Chiquita Brands International

Chiquita Brands International is headquartered in Cincinnati, Ohio and is the world’s largest international marketer, producer, and distributor of fresh and processed produce. Chiquita employees over 23,000 people and had revenues of $3,609.4 million in 2008 which represented an increase in sales of 4.2% from 2007. Although sales increased in 2008 this still represented a net operating loss of $281.1 million in 2008, as compared to a net operating loss of $49 million in 2007, (Datamonitor). Chiquita is still struggling out from under a mountain of debt, that ultimately led to a 2002 reorganization under bankruptcy protection, as a result of litigating against trade quotas and tariffs imposed by the European Union that favored fruit grown in former European colonies. As a result of their increasing debt in part due to this litigation and their decrease in market share Chiquita ended up selling their shipping fleet in 2006 which they had used to ship 70% of their produce to Europe, (Nall, 2006). Additionally, in 2007 Chiquita was found guilty of funding paramilitary organizations in Latin America and fined $25 million by the U.S. Department of Justice.

The company sources its bananas, which accounted for 57% of its 2008 annual sales, from Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Nicaragua, Panama, and the Philippines, (Hoovers). Chiquita is attempting to reestablish itself as a leading distributor in the European Union by distributing other products in Europe after a 1993 EU ruling that limited banana imports into Europe from the Latin America in favor of bananas imported from the ACP, (Africa, Caribbean, and Pacific countries), which had formerly been European colonies. In addition to bananas Chiquita produces melons, berries, grapes, pineapples, apples, pears, and other fresh and frozen fruits including smoothies marketed under the product name, Just Fruit in a Bottle. They are also agriculturally diverse and produce vegetables including tomatoes, peppers, spinach, lettuce, onions, broccoli, and other fresh and frozen vegetables including prepackaged salads marketed under the product name, Fresh Express, Additional Chiquita brands include Consul, Amigo, and Chico, (Datamonitor).

Prior to the EU ruling Chiquita had been Europe’s leading banana importer controlling 30% of the market. Chiquita’s closest competitor in this European market had been Dole, which controlled 12% of the market in 1990. In response, Chiquita mounted an aggressive and expensive campaign to reverse the protectionist EU ruling through the U.S. government and the World Trade Organization, (WTO). By 1995, when the WTO ruled the policy was discriminatory, Chiquita had already lost 1/3 of its market share. Additionally, European countries were slow to comply with the WTO ruling, leading Chiquita to continue legal battles against the EU, while their market share continued to erode. While Chiquita’s battles continued, Dole meanwhile capitalized upon its previous relationship with the ACP countries and increased investment in these production facilities. Dole showed a flexibility in international trade necessary that allowed them to gain 4% of Chiquita’s market share by 1995, (Bucheli, 2007), while Chiquita’s European market share is still eroding to date.

Chiquita is diversified geographically as well as in products and services. While the U.S is by far their largest market, they still have considerable market share in Europe, and additionally market their products throughout Latin America and the Caribbean. Operating in politically and economically unstable environments like parts of Latin America has proven to be fraught with difficulty for Chiquita throughout its 100 plus year history. In 2007 Chiquita landed on the Multinational Monitor’s top ten worst corporations list for their funding of a paramilitary organization in Colombia called the United Self-Defense Forces of Colombia, (AUC), (Mokhiber & Weissman, p. 7). Chiquita had paid over $1.7 million to the AUC, which the U.S. government had deemed a terrorist organization, over a nine year period. Chiquita self-reported the payments to the Justice Department and claimed that during this period of time it was forced to pay both right wing and left wing organizations protection money to ensure that their workers were safe.

Their claims have brought little comfort to the surviving families of the AUC’s victims who are now suing Chiquita and it is believed that the impending lawsuit could possibly force Chiquita into bankruptcy again. It is interesting to note that in 1995 Chiquita made the same worst-ten list for the continued exposure of 10,000 banana workers to the pesticide DBCP in 11 different Latin American Countries, (Draffan). Draffan also notes previous scandals with which Chiquita has been involved in Latin America including bribing Latin American government officials through the 1970’s and 1980’s and leaving soil contaminated and unfit for agriculture in the early 1990s.

Chiquita is still optimistically looking to the future despite their continued troubles. Chairman and CEO Fernando Aguirre notes in his 2008 statement in the company’s annual report that despite the economic challenges the year was their most profitable since 2005, noting that the banana industry earned more for them than the cost of capital for the “first time in decades”, (Datamontor, p.24). Additionally Aguirre notes that Chiquita has begun partnering with ACP countries such as China, Angola and Mozambique, and has engaged in significant corporate restructuring. Also notable is that Chiquita partnered with the University of Arkansas and Deloitte Consulting to test a real world application of wireless sensor systems in its live supply chain to regulate temperatures within refrigerated shipping containers to prevent financial losses from waste, pollution, and health hazards. Overall though, Hoover’s indicates that Chiquita has returned to profitability in 2009 for the first time since 2005, with $90.5 million in net income and a net profit margin of 2.5%, though they have yet to reach their pre-2005 levels of profitability. Altogether, this is not a bad performance for a company when the current global economic crisis is considered.


References:

2009, August 18. Chiquita Brands International. DATAMONITOR. Retrieved from Datamonitor Company Profiles via EBSCOhost Business Source Complete.

Bucheli, M. (2005, November). Banana war maneuvers. Harvard Business Review, 83(11), 22-24. Retrieved from EBSCOhost Business Source Complete.

Draffan, G. Directory of transnational companies. Retrieved from http://www.endgame.org/dtc/c.html

Hoovers, (n.d.).Chiquita Brands International. Hoover’s Company Records. Retrieved from http://premium.hoovers.com/subscribe/co/overview.xhtml?ID=ffffrrhhrfhrhcrhsk

Mokhiber, R. & Weissman, R. (2007, November 1). Neither honest nor trustworthy: the ten worst corporations of 2007. Multinational Monitor, 29(5), 10-30 Retrieved from EBSCOhost Business Source Complete.

Nall, S. (2006, October 9). Chiquita to sell fleet. Traffic World, 270(41), 33. Retrieved from EBSCOhost Business Source Complete.