Can Watermelons be Pomegranates?

CEO Hopes Sundia Brand will be the Next POM

By Published on .

COLUMBUS, Ohio ( -- Americans love watermelon, consuming on average 13 pounds a person in 2004, the most recent year tracked. (You had some on Memorial Day, right?)

Yet it's a leap to believe watermelon juice can emerge as the next POM, the pomegranate-juice brand that shot to $90 million in sales out of nowhere. A leap, maybe, to everyone but Brad Oberwager.
San Francisco-based Sundia believes watermelon juice can be the next big thing.
San Francisco-based Sundia believes watermelon juice can be the next big thing.

"Up until now, watermelon has been completely unassociated in people's minds" with a brand, said Mr. Oberwager, CEO of Sundia, a San Franciso company that wants to aggregate the country's 1,070 commercial watermelon growers under one brand umbrella. The goal of the 36-year-old Mr. Oberwager is to make the Sundia name as recognizable as Sunkist-the best-known fruit brand in the world. Sunkist, a nonprofit cooperative of orange growers that makes millions licensing its brand for things like Sunkist Soda and Sunkist fruit candies, is an anomaly. It has 55% of the fresh-orange market-no other fruit commodities control more than 10% of their respective markets.

"Sunkist was successful because they started a long time ago, in 1890," said Jeffrey Gargiulo, Sunkist's outgoing CEO, who is joining the Sundia board of directors. "There was no competition from other fruits. Oranges were the only fresh fruit you could find. That was it."

Mr. Oberwager, however, is creating a business model antithetical to the traditional fruit-branding method championed by growers like Sunkist, Del Monte and Ocean Spray.

Sundia owns no land and does not directly sell a single watermelon. Instead it tells a compelling brand story and leaves the hard work of production and manufacturing to others. Mr. Oberwager's mantra: "We are about brand, not land."

sticker scale

"He's not from the produce industry," said Mr. Gargiulo. "His ideas aren't constrained by the past. He brings a fresh look."

Like POM (known for its ads promoting the antioxidant powers of the fruit with lines like "Cheat Death"), Mr. Oberwager has a product with a good story and marketable health benefits. Watermelon contains high levels of lycopene, an antioxidant that a recent Harvard University study linked to the prevention of prostate cancer.

What he doesn't have is scale. "If you are going to make a dent in having a branded-fruit product you have to have scale," said Mr. Gargiulo. For "someone new coming along, it's going to be much more difficult."

So how does Mr. Oberwager intend to get scale? With those tiny, often overlooked, stickers on fruit required by retailers. He's using the stickers as an in-store marketing tool to promote and bring recognition to watermelon juice. By contracting with a single manufacturer, Sundia has cut in half the costs for stickers and shipping bins, negotiating bulk rates that U.S. watermelon growers pay. Without Sundia, a watermelon farmer would pay about $12 per 1,000 fruit stickers and up to $8 per shipping bin.

His pitch to growers: Just as POM juice helped prices for pomegranates skyrocket, raising the profile of watermelon juice could create similar profit margins.

Sundia has already launched a line of fruit juices-the mainstay being watermelon juice, along with combinations of watermelon juice with other flavors, such as blackberry and blueberry and yes, even, pomegranate, in 12-ounce bottles that retail for $1.79 to $2.20. Sales are expected to top $2.5 million this year in 3,000 retail outlets, including Safeway, HEB, A&P, Kroger and Albertson's.

Mr. Gargiulo praised Sundia's model of branching into other products: "You radically increase the number of brand impressions."

The company is also promoting the low-calorie nature of the fruit (two cups of watermelon juice has 80 calories), especially considering the bad rap high-calorie juices like apple have gotten in recent years.

Sundia is using PR to tout those benefits, and is testing an in-store promotional program in which stickers with coupons for free Sundia juice are put on Sundia watermelons. There are also plans for an in-store tasting program. For now, advertising will be limited to co-op programs in retail circulars. This summer, Sundia may also produce a book of watermelon recipes in conjunction with the National Watermelon Promotion Board for distribution in stores.

But Mr. Oberwager is seeding another marketing idea: selling watermelons as a kind of in-store billboard. "You can't get a sticker that is a really good ad on an apple, but a watermelon is huge," he said.

Seeds of Knowledge

* The first recorded watermelon harvest occurred nearly 5,000 years ago in Egypt.

* More than 1,200 varieties of watermelons are grown worldwide in 96 countries.

* Watermelon is 92% water.

* By weight, watermelon is the most-consumed melon in the U.S., followed by cantaloupe and honeydew.

* In 1990, Bill Carson of Arrington, Tenn., grew a 262-pound watermelon, the world's largest.
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