With these words, Keith E. Lindner, President and Chief Operating Officer of Chiquita Brands International, began his 1994 annual report to shareholders. Lindner’s pointed language, like the situation facing Chiquita, was stark: the world’s largest distributor of bananas was in the midst of a serious and unprecedented downturn. From a net income of $128 million on sales of $2.6 billion in 1991, the company had suffered three consecutive years of losses. By year-end 1994, Chiquita’s stock was trading at $13.63, down from $40 at the close of 1991. These setbacks had come during a crucial stage for the 35 year-old Lindner. Along with his father, Carl, a financier who had acquired Chiquita in 1984 and served the company as Chairman of the Board and Chief Executive Officer, the younger Lindner had been attempting to implement a new strategy for the Cincinnati-based fruit colossus. In 1992 he had launched an ambitious plan to shed underperforming assets, cut costs, focus on the company’s core fruit businesses, and restructure Chiquita’s debt commitments. By the end of 1994, these efforts had begun to produce positive results for the company’s balance sheet. But, as Lindner pointed out in Chiquita’s 1994 annual report, the company had suddenly found itself under siege from a powerful, if unlikely, source. As the European Union (EU) neared completion of its single market, member states had adopted a series of import restrictions that threatened to topple Chiquita from its leading position in the $3 billion EU banana market. Indeed, in the time that had elapsed between the July 1, 1993 effective date of the EU banana import regime and the last days of 1994, Lindner had seen Chiquita’s market share in Europe slide significantly. This eroding market share, combined with mounting annual losses, called for swift action on the part of senior management. Just what Chiquita could do to respond to the EU’s banana policy, however, was unclear.
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