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Tree Top, Inc. Business Information, Profile, and History

species family apple trees

220 East 2nd Avenue
Selah, Washington 98942
U.S.A.

Company Perspectives:

Tree Top will be the premier marketer and supplier of processed apple s and other fruit products by:

1: Supplying consumers and customers with high quality products and e xceptional service. 2: Increasing the value of membership to our grow er/owners. 3: Making a positive contribution to the quality of life i n our communities. 4: Providing employees a challenging and rewarding work environment, which fosters innovation and success.

History of Tree Top, Inc.

One of the largest apple cooperatives in the United States, Tree Top, Inc., processes more than 500,000 tons of fruit every year to make a pple juice and cider, as well as apple sauce and other fruit-based pr oducts and concentrates. Owned by 1,460 growers in Washington, Oregon , and Idaho, its customers include distributors and retailers through out the nation, as well as manufacturers in the food industry worldwi de. Tree Top's corporate headquarters are located in Selah, Washingto n. Five of its processing facilities are in the state of Washington, with another one located in Oregon. The company also has a bottling f acility in Rialto, California. While apple juice and cider remain the backbone of Tree Top's retail sales, it also markets other consumer packaged goods, such as blended fruit juices and fruit bars, and prod uces and sells a wide variety of dried and frozen fruit products used as ingredients in the food industry. Tree Top's juice-testing labora tories are considered world class and it has the only "trained taste profile panel" in the apple juice industry.

1940s Roots

Tree Top's roots can be traced back to the late 1940s, when entrepren eur Bill Charbonneau and his family moved from southern California to central Washington's Yakima Valley. Charbonneau bought a small apple processing plant on "Produce Row" in Selah, Washington. Charbonneau' s mission was to develop a high-quality brand of apple juice. His ori ginal product line would include apple juice and apple cider, each av ailable to consumers in three sizes.

The name Tree Top came about from the winning entry in a brand-naming contest Charbonneau held among his employees. The name was not only catchy but meaningful in that at the time the popular belief was that the best fruit grew at the top of the trees.

Charbonneau kept his office in the plant facility so that he could cl osely oversee production. He personally tried a sample of freshly pro duced juice each time a batch of apples was pressed. If he did not ap prove of what he tasted, Charbonneau ordered the plant's entire 5,000 -gallon holding tank of apple juice to be poured down the drain.

During this time, apples were overly abundant in the state of Washing ton; so much so that in 1950, Life magazine featured a double- page spread of 5,000 railway cars of fruit being dumped into the Colu mbia River because there was a lack of processors to handle it all.

By 1960 orchard owners in the state of Washington were selling their fruit for $5 a ton, and those were the lucky ones. The rest were paying to have their fruit dumped or buried in canyons and rivers. No t knowing what to do with their inferior apples and tired of wasting their fruit--not to mention paying to have it hauled away--a few Wash ington growers banded together to save money by forming a cooperative that would handle and process the excess apples. This group of growe rs approached and purchased Tree Top from Charbonneau.

New Structure and Pioneering Processes in the 1960s

After the cooperative's inception in May 1960, the number of orchardi sts to join it increased until it reached its 1980s peak of more than 3,700 grower-owners, who were based not only in Washington, but Oreg on and Idaho as well.

Recognizing that freezing juice was an economically prudent way to sh ip, Tree Top pioneered frozen apple juice concentrate in 1963. The ne xt challenge was to convince consumers on the idea of frozen apple ju ice; they managed to accomplish their mission. Then, eight years afte r the becoming a cooperative, Tree Top decided not to limit itself to juicing the apples and began to slice them as well.

By the late 1960s, Tree Top had two plants specializing in dried appl e products, and they would eventually become the largest supplier of dried apple products in the world. In 1970, with the consumer demand for organic foods on the rise, Tree Top introduced an unfiltered appl e juice. It also began marketing frozen concentrated cider that same year.

In 1975, Tree Top succeeded in marketing juice blends. It introduced a pear-apple and other pear-based fruit blends to provide its members with an outlet for processing pears.

The first 20 years was a high time for growth and development for Tre e Top. During this time, the cooperative returned more than $85 m illion to its membership--on what was once a waste product dumped by the ton into rivers and canyons.

The 1980s

By 1985 the rationale for apple growers to band together had changed. To compete with much larger companies that dominated the food market (such conglomerates as Procter & Gamble, Unilever, Cadbury Schwe ppes, and Nestle) Tree Top decided to move away from being a traditio nal co-op and adopt the business practices of a corporation. Recogniz ing that it had become less of an apple handler/processor and more of an apple marketer, Tree Top executives changed its equity structure. The company paid its now 3,500 members based on the current market p rice, rather than the old method of basing payments on the number of tons processed. The change gave the company more capital for marketin g new products such as dried apples and apple fiber, and it guarantee d that growers would get the fair market value for their fruit every year. Tree Top began to purchase additional presses and plant facilit ies. In 1988 Tree Top was the largest apple juice producer for the re tail market in the world. It had become a global company, selling to Japan and buying from Europe and South America.

In February 1989, the Natural Resources Defense Council (NRDC), an en vironmentalist and consumer watchdog group, issued a report that said children who eat a lot of apples run a higher risk of cancer due to the use of Alar, a chemical sprayed on apples to make them redder and crisper. Yet because Tree Top didn't sell fresh apples and thus didn 't care about the chemically-enhanced appearance of fresh fruit, it h ad always rejected apples from growers who used Alar and had urged th e U.S. Environmental Protection Agency to the prohibit use of the che mical.

Their anti-Alar stance didn't help Tree Top in the end. The NRDC repo rt led to a led to a nationwide fear of apple consumption. Despite th e fact that the U.S. Food and Drug Administration (FDA) challenged th at the Alar present in apples was far below safe levels for humans, t he NRDC mounted a strategic media campaign against Alar use, which in cluded celebrity backing and a television feature on CBS's 60 Minu tes television program.

Tree Top expanded its ban, refusing apples from growers who used Alar on any apple trees. The company also fought back with its own $1 million advertising blitz and media campaign. By May, however, the m atter led Tree Top president Dennis Colleran to resign due to a relat ed dispute with the board.

The 1989 Alar controversy and Mother Nature's drop in apple crop yiel d resulted in a record decline from 1988's return of $30.4 millio n. To reduce costs, Tree Top chopped is management staff by 10 percen t, abandoned its plans to open a facility in the southeastern part of the country, and sold its recently acquired Sunnyside division to th e National Grape Cooperative Association, which did business as Welch 's.

New Challenges in the 1990s

By the early 1990s, things were getting back on track. In 1990 the Sc hweppes U.S.A. division of Cadbury Beverage of North America struck a 15-year deal with Tree Top for the exclusive franchise rights to its juice line in 11 western states, as well as Alaska and Hawaii. Mott' s was already dominating the eastern states for Cadbury Schweppes.

By now Tree Top was now making more money than it ever had, despite t he fact that it was processing fewer apples. The company was capitali zing on its name as a quality apple juice producer, still the nation' s largest seller of juice with 8 percent of the market and selling to 21 countries. The company's industrial operations, which provided de hydrated apple products to the food industry for use in hot and cold cereals and fruit-filled cookies, for example, were now making up 25 percent of its industrial sales. Its Wenatchee plant was slicing, dic ing, drying, and freezing apples to transform into 400 different type s of dehydrated and frozen products that were sold to major food comp anies, such as Campbell's Soup, Kellogg, Nabisco, Pillsbury, Sara Lee , and Ralston Purina. The company could even take low-moisture apples and turn them into other fruits, like blueberries, raspberries and s trawberries by using flavors and colors.

Creating more juice blends and targeting products to adults as well a s kids would be marketing milestones of the 1990s. The company also m et market demands by switching from glass to plastic bottles and sell ing products in vending machines.

Yet Tree Top recognized the fact that it would continue to face chall enges, including fluctuating crop volumes, too much competition, the relative easiness of entering the juice business, and shipping a heav y product. Economic reasons such as these kept Tree Top from expandin g to the eastern part of the country.

Tree Top restructured in 1996 as a response to the growth of its ingr edient business. It separated into two divisions: one for consumer pa ckaged goods and one for ingredients. The restructure did not lead to layoffs, though the number of employees continued to shrink as the c ompany invested in equipment.

At the same time, China, with its vast orchards, became a bigger thre at to the industry. Between 1995 and 1998 Chinese apple juice imports grew by more than 1,200 percent, while the average price for apple j uice fell by 53 percent. In 1999 Tree Top and five other U.S. juice c oncentrate businesses petitioned the U.S. Department of Commerce to i nvestigate several Chinese companies they claimed were selling concen trate into the United States market for less than cost of production. The following year, in a response to aid U.S. juice makers, the Depa rtment of Commerce began to charge a duty of nearly 52 percent on app le juice imports.

A New Century

Yet in 2001 a worldwide apple surplus drove down prices paid to growe rs, with juice market values falling from $112 a ton in 2000 to a lmost $43. This latest slump felled Tree Top's membership, althou gh the overall acreage represented remained steady.

Stagnant prices and strong competition out of China further compelled Tree Top to experiment with non-juice products. In 2003 it test mark eted a new line of snack products called Flat Fruit. The company was also forced to lay off employees and reduce production down to one pr ocessing plant.

In addition to fierce global competition in not only the juice indust ry, but the entire beverage industry, Tree Top also occasionally expe rienced a shortage of apples to process, being second in line for the crops produced by growers, who grew primarily for the more lucrative fresh fruit market and not the processing market. If the quality of a given year's crop was particularly high, the majority of the crop w ould be sold to the fresh market, leaving less for processing--the ex act opposite of what led growers to form the co-op in 1960.

In the 21st century, Tree Top executives were fully aware that divers ification would be key to survival. Despite continued challenges, Tre e Top remained optimistic. Diversification would not be the only tact ic to keep the former apple co-op on top. Its use of state-of-the-art technology at its processing plants, an experienced work force, and strong brand-recognition would also play major roles to the company's success, because Tree Top insisted that apple juice would remain the core of its business.

Principal Divisions: Ingredients; Consumer Packaged Goods.

Principal Competitors: Dole Food Company, Inc.; Mott's Inc.; T ropicana Products, Inc.

Chronology

  • Key Dates:
  • 1940s:Bill Charbonneau founds Tree Top Inc.
  • 1960: Group of Washington orchardists buy Tree Top to form a c o-op.
  • 1963: Tree Top pioneers frozen juice concentrate.
  • 1975: Company markets juice blends.
  • 1988: Tree Top is the world's largest apple producer for the r etail market.
  • 1989: Industry-wide ban on chemical Alar affects the company's profits.
  • 1996: Company restructures into two divisions: ingredients and consumer packaged goods.
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