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All Juiced Up

What Daniel Dillon knows about grape juice would fill a tall glass. The CEO of Concord, MA-based Welch’s Foods has spent 16 years marketing the Concord and Niagara grape juices, frozen concentrates, jams and jellies sold under the Welch’s name. The 129-year-old Welch’s brand is a familiar supermarket fixture, particularly its purple Concord grape juice. …

What Daniel Dillon knows about grape juice would fill a tall glass. The CEO of Concord, MA-based Welch’s Foods has spent 16 years marketing the Concord and Niagara grape juices, frozen concentrates, jams and jellies sold under the Welch’s name. The 129-year-old Welch’s brand is a familiar supermarket fixture, particularly its purple Concord grape juice. But the fruit juice business is not for the thin-skinned. These days, a thirsty mouth has many choices, and grape juice while gaining popularity-generally is not the first quencher.

Heightened competition is only the latest hurdle Dillon has faced at Welch’s. The venerable brand had grown tired by 1991, with sales that year bottoming at $220 million. Since then, Dillon has helped engineer a turnaround through selective acquisitions and divestitures, new product launches, and tripling advertising expenses. Sales rose to a record $572.7 million in August 1997, the fiscal year end, against $509.1 million in August 1995, when Dillon, then Welch’s COO, was named CEO. About 80 percent of its business is domestic, with Asia accounting for much of the rest.

The rebound has benefited the more than 1,400 members of the National Grape Co-operative Association who are Welch’s sole shareholders. The growers, who collectively control 43,000 acres of vineyards in New York, Michigan, Ohio, Pennsylvania, Washington, and Ontario, Canada, supply Welch’s with most of its product. Welch’s, in turn, distributes the net proceeds from its sales to them, measured in tons sold. Net proceeds in fiscal 1997 reached $56.2 million. Expressed per ton, which is similar to earnings per share, net proceeds equaled $232 in fiscal 1997, compared with $197 the year before. For fiscal 1998, Dillon expects net proceeds to exceed $70 million. “Our mission is to provide a secure market for our members and to optimize their earnings,” explains Dillon, who learned about food marketing at General Mills as a product manager for mainstream brands including Wheaties, Hamburger Helper, and Yoplait yogurt.

The boost in Welch’s net proceeds is significant, for it comes at a time when the supply of essential Concord and Niagara grapes-the most expensive next to wine grapes-is 38 percent larger than it was in the ’80s. But demand also is much greater, reflecting strong U.S. consumer preference for health-conscious foods. Purple grape juice –Welch’s signature product- enjoyed the same heart-healthy interest that created a surge in red wine drinkers.

Additionally, Welch’s is distributing to more retail outlets, from corner convenience stores to giants like Wal-Mart, which in 1997 named Welch’s its “Grocery Vendor of the Year,” citing the company’s high level of innovation and customer service. Dillon’s strategy includes helping retailers manage juice sections rather than simply paying for shelf space. This way, retailers can sell more product and, not incidentally, forge a closer relationship with Welch’s. “You’ve got to bring value to the retailer,” he says. “If you show them ways they can sell more juice, they’ll want to work with you.”

The tactic has been, well, fruitful. Welch’s share of canned and bottled juices soared nearly 50 percent in fiscal 1997, to 8.3 percent from 5.6 percent. New products and line extensions continued their upward momentum, contributing 30 percent of total sales. JuiceMakers, a concentrated product that is poured and needs no refrigeration, is approaching sales of $80 million in less than two years. Welch’s also has high hopes for a line of packaged, frozen fruit-juice “smoothies”-an icy drink with a smooth texture that is fast becoming a consumer favorite.

At the same time, the market for jams and jellies has declined by 1 percent each year for the past two decades, Dillon says, a result of a U.S.-wide trend to lighter and less frequent breakfasts. So, when in 1994 Welch’s acquired BAMA, the leading jam and jelly  brand in the South, the company immediately streamlined the operation, shedding non-strategic peanut butter and oil brands, transferring production to Welch’s under-utilized processing plants in Michigan and Pennsylvania, and selling BAMA’s Birmingham, AL, plant at a profit. Dillon is now expanding BAMA into juices and into other Southern states.

He’s also positioning white grape juice as easier for infants and toddlers to digest than apple juice, seeking to open a potentially huge market for Welch’s products. Americans buy 50 million cases of apple juice every year, but only two million cases of white grape juice, Dillon asserts, adding that half of all apple juice drinkers are children. “There’s your opportunity,” he says. The trouble is that apple juice is the cheapest juice in the store, and white grape juice is among the most expensive. Observes Dillon, “You’ve got to get mothers to say, ‘I’ll buy it because it’s best for my child.’”

Such an effort calls for another marketing campaign, and if there’s one thing a Civil War buff like Dillon appreciates, it’s a full-scale advance with a single goal. “You can’t make a partial commitment to anything,” he says. For Dillon, it’s the whole juice, and nothing but the juice.


DANIEL DILLON

President and Chief Executive

We lch’s

Age: 52

Birthplace: Jacksonville, FL.

Family: Married, three children. Education: BS, MBA, Florida State University, 1964, 1966.

First Job: Grocery store clerk, Winn-Dixie supermarket, Jacksonville. Pastimes: Fly fishing, golf.

Favorite Period of History: Civil War. U.S. Civil War Tie: Great grandfather fought with the Michigan 14th regiment.

Favorite General: Ulysses S. Grant.

About jonathan burton