November 17, 2016

FRESH NEWSLETTER FOR A NEW SEASON We are pleased to introduce an updated grower newsletter format that continues to provide seasonal varietal information, report on Sunkist sales and marketing activities while also highlighting consumer and industry trends that inform our sales and marketing strategies.

Our staff will continue to share important regulatory information with growers separately from the newsletter to ensure timely news is communicated with the necessary urgency. Additionally, we encourage grower members to leverage the industry resources noted at the end of this newsletter for regular updates on important industry issues.

As always, your feedback is important to us. Please e-mail questions, comments and suggestions about the newsletter to [email protected].

VARIETAL UPDATE

ORANGES The Valencia crop has finished as the Navel orange season ramps up. The Navel crop is starting off with very good flavor and internal color. Focus is currently on sizes 88 and smaller as we wait for the season to progress with better overall color and more sizing options. Organic Navel oranges have also started shipping, with good availability and slightly larger sizing than the conventional crop; organic navels are currently at an 88/72/113 peak.

The first packs of oranges are expected the week of November 21/28, with initial sizing projected to be 88/72/113/56. Blood oranges are expected to start shipping the week of December 5.

LEMONS Demand for continues to grow, with bookings ahead of the past two years. Shipments are currently from districts 1 (D1), 2 (D2) and 3 (D3). The D3 harvest is underway with 47% of the crop in-house. The D1 harvest has started with 6% of the crop in-house. The new D2 program is just starting with light harvest volume.

Specialty supplies available include domestic Meyer, Organic, Seedless and Zebra® (pink variegated) lemons.

LIMES Sunkist is shipping limes along with our lemons in Ventura County, CA and Lancaster County, PA. In addition, we are delivering full trucks to customers directly from Mexico. Sunkist® Persian and Key limes are also available to load in McAllen, TX.

MANDARINS & Satsuma mandarins are almost finished. Sales were strong throughout the season. Color and flavor have been exceptional on this early mandarin.

Sunkist Smiles® mandarins are in production, with supplies increasing as the season progresses. Size structure will start out peaking 32/36/28 followed by 24 for the next couple weeks.

The Fairchild season has begun! Size structure will peak heavy LGE/MED followed by JMB. has great color, flavor and juice content and is easy to peel.

GRAPEFRUIT from our Texas and Florida programs, which supplement our California program to offer customers year-round availability, is now shipping.

PUMMELOS The pummelo season is running at a good pace with strong movement. Good supplies are available with all shippers packing. Early pack outs are peaking midrange in the sizes of 12s and 14s, mostly Sunkist grade.

SALES & MARKETING UPDATE

COSTCO OPENS NEW STORE IN HANFORD, CA WITH SUNKIST MANDARINS Hanford residents are ecstatic about the new Costco store that opened October 27, with lines of consumers waiting for the greatly anticipated store opening.

Consumers shopping the new store were able to stock up on Sunkist mandarins, prominently displayed in the retailer’s produce department. Sunkist navels and Texas grapefruit were also featured at the opening.

Sunkist Director of North American Sales Lance McMillan, pictured left, celebrated the opening with our Costco buyers.

SUNKIST CELEBRATES NEW SEASON AT 2016 PMA FRESH SUMMIT CONVENTION + EXPO With consumers focused on fresh, bold flavors, demand for citrus continues to grow. According to IRI Worldwide Data, citrus category growth out-performed fruit and produce category growth in both volume and dollar sales over the past year, so the opportunity was ripe for Sunkist to preview this year’s Sunkist citrus crop at the 2016 PMA Fresh Summit Convention + Expo.

Sunkist along with over a thousand vendors, exhibits at the annual PMA Fresh Summit, which is one of the largest fresh produce trade shows in the world. The event is well attended by nearly 20,000 from over 60 countries and provides Sunkist with the opportunity to meet with many key citrus buyers and customers from all over the world as well as showcase new packaging, display merchandising units, recipe sampling and the full line of fresh citrus varieties and Trademark Licensing products.

“PMA marks the beginning of a new citrus season, so this is a great time for us to connect with our customers and discuss opportunities to capitalize on demand,” says Joan Wickham, Director of Communications for Sunkist Growers. “We are excited to kick off the season and showcase trends and marketing initiatives.”

Sunkist Navel orange season begins in mid-October. Navel oranges, refreshingly sweet and juicy, are the most popular and widely known citrus fruit in the world. Seedless and easy to peel, Navel oranges make for a tasty and nutritious snack, while also serving as a wonderful ingredient for fresh, seasonal recipes.

Additionally, Sunkist Satsuma mandarins were showcased at Sunkist’s booth. These easy-peel mandarins are sweet, seedless and bursting with flavor, making them a consumer favorite. They are also packed full of Vitamin C— with just one Satsuma mandarin providing you with a full day's supply!

Thought to be a cross between a regular lemon and a mandarin, Meyer lemons were also showcased. Sweeter and less acidic than conventional lemons with a refreshing herbal scent, Meyer lemons are perfect for cooking, baking, and beverages. Sunkist offers quality, fresh lemons year-round as well as a portfolio of specialty lemons with seasonal availability including Seedless and Zebra® brand (pink variegated) to meet growing demand for this versatile household staple.

As consumer demand for organic citrus continues to increase, Sunkist growers are increasing production of organic citrus varieties. The cooperative currently offers a broad portfolio of organics including Navel, Cara Cara Navel and Valencia oranges, mandarins, Minneola , grapefruit, lemons and limes.

“Consumers are looking for seasonal items in the produce department,” said Sunkist Director of Retail Marketing, Julie DeWolf. “Retailers can generate excitement around citrus season by leveraging point of sale materials such as posters and secondary display units, coupled with sampling, to educate consumers about seasonality, nutrition information and flavor profiles of seasonal varieties.”

For retailers looking to capitalize on seasonal citrus varieties, Sunkist will preview specialties that come into season during the winter months including Cara Cara Navel oranges, blood oranges and Minneola tangelos – unique specialty items that respond favorably to promotion.

Showcasing how delicious and versatile Sunkist citrus is as an ingredient, Sunkist sampled citrus recipes courtesy of Chef Jill Davie, including an Orange Chorizo-Spiced Burger Bowl and a Lemon-Coconut Soup with Butternut Squash, Tomatoes and Basil Shrimp.

Additionally, refreshing beverages were served courtesy of Chef Kathy Casey including a Sparkling Lemon Lavender drink in the morning and a California Mai Tai, made with freshly squeezed oranges, lemons and limes, in the afternoon, pictured left.

FOOD BLOG PROMOTES SUNKIST NAVEL ORANGES Sunkist partnered with food influencer Sally’s Baking Addiction this year to feature citrus recipe ideas and tips throughout the season. Sally’s latest citrus concoction, Dark Chocolate Slice & Bake Cookies, features juice and from Sunkist Navel oranges.

She writes, “See that gorgeous orange zest in the cookie? I love it. So much flavor. This is a recipe I’m making in partnership with Sunkist and their juicy, refreshing navel oranges shine in these slice ‘n’ bake cookies. What better to pair with orange than dark chocolate? Truly an underrated flavor combination, chocolate and orange is not only spot-on delicious– the pair’s kinda perfect for Halloween, no?”

The recipe post was also shared on her social channels: Facebook, Twitter, Instagram and Pinterest.

Sally’s Baking Addiction covers cooking and baking, offering recipes and ideas for meals and desserts. Sally is also an author of two books – Sally’s Baking Addiction and Sally’s Candy Addiction. All her recipes are classic and approachable, inspired by her favorite seasonal flavors and recipes passed down in her family. Her blog also includes informational posts about different baking techniques and how to use proper ingredients to achieve the best results. The blog has 255,805 unique monthly visitors.

FAREWAY FEATURES SUNKIST ORANGES IN RETAILER’S CONSUMER MAGAZINE The November-December issue of Fareway’s seasonal magazine, Balance, promotes the start of Sunkist orange season in a branded 2- page spread.

The feature includes educational information about Navel, Cara Cara Navel and Blood oranges as well as Sunkist’s Cranberry, Orange, Walnut & Goat Cheese Dip recipe.

The spread also highlights Sunkist’s Family Stories program, highlighting Sunkist grower Gary Laux, pictured right.

CONSUMER NEWS & TREND UPDATE In this new section of the grower newsletter, Sunkist summarizes consumer and industry new stories that the sales and marketing teams are following to inform the positioning of our brand and citrus portfolio.

RECENT NEWS IN SUMMARY Convenience stores have been offering a more sophisticated and diverse selection of food for some time, posing a competitive threat to quick-service restaurants. New data reveals that this threat continues to grow, as convenience stores are seeing increased traffic from consumer groups. For example, both Gen Z and millennials have increased visits to convenience stores in the last five years. Millennials are now the heaviest users of convenience stores, accounting for 32 percent of visits in the year.

According to a new study, American children's high salt intake puts them at risk for heart disease later in life and nearly 90 percent of U.S. kids consume more than the recommended amount of salt for their age. The research also found that average levels of salt intake were especially high among teens aged 14 to 18 (3,565 mg daily). Dinner accounted for 39 percent of children's salt intake and lunch for 31 percent.

FOOD INDUSTRY NEWS AND TRENDS Kroger hints at more M&A in the grocery aisle [Shelly Banjo, Bloomberg] Bloomberg reports that America's largest grocery store is still hungry for deals. Kroger Co., with $110 billion in sales last year, has become America's second-largest seller of groceries after Wal-Mart Stores Inc., thanks to 51 straight quarters of positive sales growth, along with acquisitions such as supermarket chain Harris Teeter.

Whole Foods is launching a rewards program in 2017 [Virginia Chamlee, Eater] Eater reports that a Whole Foods loyalty rewards program is on the horizon, as are more in-store meal kits. The grocer will soon roll out its optimized rewards program at all U.S. stores, where users get 10 percent off their first purchase, a one-time offer of 15 percent off any department, and select free products throughout the year. The more customers shop at Whole Foods stores, the more rewards are unlocked.

FOODSERVICE NEWS Calculating the new cost of food spoilage [Terry Myers, Fast Casual] Fast Casual reports that farmers are starting to rethink spoilage. Climate change, increasing land, water, labor costs, and new laws are forcing greater efficiency in harvest, cooling, and distribution, not only to prevent spoilage, but to maximize profitability. Traditional practices of sending more products than ordered and writing off a percentage due to spoilage or refused shipments is less affordable and less acceptable in terms of the investment made to produce it. Addressing pre-consumer spoilage represents not only captured profit but a competitive advantage. Forward-thinking companies are embracing new technologies to better position themselves for ongoing profitability. In 2015, a report by the UK Waste & Resources Action Program highlighted the monetary benefits of reducing food waste. The report predicts that by reducing waste from 20 to 50 percent, could save the industry between $120 billion to $300 billion.

Threat from C-stores keeps growing [Fern Glazer, Nation’s Restaurant News] Nation’s Restaurant News reports that convenience stores have been offering a more sophisticated and diverse selection of food for some time, posing a competitive threat to quick-service restaurants. New data reveals that the threat continues to grow, as these food-forward chains change the face of the convenience store consumer and increasingly take visits from quick-service restaurants.

The Evolution of Farm-to-Table Fast Casual [Christa Gala, QSR Magazine] QSR Magazine reports that as consumers continue to clamor for wholesome food and restaurant transparency, more operators like Olinto are considering how vertical integration can redefine the farm-to- fork formula. Not only does it offer greater control over their supply chain, but it also lends restaurant owners the opportunity to better connect with the communities they serve. Engaging the community and making them a part of the experience goes a long way toward building a bond with the brand, the article notes.

How Unilever is embracing transparency [Food Business News] Food Business News reports that nearly 4 in 10 consumers say they would switch to a new brand from a current preferred brand in favor of increased product transparency, according to a recent study. Moreover, 73% of consumers would be willing to pay more for a product that offers complete transparency. The article notes that Unilever is doing it right when they hired Label Insight to help them deliver a component of their Sustainable Living initiative, which had to do with becoming more transparent about the ingredients in their products, particularly food products.

What Restaurants Need to Know About FDA Regulations [QSR Magazine] QSR Magazine reports that according to the U.S Food and Drug Administration (FDA), Americans eat and drink about one-third of their calories away from home. In order to help consumers make more informed and healthier dietary choices, the FDA established a mandate for nutrition labeling in chain restaurants and similar retail establishments. The article notes that the bottom line for restaurant operators should be that although the effective date for the FDA compliance has been pushed back several times, it’s more beneficial for businesses and their customers to start planning for the inevitable now—especially given the FDA will want to see proof of nutritional content and calorie levels through a vetted analysis process.

POLICY & REGULATION NEWS Coca-Cola, PepsiCo hit with wave of soda taxes [Jennifer Kaplan, Bloomberg] Bloomberg reports that Coca-Cola Co. and PepsiCo Inc. are facing a wave of new soda taxes after four U.S. cities voted to pass the measures, part of an escalating war on sugary drinks.

WELLNESS NEWS Too Many Kids Eating Too Much Salt [Robert Preidt, HealthDay News] HealthDay News reports that according to a new study, American children's high salt intake puts them at risk for heart disease later in life. Nearly 90 percent of U.S. kids consume more than the recommended amount of salt for their age. The research also found that average levels of salt intake were especially high among teens aged 14 to 18 (3,565 mg daily). Dinner accounted for 39 percent of children's salt intake and lunch for 31 percent.

CITRUS AND INDUSTRY NEWS Berries, citrus rising stars in organic sales growth [Melissa Shipman, The Packer] The Packer reports that 2016 was a banner year for organic and vegetables, as sales at mainstream retailers totaled $5.5 billion. The article adds that organic citrus growth has been strong and anticipates a good citrus season.

US Citrus Industry Working Together [Patrick Cavanaugh, California AG Today] California AG Today reports that State Citrus Mutuals in California, Texas and Florida are diligently working in Washington, D.C., for $10 to 12 million in annual funding to help their citrus regions fight Asian Citrus Psyllid (ACP) infestation and Huanglongbing (HLB).

Bayer & California citrus industry unite to remove abandoned trees [Fresh Plaza] Fresh Plaza reports that California Citrus Mutual (CCM) and Bayer CropScience have united to stop the spread of a dangerous pest and disease attacking the state’s citrus trees. The article adds that as part of their initiative, eighty citrus trees were recently removed from a residential property in Exeter, California.

Florida: all orange production up 3% [Fresh Plaza] Fresh Plaza reports that in the U.S. Department of Agriculture's monthly outlook, released Wednesday 9 November, Florida's orange harvest is forecasted to fill 72-million 90-pound boxes, up 2 million boxes from the initial forecast in October.

Producing seedless fruits could improve food security [Fresh Plaza] Fresh Plaza reports that according to newly released research, the production of seedless fruits is an under- estimated tool for improving food security. The opportunity to produce bountiful levels of vital food crops such as apples, tomatoes and watermelons could be boosted by reducing a crop's demand for pollinators, new research has shown.

USDA releases 2015 pesticide data [Tom Karst, The Packer] The Packer reports that the newly released U.S. Department of Agriculture’s 2015 Pesticide Data Program summary shows that more than 99% of the samples tested had pesticide residues well below the residue levels established by the Environmental Protection Agency and 15% of samples had no detectable residues.

INDUSTRY NEWS RESOURCES Stay connected to the industry by connecting with these groups, who regularly issue important updates about industry meetings, regulatory matters and more. California Citrus Mutual California Citrus Quality Council Citrus Pest & Disease Prevention Program’s Citrus Insider

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This publication is prepared for Sunkist growers. Sunkist, Sunkist Smiles and Zebra are registered trademarks of Sunkist Growers, Inc. ©2016