FRESH GROWTH

STEPHEN DOWDELL

CORAL GABLES, Fla. -- Fresh Del Monte here is on a path to becoming a broader-line supplier to the supermarket trade, and "a real player in the market" in the next several years, according to its chairman and chief executive officer, Mohammad Abu-Ghazaleh.

The supplier's business currently is based on three primary commodities: bananas, pineapples and melons. But expansion beyond those three will help the company grow in revenues, influence and innovation, Abu-Ghazaleh said in an exclusive interview with SN.

If Abu-Ghazaleh has his way, the Del Monte of a few years from now will market as many as 15 products, each offering added value analogous to the company's biggest current success story, the Del Monte Gold fresh pineapple.

The key to the Del Monte Gold story, he said, is the same product and marketing formula that should guide the company on a straightforward growth course: making sure the product offers good taste, but just as important, consistently good taste and eating quality day after day, intimately linked to and supporting the brand name Del Monte every step of the way.

That clear sense of purpose is a far cry from Del Monte's darker days, when it suffered from the distractions of a succession of buyouts and takeovers in the 80s and trouble-plagued ownership for much of the 1990s. In 1996, the Abu-Ghazaleh family's holding company IAT assumed control, lending the expertise of its Chilean subsidiary, the large fruit exporter United Trade Co., to getting Del Monte back on track.

Now, having gone public this past October and with financial health to buoy it, Fresh Del Monte is poised for action. Abu-Ghazaleh shared some of his plans in an interview at the company's headquarters here.

SN: What do you think will stimulate growth near-term in the produce business, and how will that be reflected in what Del Monte does in the next few years?

ABU-GHAZALEH: For one, world population is increasing, and for our purposes that is important in markets such as North America, in Western Europe, certain parts of the Far East, South America. This is taking a long-term view, say, over the next 10 or 15 years, not the next three.

No. 2, per capita consumption of fruits and vegetables will increase. People are becoming more conscious about health.

However, this company cannot just depend on three items as its base business, and that is why we are looking to include several items in our mix during the next year or so from now.

Of course, I cannot name those items, but I can tell you they are in the fresh fruit and produce sector.

Fresh Del Monte is really just at the beginning of what it can do. I can say we will continue to be a fruit and produce marketer, but that does not preclude us from exploring added-value products in that sector. We will certainly look at adding value to our products, including areas that will still be considered produce, but not necessarily fresh.

SN: What about the added value that branding can bring to a product, and to your company's ability to keep growing?

ABU-GHAZALEH: I believe in terms of produce the Del Monte name is the most well-recognized name in the industry, with all due respect to the competition. And that goes beyond fresh. We benefit from the tradition of Del Monte as a high-quality canned fruit brand.

That is why wherever we put it, on any product that is fresh, I believe it will have tremendous leverage and impact. That is very clear in the pineapple market -- and in our melons, the branded melons we are bringing into the United States, right now we are the biggest off-shore supplier, and we are the biggest in the United States as a producer, in share and in recognition.

If I put the Del Monte name on tomatoes or carrots, the consumer will not have to think twice about what that name represents. When you look at shoppers in supermarkets examine some other brands that are not as well-recognized, you will see them look at the package, and then move on to another branded package, and you can see the hesitation. They take a few minutes; but a strong brand makes the decision easier.

SN: What has been your biggest product success story?

ABU-GHAZALEH: Del Monte Gold is the biggest. This will continue as a success story. However, we will have other successes in the near future that could be just as strong.

SN: Will they follow the same pattern as Del Monte Gold, a product that offers added value, in taste?

ABU-GHAZALEH: Yes, the value is in taste. It is very important to note that Del Monte Gold is a consistently very good pineapple. If you go to the supermarket, every day you will receive the same type of fruit you bought the day before, or a week or a year ago. You will not be surprised when you cut into this pineapple.

SN: Does the produce industry at large have to head in that direction?

ABU-GHAZALEH: It is extremely important. With fruit, it is going to be crucial to make sure that for the consumer, the product is the same day in and day out, that there is not much variation. That is another secret for this business.

SN: Is there a product-related challenge, an area you want to concentrate on for specific improvements going forward?

ABU-GHAZALEH: Every day we are trying to improve our bananas in terms of quality and presentation to the consumer. Bananas are a sensitive product, easily bruised, easily affected by temperature.

We cannot get perfection, but we are trying to get to the upper end of this scale; again, to make sure we deliver a consistent level of quality to the consumer.

One of the problems is that sometimes at the supermarket you find green bananas, you find yellowish, you find overripe bananas. We would like to go to the supermarket with a consistent box of bananas that will more or less always be the same. That is why we are investing a lot into infrastructure.

SN: How would you characterize the company's financial situation right now?

ABU-GHAZALEH: I believe we are very solid now, financially. Within one year, Del Monte has become the healthiest, in terms of debt to equity, out of the major multinationals. We look forward to continual improvements. And that makes us a better operator to do business with for retailers. Retailers are looking for supply 365 days a year, consistent quality, more stable pricing.

Of course, right now Fresh Del Monte is doing that for only three items. But very soon, Del Monte will be delivering the same service for other items within the same line: consistency, supply, 12 months a year.

SN: How might Fresh Del Monte be different three or five years from now?

ABU-GHAZALEH: It will be a much bigger company than what you see today. You will see probably 15 products added to the list. It will be bigger in terms of revenue. It will be a real player in the market. We have such a tremendous brand, and it needs to be leveraged effectively.

We have excellent relationships with our supermarket customers and the trade in general. We would like to capitalize more on this, and deliver more products, consistently, so at the end of the day they can make more money on them.

SN: What might be the most important obstacles that could stand in the way of that future?

ABU-GHAZALEH: The major obstacle is if you don't work hard enough. There are certain things that are out of your control, like water, a complete market collapse, and so on.

My main objective is very clear: to make this company bigger, more solid and a very good partner to the trade. People always talk about conflicts between supermarkets and suppliers, and I have been on both ends; but I believe neither can win ultimately through conflict.

A supermarket chain's executives may believe, 'We have the power, we have the consumers, and so the supplier must submit to our pricing and our specs.' This is a very short-term policy. Neither the supermarket nor the supplier can survive without making money. The relationship has to be fair.

Partnerships will be the way the business is heading.