Brand Failures

104 Brand failures
fresh produce includes pears, peaches, plums, grapefruits, green vegetables,
grapes and cantaloupe. But even after the campaign most consumers and
retailers still firmly associated the brand with bananas.
This wouldn’t be so bad, if the company’s banana sales were booming. But
Chiquita was badly hurt towards the end of the 1990s with a number of
banana-related problems. Quite simply, there were too many of the damn
things. Banana production in Ecuador, the world’s leading banana producing
nation, more than doubled from 1990 to 1999. This increased supply forced
Chiquita to charge lower prices. As a result, the margin of profit diminished
and debts mounted.
There were also other problems over which Chiquita had no control. For
instance, Hurricane Mitch devastated Chiquita’s banana plantations in
Honduras and Guatemala in 1998, forcing the company to spend more than
US $75 million rebuilding them.
Chiquita has also accused the European Union of favouritism towards
Caribbean bananas grown in former European colonies. The long-running
dispute hit Chiquita hard and according to Stephen G Warshaw, president
and chief operating officer of Chiquita, the company had about a 40 per cent
share of the European market before 1993, but that dwindled to 20 per cent.
Although the EU banana trade policies were changed in 2001, Warshaw is
sceptical that the company will be able to regain the dominant market
position it once held.
The problems affecting the banana industry, combined with unpaid debts
resulting from expansion and its many attempts to broaden its product
offering, means the Chiquita brand is now in deep trouble. Whether the
brand’s fortunes will be able to curve back up, banana-style, remains to be
seen.
Lessons from Chiquita
‘Catch-22’ situations should be avoided. Chiquita tried to stretch its brand
when banana sales were slipping. This led the company into debt, because
it wasn’t selling enough bananas to cover costs. It needed to move beyond
bananas to bring in more money, but more money was needed to move
beyond bananas. A classic ‘catch-22’.
Historical identities are hard to shake off. The company has been linked with
bananas since the 1940s and that association has been difficult to undo.