 million.

"We're betting big on grapefruit. The reason why is that it's a high quality product," he said.

"We looked at the stats and we think that the consumer has just lost track of grapefruit and it's not in their regular diet, but if we get them to trial that quality product out of Texas we can get them to repeat buy."

When asked why the category had fallen off the radar somewhat, he said it was likely because the grapefruit business was fragmented with "nobody promoting it to the consumer".

"We're focused mainly on the domestic market as we think that's where we really need to strengthen, but we'll look for opportunities to expand the export market as well," he added.

The initiative promises to supplement an ambitious US$100 million marketing investment scheme in the mandarin category over five years - now in its second year - for the brand Wonderful Halos.

"We're in a clip of about 20% year-on-year growth because of new, young plantings that are just coming into production," Krause said of the mandarin category.

"It'll be US$20 million [in marketing] this coming season. We had great success in the first year...we're creating new TV spots, and we're going to hit harder and earlier.

Paramount Citrus president David Krause

"The crop is coming off earlier this year so it's perfect that our advertising program is launching earlier."

When asked about the state of competition with other kid-friendly easy peeler brands, Krause said Paramount just 'did not see it'.

"We've established a leadership position in such a short space of time with the brand. Yes, there is a competitive nature to the product but no one is advertising to the consumer in the way that the Halos program is.

"Others are doing things but they’re not doing what we’re doing to talk to the consumer about why they should be buying the product.

"All will benefit. We'll lift the tide for all mandarin growers, but we're such a big part of it that we think the majority of it will come back to the Halos brand."

In an interview with www.freshfruitportal.com, Sun Pacific vice president of marketing Victoria Nuevo-Celeste begged to differ with Krause about the claim, but agreed both companies could grow the pie in the category.

Krause also highlighted the strategic importance of deals over the last 16 months involving the acquisition of Grimmway Farms' citrus assets and a partnership with Mulholland Citrus to market Halos.

"In the case of Grimmway it was an opportunity where they saw it as non-core - their primary business is carrots - and it's very core for us. An additional aggregation of share for our program, optimization of our packing and assets of that nature, was a perfect fit for our program...we want to be a one-stop citrus source for the U.S. market.

"Mulholland was a very strategic partnership we developed where we can see that by more people aggregating behind the brand, we’re going to drive advertising, marketing and consumption.

"It's a perfect alignment – they’re good quality growers, they see the power of our marketing capabilities, and that’s why that’s such a strategic alignment."

Oranges, water and the Nadorcotts vs. Tango debate

While Paramount is raising its production of mandarins and its grapefruit sourcing, Krause expected the upcoming commodity crops like Navel oranges and others would be down due to the effects of drought.

"For the estimate that the industry has, there’s a lot of debate about whether that number is right," he said, referring to recent forecasts put out last month by the U.S. National Agricultural Statistics Service (NASS).

"We tend to agree with other industry groups that it's overstated; not so much because of the number of pieces set per tree, but the number of acres that the estimate is based on, because growers like ourselves make the decision to take acreage out of production to save the water and allocate the water to other crops.

"But we think the acreage number is misstated as they don't get round to surveying all the industry. It's very difficult."

He added that the need to save water had led to Paramount pulling out trees from some acreage that would have otherwise been taken out in three years' time to be replaced with mandarins.

"Rather than wait, we decided to take it out now to save water because we're in a situation of drought."

The executive said Paramount had been actively involved with in water legislation issues, but he would have liked to see more engagement from the California Government with industry.

"We would have liked to be more involved and have a bigger say in it, with the lawmakers engaging industry a little bit more so that we could create more comprehensive programs that I think are workable, and alleviate what I think will be a lot of downstream litigation where these conflicts exist," he said.

On the issue of intellectual property disputes in South Africa and Spain between the owners of Nadorcott mandarins and the licensees of Tango mandarins, Krause did not believe any precedents could be set for these variety heavyweights in the U.S.

"U.S. patent law protection says that if it's in the public domain for too long and available, then they can't backtrack from that," he said.

"I'm not sure if I agree that they'll be able to do something here in the U.S. In other markets I think maybe they can as it's a newer release.

"It's [Tango] probably almost half of our mandarin portion in the second half of the season, it’s great because it’s seedless without having to take certain cultural practices."

Chinese re-opening

While the Chinese market had been closed Paramount Citrus was exporting fruit to Hong Kong anyway, but Krause said the situation had been "difficult to watch" until the market re-opened just over two months ago.

"Unfortunately, we don’t think it's as much about the science as it should have been – more and more there are challenges about imports and exports out of countries relative to political issues. One country wants access to a market and if they don’t get what they want, they in turn sort of trump up phytosanitary issues," he said.

"We think that’s a little bit the case here. We're glad to be back in China...and we’re happy to comply with any protocol to make them comfortable. It's going to be great for the industry to get back to that market."

However, he said probably only 10% of Paramount's exports traditionally went to China.

"We're not a really strong player in that market like some others are – we have a stronger play in Japan and Korea, because of the breadth of other products that we might ship.

"But it's important for the industry because that volume going there means it's not going somewhere else."

Outside the main export destination of the Pacific Rim, Paramount also ships to Europe buy Krause said the U.S. would continue to be the main focus.

"You have a very fragmented supply, and the only way you can spend money like we are to build these consumer brands is where you have concentration of supply.

"That’s why the U.S. market is so important for us – we love the growth that is happening in export markets, it’s very important to us in the overall category, but we can’t do there what we can do in the U.S. market."

www.freshfruitportal.com