“Historically, the banana trade symbolized economic imperialism, injustices in the global trade market, and the exploitation of agriculture-dependent third-world countries”. However, they remain to be one of the most profitable items in grocery stores. Making bananas crucial to economic and global food stability for countries all over the world. They are the third largest staple crop, coming only after wheat and coffee. Since bananas are such a sought after fruit, many companies have gone to extensive lengths in the to fight for a share of the market.
Chiquita Brands International was one of the pioneer companies to try and globalize bananas. They took a risk and made some very critical mistakes along the way. Throughout the past several decades, Columbia is known to have been one of the most hazardous countries, due to its recent “deadly civil war and the effects of wide-ranging narco-terrorism”. Despite the huge risk associated with this country, Chiquita decided to take the chance, it’s one that end up costing them their reputation. Chiquita admitted, in 2004, to the U. S.
Justice Department, that one of its subsidiaries was guilty of making protection payments from 1997 through 2004 to different terrorist groups inside Colombia. In addition to that, as stated in the case brief, news surfaced that: “Chiquita had been involved in paying bribes to Latin American government officials in exchange for preferential treatment, encouraging of supporting U. S. coups against smaller nations, putting in place dictatorships in Central America’s “banana republics,” exploiting local workers, creating an abusive monopoly, and now doing business with terrorists. ”
As a result, Chiquita faced a high-profile investigation and trial, as well as a separate lawsuit from the Colombian victims’ families in 2010. In response to this devastation, Chiquita’s got a new CEO in 2004, Fernando Aguirre. He faced a long road ahead that consisted of trying to decipher the company’s past mistakes and formulate a new course of action that could rebuild their brand image and resurrect the company’s competitive position. In thinking about competition, it was important for him to know his competitors and their past experience in the banana trade. They were know as ‘The Big Three,’ it included Dole, Del Monte, and Chiquita.
Dole reported US$6. 9 billion of revenue in 2007 and was known to be “the world’s largest producer and marketer of high-quality fresh fruits and vegetables”. Del Monte was also one of the U. S. ’s largest producers, distributors, and marketers of food in retail markets. And according to the case brief, they generated approximately US$3. 4 billion in sales during 2007. Most importantly, Chiquita was founded in 1899 and was the largest employer in Latin America for many years. Skipping forward to 2007, in order to rank it next to its competitors, it had grown to be the largest distributor of bananas in the U. S.
and was making US$4. 7 billion of revenue. These three companies set the stage for a very competitive marketplace. Despite the fact that all three of these power companies were fighting for the biggest share of the banana industry, Chiquita ended up being the one to get slammed with the most repercussions. Following the Justice Departments investigation and trials that began in 2004, “Chiquita signed a plea agreement that gave them the dubious distinction of being the first major U. S. company once convicted of dealing with terrorists, and resulted in a fine of US$25 million,” along with other various penalties.
In order to move forward, the newly named CEO needed to look back at the company’s past in order to learn from mistakes. It seems that in going through Chiquita’s company background, that they have been somewhat of a shady brand since its origin. Eli Black, CEO in 1970, paid a US$1. 25 million bribe to Honduran official in return for them reducing taxes on the company’s banana exports. He then proceeded to kill himself. The next CEO, Carl Linder, was know for ‘bottom fishing’ and led the company into bankrupty in 2002.
Next in line to assume the title was Agguire. It seemed that he was faced with an overwhelming load of problems from Chiquita’s past, but he quickly decided on the best way to fix it. He told CEO Magazine in 2007, “[Chiquita’s] key challenge is to control costs while supporting innovation efforts. Cost-saving programs have not been nearly enough to offset higher industry and other costs. ” He said also that “the second challenge is to remain agile in a competitive, fast-paced marketplace that is characterized by growing consumer expectations and that in order
to strengthen the power of the brand, [they] are developing strategies based on consumer brands for healthy, fresh foods and focusing on diversification and innovation” (5). He made it clear from the beginning that Chiquita would be transitioning from the low-margin operations to a company that produced more value-added products. Also, that they would begin to maintain an excellent record of food safety, quality, management, customer service, and in-store execution.