Harold Edwards, CEO with Limoneira Company
“We commit to a 365-day supply of lemons worldwide”
“Most people know us from lemons since we handle four million cartons of fresh lemons per year,” says Harold Edwards, CEO of Limoneira. In addition, the company produces and sells one million cartons of other citrus varieties including navel oranges, cara caras, blood oranges, satsumas, different types of mandarins and pummelos.
Change in business model
In the past 10 years, Limoneira’s business has changed significantly as the company commits to a 365-day supply of lemons around the globe. “Challenges such as logistics, dependence on Mother Nature and different seasons, have forced us to expand our production from the US into different sourcing regions in the world,” mentioned Edwards.
Out of the four million cartons of fresh lemons that Limoneira grows and sells, 75 percent is grown domestically in the states of California and Arizona. The remaining 25 percent is grown in Mexico, Chile and Argentina. In addition, the company is just starting to source lemons in South Africa. Today, 60 percent of the lemons that are grown/sourced outside the US, are sold in the US. The balance is distributed over the globe. Eventually, Edwards expects this number to change to 40 percent being sold in the US versus 60 percent in other countries of the world.
Difficult to serve Western Europe
“There is one caveat to our commitment,” continued Edwards. “Internally, we set very lofty growth goals and are rapidly growing our business in the Far East, including Japan, South Korea, Hong Kong and China. However, it appears to be difficult to serve Western Europe. Countries in the Far East have annual consumption growth rates of eight to ten percent. Western Europe on the other hand is much more challenging to break into. It is a very mature and well-established market.”
Logistics, foreign exchange rates as well as alternative sources of supply for Europe, make it difficult for Limoneira to get product into the continent. “From a production perspective, we compete with Italy, Spain, Turkey, South Africa and Argentina,” shared Edwards. “Having our own supplies from South Africa and potentially expanding into Spain, should make us more competitive in Western Europe.” The company’s strategy to grow its presence in Europe is similar to what was done in the US, Canada and the Far East. “We set ourselves apart by a year-round supply chain and continue to focus on being a Global GAP supplier that sells instantly food-safe product. In addition, we are focusing on growing the direct relationship with retailers.”
Changing landscape of prosperity
“In our business we are witnessing a changing landscape of prosperity around the world,” Edwards remarked. Disposable incomes keep on growing and people are eating out more. As a result, hotels, bars and restaurants around the globe see their sales going up. “Given that 70 percent of lemon consumption is generated through the foodservice industry, we see significant growth in demand. Although it is often just a little piece of lemon that is used to garnish a dish or drink, that little piece puts the whole lemon out of business.”
Substantial overcapacity in containerized shipping is also an important driver of Limoneira’s business. “It is easy for us to fill a 45 ft. container and send it off to the Far East. The combination of global consumption growth, overcapacity in shipping and consumers becoming more aware of the health benefits of lemons, has created a much better balance between supply and demand of lemons.”
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Publication date: 1/23/2018
Author: Marieke Hemmes