Chiquita Brands International

Chiquita Brands International Inc.

Type	Private
Industry	Agriculture
Founded	1863
Headquarters	Charlotte, North Carolina, United States
Key people	Edward F. Lonergan, President and Chief Executive Officer
Products	Produce, primarily bananas
Revenue	$3.1 billion USD (2013)
Net income	$405 million USD (2012)
Owner	Cutrale and Safra
Number of employees	20,000
Website	www.chiquita.com

Chiquita Brands International Inc. is an American producer and distributor of bananas and other produce. The company operates under a number of subsidiary brand names, including the flagship Chiquita brand and Fresh Express salads. Chiquita is the leading distributor of bananas in the United States.

Chiquita is the successor to the United Fruit Company. It was formerly controlled by Cincinnati businessman Carl H. Lindner, Jr., whose majority ownership of the company ended when Chiquita Brands International exited a prepackaged Chapter 11 bankruptcy on March 19, 2002. In 2003, the company acquired the German produce distribution company, Atlanta AG. Fresh Express salads was purchased from Performance Food Group in 2005. Chiquita's current headquarters is located in Charlotte, North Carolina.^[1]

On March 10, 2014, Chiquita Brands International Inc. and Fyffes plc announced that the Boards of Directors of both companies unanimously approved a definitive agreement under which Chiquita will combine with Fyffes, in a stock-for-stock transaction that is expected to result in Chiquita shareholders owning approximately 50.7% of ChiquitaFyffes and Fyffes shareholders owning approximately 49.3% of the proposed ChiquitaFyffes, on a fully diluted basis. The agreement would have created the largest banana producer in the world and would have been domiciled in Ireland.^[2] Though an intervening offer by Cutrale and Safra groups of $611 million in August 2014 was rejected by Chiquita, with the company saying it would continue with its merger with Fyffes,^[3] on October 24, Chiquita announced that the shareholders at a Company Special Meeting had rejected the merger with Fyffes. Instead the Cutrale-Safra acquisition offer was then accepted by the shareholders.^[4]

History

Chiquita Scandinavia, a former Chiquita Brands International ship.^[5]

Early history

Chiquita Brands International's history began in 1870 when ship's captain Lorenzo Dow Baker purchased 160 bunches of bananas in Jamaica and resold them in Jersey City eleven days later. In 1873 Central American railroad developer Minor C. Keith began to experiment with banana production in Costa Rica. Later, he planted bananas alongside a Costa Rican railroad track to provide revenue for the railroad.^[6] In 1878, Baker partnered with Andrew Preston to form the Boston Fruit Company.^[7] United Fruit Company was founded in 1899 when the Boston Fruit Company and various fruit exporting concerns controlled by Keith merged. In 1903, United Fruit Company was listed on the New York Stock Exchange and began the first company to use refrigeration during open sea transport. By 1930, the company's fleet had grown to 95 ships.^[6]

The brand name Chiquita was registered as a trademark in 1947. By 1955, United Fruit Company was processing 2.7 billion pounds (1.2 billion kilograms) of fruit a year. In 1966, the company expanded into Europe. In 1970, the company merged with AMK Corporation and changed its name to United Brands Company.^[6] Eli Black took a controlling interest by outbidding two other conglomerates, Zapata Corporation and Textron.^[8] After the suicide of Black, the company was acquired by Seymour Milstein and Paul Milstein. In 1980, Chiquita was an official sponsor of the Winter Olympics in Lake Placid, New York.^[6] In 1984, Cincinnati investor Carl Lindner, Jr. became the controlling investor in United Brands.^[9]

In 1928, thousands of workers were murdered by military forces in Ciénaga (Colombia). The workers were protesting against the bad working conditions in the company plantations. This episode is known in the history of Colombia as the Masacre de las Bananeras (Banana massacre). Gabriel García Márquez describes in his novel One Hundred Years of Solitude the inhuman impact that the company had in Colombia.

In 1990, the company renamed itself Chiquita Brands International, as it undertook major investments in Costa Rica. In 1993, the company was hit by European tariffs on the import of Latin American bananas. In 1994, select Chiquita farms were certified the Rainforest Alliance's Better Banana Project as being environmentally friendly. In 1995, the company sold the John Morrell meat business that was part of the original AMK Corporation. In 1998, the world's largest banana processing facility debuted in Costa Rica.^[6]

Controversy

Cincinnati Enquirer charges

Chiquita Center in Downtown Cincinnati, Ohio

On May 3, 1998, The Cincinnati Enquirer published an eighteen-page section, "Chiquita Secrets Revealed" by investigative reporters Michael Gallagher and Cameron McWhirter. The section accused the company of mistreating workers on its Central American plantations, polluting the environment, allowing cocaine to be brought to Borneo on its ships, bribing foreign officials, evading foreign nations' laws on land ownership, forcibly preventing its workers from unionizing, and a host of other misdeeds.^[10] Chiquita denied all the allegations, and sued after it was revealed that Gallagher had repeatedly hacked into Chiquita's voice-mail system. (No evidence ever indicated that McWhirter was aware of Gallagher's crime or a participant.) A special prosecutor was appointed to investigate, because the elected prosecutor at the time had ties to Carl Lindner, Jr.

On June 28, 1998, the Enquirer retracted the entire series of stories and published a front-page apology saying it had "become convinced that [the published] accusations and conclusions are untrue and created a false and misleading impression of Chiquita's business practices".^[11] The Enquirer also agreed to pay a multi-million-dollar settlement. The exact amount was not disclosed, but Chiquita's annual report mentions "a cash settlement in excess of $10 million". Gallagher was fired and prosecuted and the paper's editor, Lawrence K. Beaupre, was transferred to the Gannett's headquarters amid allegations that he ignored the paper's usual procedures on fact-checking.

In an article examining the Chiquita series, Salon.com said the "Chiquita Secrets Revealed" series "presents a damning, carefully documented array of charges, most of them 'untainted' by those purloined executive voice mails."^[12]

Environmental awareness

In 1998, a coalition of social activist groups, led by the European Banana Action Network (EUROBAN), targeted the banana industry in general and Chiquita in particular, aiming to create a new climate of corporate social responsibility. Their strategy was to encourage small farming of bananas rather than large scale monoculture, and to push for subsidies and other government relief to level the field for small producers. The fair trade movement, which sought to influence consumers to purchase the products of smallholders, also joined in the action.^[13]

Chiquita responded to the activism with changes in corporate management and new patterns of global competition, according to J. Gary Taylor and Patricia Scharlin. Chiquita partnered with the Rainforest Alliance, an environmental group dedicated to preserving the rainforest, and made major reforms in the way they plant and protect their bananas. The changes focused on the use of pesticides but also affected corporate culture.^[13] In 2000, Chiquita adopted a new code of conduct that included the Social Accountability International's SA8000 labor standard. Also in 2000, Chiquita achieved Rainforest Alliance certification for environmental friendly practices on 100% of its farms. In 2001, Wal-Mart named Chiquita as the "Environmental Supplier of the Year".^[6]

Payments to paramilitary groups

On March 14, 2007, Chiquita Brands was fined $25 million as part of a settlement with the United States Justice Department for having ties to Colombian paramilitary groups. According to court documents, between 1997 and 2004, officers of a Chiquita subsidiary paid approximately $1.7 million to the right-wing United Self-Defense Forces of Colombia (AUC), in exchange for local employee protection in Colombia's volatile banana harvesting zone. Similar payments were also made to the Revolutionary Armed Forces of Colombia (FARC), as well as the National Liberation Army (ELN) from 1989 to 1997, both left-wing organizations.^[14][15] All three of these groups are on the U.S. State Department's list of Foreign Terrorist Organizations. Chiquita sued to prevent the United States government from releasing files about their illegal payments to Colombian left-wing guerrillas and right-wing paramilitary groups.^[16]

According to a Wall Street Journal report in 2004, outside attorneys for Chiquita notified the company that the payments violated U.S. anti-terrorism laws and should not continue. However, payments to the groups continued until Chiquita sold its subsidiary, Banadex, in June 2004.^[17] On December 7, 2007, the 29th Specialized District Attorney's Office in Medellín, Colombia subpoenaed the Chiquita board to answer questions "concerning charges for conspiracy to commit an aggravated crime and financing illegal armed groups". Nine board members named in the subpoena allegedly personally knew of the illegal operations.^[18] One executive for the company penned a note which proclaimed that the payments were the "cost of doing business in Colombia" and also noted the "need to keep this very confidential — people can get killed."^[19]

In 2013 and 2014, Chiquita spent $780,000 lobbying against the Justice Against Sponsors of Terrorism Act.^[20]

On July 24, 2014, a US appeals court threw out a lawsuit against Chiquita by 4,000 Colombians alleging that the corporation was aiding the right-wing paramilitary group responsible for the deaths of family members. The court ruled 2-1 that US federal courts have no jurisdiction over Colombian claims.^[21][22]

Workers' rights

In May 2007, the French non-governmental organization (NGO) Peuples Solidaires publicly accused the Compañia Bananera Atlántica Limitada (COBAL), a Chiquita subsidiary, of knowingly violating "its workers' basic rights" and endangering their families' health and their own. According to the charge, the banana firm carelessly exposed laborers at the Coyol plantation in Costa Rica to highly toxic pesticides on multiple occasions. Additionally, COBAL was accused of using a private militia to intimidate workers. Finally, Peuples Solidaires claimed that Chiquita ignored some union complaints for more than a year.^[23]

Restructuring

In November 2001, Chiquita filed for Chapter 11 bankruptcy protection in order to restructure the company.^[6] It emerged from the bankruptcy on March 19, 2002, ending Cincinnati businessman Carl H. Lindner, Jr.'s control of the company. Also in 2002, Chiquita joined the Ethical Trading Initiative and was named as a top "green stock" by The Progressive Investor.^[6]

In 2003, Chiquita acquired the German produce distribution company, Atlanta AG. It also sold its processed foods division to Seneca Foods that year. In 2004, 100% of Chiquita farms were certified compliant with the SA8000 labor standard and the company earned the "Corporate Citizen of the Americas Award" from a Honduran charity.^[6] Fresh Express salads was purchased from Performance Food Group in 2005.^[6]

Acquisition

In March 2014, Chiquita Brands International and Fyffes announced that their boards of directors had unanimously approved a merger agreement. In the stock-for-stock transaction, former Chiquita shareholders will own approximately 50.7% of the new company, ChiquitaFyffes, while Fyffes shareholders will own 49.3% of the new company.^[24] The all-stock purchase was valued at US$526 million.^[25] The agreement would have created the largest banana company in the world^[2] with projected annual revenues of US$4.6 billion and have been domiciled in Ireland but be listed on the New York Stock Exchange. Chiquita's CEO Ed Lonergan would have serve as Chairman and Fyffes Executive Chairman David McCann would have become the CEO of the proposed entity. Lonergan called this a "milestone transaction" and that "the combined company will also be able to provide customers with a more diverse product mix and choice;" while McCann added that both companies will benefit from their "joint expertise, complementary assets and geographic coverage to develop a business".^[24][26] According to Chiquita, the deal will "provide substantial operational efficiencies and cost savings".^[27] The combined company will have tax savings from being domiciled in Ireland, similar to the 2013 acquisition by US drug-maker Perrigo of Irish company Élan.^[28] The deal is a corporate inversion, as the takeover company (Chiquita, United States), is relocating its domicile to that of purchased company (Fyffes, Ireland).^[29]

A $611 million takeover offer by Cutrale of Brazil and Safra group in August 2014 was rejected outright by Chiquita, with the company refusing to meet with the bidders to discuss the offer. Chiquita said it was pressing on with its merger with Fyffes.^[3] However, shortly after Chiquita shareholders rejected the offer the Cutrale-Safra offer of $14.50 was accepted.^[30][31] Yet the North Carolina Economic Development board asserted that if the headquarters was moved away, the company would be due to return N.C. and local incentive money. Former Charlotte City Council member John Lassiter, who heads the board, said the new owners would inherit Chiquita’s responsibilities under a 2011 deal that brought the company to the city. The agreement stipulates that it received over than $23 million in incentives from Charlotte and Mecklenburg County for moving its headquarters and hundreds of high-paying jobs from Cincinnati and if it moved again within 10 years it must repay the "clawback" provision. Lassiter said of the matter: "It’s not a question of opinion. It’s ‘What does the agreement say?’ I would expect both the city (of Charlotte) to impress its position (on the new owners) and for the (new ownership) to follow expectations under its provisions of the agreement."^[32]

Operations

New Chiquita headquarters in Charlotte, North Carolina

Chiquita Brands International operates in 70 countries and employs approximately 20,000 people as of 2014. The company sells a variety of fresh produce, including bananas, ready-made salads, and health foods.^[33] The company's Fresh Express brand has approximately $1 billion of annual sales and a 40% market share in the United States.^[6]

On November 29, 2011, the North Carolina Economic Investment Committee approved $22 million in incentives for Chiquita to move its headquarters to Charlotte, North Carolina. The same day, Chiquita officially announced their move to the city, with the new headquarters residing in the NASCAR Plaza tower. Research and development was also moved to the Charlotte area. In addition to the incentives, the company cited the growing airport as a reason for the move.^[1][34] According to the company's 2012 annual report, the company was aiming to "transform [itself] into a high-volume, low-cost operator" and to "minimize investments outside of [its] core product offerings".^[1][35]

Logo

The company mascot "Miss Chiquita", now Chiquita Banana, was created in 1944 by Dik Browne, who is best known for his Hägar the Horrible comic strip. Miss Chiquita started as an animated banana with a woman's dress and legs. Vocalist Patti Clayton was the original 1944 voice of Miss Chiquita, followed by Elsa Miranda, June Valli and Monica Lewis. Advertisements featured the trademark banana character wearing a fruit hat. The banana with a fruit hat was changed into a woman in 1987.^[36] A new Miss Chiquita design was unveiled in 1998.^[6] Peel-off stickers with the logo started being placed on bananas in 1963. They are still placed by hand today to avoid bruising the fruit.^[36]

See also

• Grand Nain
• Paramilitarism in Colombia
• Union of Banana Exporting Countries
• United Fruit Company

References

Further reading

• Bender, Nicholas (May–June 2001). "Banana report". Columbia Journalism Review. 
• Frantz, Douglas (July 17, 1998). "After apology, issues raised in Chiquita articles remain". The New York Times. pp. A1, A14. 
• Frantz, Douglas (July 17, 1998). "Mysteries behind story's publication". The New York Times. p. A14. 
• Stein, Nicholas (September–October 1998). "Banana peel". Columbia Journalism Review. 
• Mike Gallagher & Cameron McWhirter, "Chiquita Secrets Revealed," Cincinnati Enquirer, May 3, 1998.
• "The Business and Human Rights Management Report—Chiquita Brands International", Ethical Corporate Magazine, Nov. 2004.
• Bucheli, Marcelo (2005). Bananas and Business: The United Fruit Company in Colombia: 1899-2000. New York: New York University Press. ISBN 978-0-8147-9934-5. 
• Bucheli, Marcelo (July 2008). "Multinational Corporations, Totalitarian Regimes, and Economic Nationalism: United Fruit Company in Central America, 1899-1975". Business History 50 (4): 433–454. doi:10.1080/00076790802106315. 
• Bucheli, Marcelo (November 2005). "Banana Wars Maneuvers". Harvard Business Review 83 (11): 22–24. 
• Bucheli, Marcelo; Geoffrey Jones (2005). "The Octopus and the Generals". Harvard Business School Case (9–805–146). 
• Bucheli, Marcelo; link (2006). "The United Fruit Company in Latin America: Business Strategies in a Changing Environment". In Jones, Geoffrey; Wadhwani, R. Daniel. Entrepreneurship and Global Capitalism 2. Cheltenham (UK): Edward Elgar. pp. 342–383. 
• Bucheli, Marcelo (Summer 2004). "Enforcing Business Contracts in South America: The United Fruit Company and the Colombian Banana Planters in the Twentieth-Century". Business History Review (The Business History Review, Vol. 78, No. 2) 78 (2): 181–212. doi:10.2307/25096865. JSTOR 25096865. 
• Bucheli, Marcelo; Read, Ian (2006). "Banana Boats and Baby Food: The Banana in U.S. History". In Topik, Steven; Marichal, Carlos; Frank, Zephyr. From Silver to Cocaine: Latin American Commodity Chains and the Building of the World Economy, 1500-2000. Durham: Duke University Press. ISBN 978-0-8223-3766-9. 
• Bucheli, Marcelo; link (2003). "United Fruit Company in Latin America". In Moberg, Mark; Striffler, Steve. Banana Wars: Power, Production, and History in the Americas. Durham: Duke University Press. ISBN 978-0-8223-3196-4. 
• Bucheli, Marcelo; link (2006). "United Fruit Company". In Geisst, Charles. Encyclopedia of American Business History. London: Facts on File (published 2005). ISBN 978-0-8160-4350-7. 
• Bucheli, Marcelo; link (2004). "United Fruit Company". In McCusker, John. History of World Trade Since 1450. New York: Macmillan. 
• Taylor, Gary; Patricia Sharlin (2004). Smart Alliance: How a Global Corporation and Environmental Activists Transformed a Tarnished Brand. New Haven: Yale University Press. 
• "The Importance of Corporate Responsibility", Economist Intelligence Unit, January 2005.
• "Chiquita Brands: A Turnaround That Is Here to Stay", Winslow Environmental News, January 2004.
• "The banana giant that found its gentle side", 'Financial Times, December 2002
• '"Chiquita Wins Raves for Outstanding Sustainability Reporting", Greenbiz.com, April 3, 2003

External links

Wikimedia Commons has media related to Chiquita Brands International.

• Chiquita Brands International official site
• Chiquita Bananas official site
• United Fruit Historical Society: This site contains a detailed chronology of the history of Chiquita, biographies of the company's main protagonists, and an extensive bibliography.
• CounterPunch, 17 July 2009, From Arbenz to Zelaya: Chiquita in Latin America with video report by Democracy Now!
• Chiquita Lauded for Human Rights Abuses by Dan Kovalik, CounterPunch, January 12, 2010
• Chiquita: Between Life and Law Al Jazeera, June 2009
• The Chiquita Papers at The National Security Archive
• Chiquita Asks Court To Block Suits Blaming Banana Giant For Violent Deaths In Colombian Civil War. Associated Press, September 2013.