(Nov. 8) MIDDLEBORO, Mass. — Grower-owned Ocean Spray Cranberries Inc. chief executive officer and director Robert Hawthorne resigned Nov. 5, in the midst of a season in which grower returns aren’t meeting expectations.

Hawthorne wasn’t pressured to submit the resignation, Ocean Spray spokesman Chris Phillips said.

The board received and accepted the resignation during a scheduled board meeting and named board member Barbara Thomas, former president of Warner Lambert’s consumer health care division, as interim chief executive officer.

Hawthorne and Thomas were unavailable for comment.

The board will use the opportunity to capitalize on the Ocean Spray name while working to increase grower returns, Phillips said.

“It was his decision, but the board certainly will take the opportunity to seek a new leader that will take the company to the next level,” he said. “We’ve made some substantial gains in the marketplace in the last three years, but it is obvious we need to accelerate the growth of returns for growers.”

Hawthorne, former president of the Pillsbury Brands Group, joined Ocean Spray in January 2000. During his tenure, the cooperative’s net earnings rose from $59 million to $158 million, and the company introduced its white cranberry juice drinks, which with more than $100 million in sales since its national January rollout have been the best-received juice debut on the market in 10 years, Phillips said.

Less than 5% of Ocean Spray’s net sales, which were $1.07 billion in fiscal year 2002, are to the fresh market, which typically lasts September through December.

Prices for processed cranberries shot up to $60.50 for a 100-pound barrel in the mid-1990s, dropping to a low of less than $12 in 1999. Projections for the 2002 processed crop are between $23-28, Phillips said. Processed berries typically aren’t all sold up to 1½ years after the season.

Harvesting, labor and handling costs are higher for fresh berries, and Phillips said fresh berries often bring $21-23 per barrel more than processed berries.

Fresh cranberry prices were typically $25-30 more per 100-pound barrel through most of the 1990s and are $10-15 per barrel higher now, said John Decas, president and chief executive officer of Decas Cranberry Sales Co. Inc., Wareham.

Decas, an Ocean Spray competitor, said the cooperative, under Hawthorne’s direction, lobbied growers to support marketing order changes that limited processed production. Even after the limits were enacted during the past two seasons, Decas said the growers didn’t see the $40 per barrel that Hawthorne estimated.

“It’s all about grower returns. He simply hasn’t lived up to the promises he made,” Decas said.

Phillips said the production limits were a necessary move, and that grower returns are moving in the right direction.

He said recent lawsuits, including a pending case in which a grower claims Ocean Spray drove smaller growers out of business, didn’t influence Hawthorne’s decision to resign or the board’s acceptance of the resignation.

The board is dedicated to the grower cooperative business model, Phillips said, despite efforts by members in the past to seek a sale to companies with more marketing muscle.

The same day Ocean Spray board members accepted Hawthorne’s resignation, the company notified customers of a temporary stop on fresh orders. Phillips said the two decisions are unrelated and that fresh cranberry supply gaps were caused by drought in Massachusetts.

“We’re not taking any more orders for Thanksgiving, but we fully expect to meet all the consumer demand that’s out there,” he said. “We expect later in November to return to the market to take orders for Christmas.”

David Farrimond, general manager of the Cranberry Marketing Committee, Wareham., Mass., said a drought in Massachusetts and other Eastern states is crimping fresh supplies, even though the overall U.S. crop is expected to be up from last year because of a larger supply from Wisconsin. The U.S. Department of Agriculture in August estimated an increase from 5.33 million 100-pound barrels last year to 5.72 million this year; the Cranberry Marketing Committee estimates this year’s crop at about 5.8 million barrels.

“It looks like the (fresh) supply for Thanksgiving is going to be sufficient, but it’s up in the air for Christmas,” said Farrimond, who suggests consumers buy ahead for Christmas.

Decas also stopped accepting new orders and expects to ship about a third less fresh fruit this season. He said fresh market prices aren’t high enough to convince growers to ship fresh berries this season, compounding the supply problem. Again, he was critical of Ocean Spray, claiming the cooperative discounted fresh berries and offered buying incentives, locking in industrywide returns that are not acceptable to many growers.

“We’re very concerned that Ocean Spray, which dominates the industry, has made some serious errors in judgment in pricing fresh fruit,” Decas said. “… They’ve caused the rest of us to match their prices because they lead the way.”

Ocean Spray has 804 members that grow cranberries in Massachusetts, Wisconsin, New Jersey, Oregon, Washington and Canada, and an additional 126 members in Florida who grow grapefruit.