The tang of Jose Luis Cutrale’s orange-juice factory permeates the air in the Brazilian town of Araraquara.
For visitors who make the 173-mile trek northwest from São Paulo, the aroma is a welcome respite from the stench that normally emanates from the city’s sewage-choked Tiete river. For local inhabitants, the Sucocitrico Cutrale Ltda plant reminds them of home.
“I don’t even like the taste of oranges, but I love the smell of Cutrale,” said Andrea Savia, an aide for an Araraquara city council member. Returning recently after a year away, Savia broke down in tears when she took her first whiff of the company’s pungent by-product.
Sucocitrico Cutrale has grown under CEO Cutrale, according to filings for its international operations. The closely held business has defied declining global demand for orange juice, a decade-long scourge of crop disease in São Paulo, and allegations that the executive heads a cartel of orange exporters.
Cutrale, 68, is head of a third-generation fruit empire that began with his family’s orange groves and grew into Minute Maid’s largest supplier. He’s also a shareholder of Brazilian Coca-Cola distributor Spaal and has interests in commercial real estate, commodities-trading firms and a US-based aircraft operator.
His fortune, valued at $2.6 billion, according to the Bloomberg Billionaires Index, makes him the 26th-richest person in Brazil. He doesn’t appear on an international wealth-ranking and declined to comment for this story.
Sales have increased at Sucocitrico Cutrale as orange output from Florida heads toward a 25-year low. Worldwide consumption of orange juice in the top 40 markets dropped 11 per cent in the past decade, with demand in the US dropping by 27 per cent, according to data from Brazil’s association of citrus-juice exporters.
To diversify, Cutrale began growing soy to export to Asia and joined with Brazilian banking billionaire Joseph Safra in a $1.3-billion buyout of Charlotte, North Carolina-based Chiquita Brands International Inc., which was completed in January. In the Chiquita bid, Cutrale revealed that his family’s empire controls more than 33 per cent of the $5-billion global orange-juice industry.
Chiquita’s pineapples, fruit chips and salad products have reduced Cutrale’s exposure to oranges, as flavoured water and single-serve coffee cut into demand for orange juice, said Brett Hundley, analyst at BB&T Capital Markets, which has offered investment banking services to Chiquita.
Cutrale’s buyout came after the US Court of Appeals in Atlanta dismissed a case in July by thousands of Colombians who contend that Chiquita financed paramilitaries. Plaintiffs say that they are seeking further review, including in the Supreme Court, if necessary. The company pleaded guilty in 2007 to US criminal charges stemming from the payments at issue in the Atlanta case and paid a $25-million fine. Cutrale and Chiquita declined to comment further.
“Diversification, when done well, is a blessed strategy,” Marcos Fava Neves, professor of strategy at the University of São Paulo’s economic school, said in an email. “The world’s orange-juice market is in decline. So maintaining its leadership in juice, but also looking after soy and fruits, is a good route if Cutrale wants to keep growing.”
Sucocitrico Cutrale doesn’t publish its financial results. According to annual reports filed by London-based Burlingtown LLP, a UK holding company that oversees Cutrale’s operations outside of Brazil, annual revenue doubled to $1.3 billion between 2007 and 2013.
The holding company has ten subsidiaries spread across the US, the UK, the Netherlands and Portugal, with stakes in Zurich- based Grove2Glass Trading, Nippon Juice Terminal KK in Japan, and Orlando-based General Avileasing Inc., which owns the company’s jets. It lists Cutrale’s wife, Rosana, and their children, Jose Enrique, Jose Luis Junior and Graziela, as directors.
The family’s fruit business was started by the billionaire’s grandfather, Guiseppe Cutrale, an Italian immigrant who sold oranges in São Paulo's municipal market, according to Eliseu Nonino, a family friend and former director at the company.
The elder Cutrale purchased an orange grove and began exporting the fruit to Europe and the Middle East in 1956. His son, Jose Cutrale Jr, bought a juice plant in 1967 and changed the firm’s name to Sucocitrico Cutrale. He acquired five industrial complexes in São Paulo state and two former Minute Maid plants in Florida.
“Jose was an entrepreneur with a grand vision,” Nonino said in a phone interview from Araraquara.
The company that Jose Luis Cutrale oversees today looks nothing like his grandfather’s orange business. Employees use satellite imaging of Brazilian groves to ensure the fruit is picked at the right time. A pipeline sends juice from silos in Auburndale, Florida, to a Coca-Cola bottling plant. Blend technicians control acidity levels by following algorithms known internally as 'the black book'.
Cutrale executives fly in and out of Araraquara using a helipad atop a high-rise building next to its plant, which produces orange concentrate all night. They live in company- built homes within a heart-shaped clearing protected by armed security. A swimming pool and tennis court in the compound are surrounded by orange groves.
The company’s reach spans the global supply chain, from about 400,000 acres of Brazilian groves to a fleet of vessels that ship his commodities to at least three continents. Trucks with the logo of a dripping orange slice are a fixture on São Paulo highways as they haul juice to Santos, Latin America’s biggest port, where the company rents a private-use terminal.
To meet demand in Asia, Cutrale invested in a commodities-trading company and soy plantations near Brazil’s Amazon in 2012. Soy exports from Araraquara spiked fourfold in 2013 to $777 million, though they tapered off in 2014, according to Brazil’s trade ministry.
Trade data shows Cutrale’s exports surged 62 per cent to $1.7 billion in 2013 from a year earlier, and reached at least $1.4 billion in 2014. Coca-Cola and Cutrale buy about 30 per cent of all oranges grown in Florida.
The USDA estimates that Florida produced 125 million boxes of oranges in the 2013-14 crop year, about half its peak in the late 1990s, when output was 244 million boxes. Brazil’s Conab said that production in São Paulo and Minas Gerais states remained stable over the past 15 years, at about 340 million boxes.
Brazil was more prepared than Florida for greening, an insect-borne bacterial disease discovered in the state’s orange groves in 2005, because it had put systems in place after outbreaks of a bacteria known as canker, said Juliano Ayres, director of Cutrale-funded Fundecitrus in Araraquara, which releases alerts as diseases spread.
Cutrale’s rise in the orange business has attracted scrutiny. In the 1980s, the company was among Brazilian producers accused by the US Commerce Department of selling juice in the US at prices deemed too low by Florida growers, though he had the US anti-dumping measures removed in a World Trade Organization case that closed in 2013.
Brazil’s citrus-growers’ association accused Sucocitrico Cutrale, Citrosuco and a unit of Louis Dreyfus of forming a cartel to keep prices for oranges they were buying artificially lower since the 1990s. A ruling by Brazilian antitrust authorities is pending. The companies have denied the claim for decades, and declined to provide further comment.
“Cutrale manipulates the market and creates a barrier to entry from competition,” said Flavio Viegas, head of the association, who supplied Cutrale for more than four years from 2004.
Dino Tofini, a juice-maker who died in 2013, told São Paulo state legislators at a 2010 hearing that he was forced to participate in weekly price-fixing meetings orchestrated by Cutrale. Police rounded up 30 bags of documents and computers from orange exporters in a 2006 operation known as 'Fanta'.
The stash of goods, which included an Uzi submachine gun seized from a Cutrale director’s office, according to the daily paper Folha de São Paulo, was blocked for four years before investigators were granted access, since exporters said the evidence was obtained illegally. Companies involved in cartels can be fined as much as 20 per cent of annual sales in Brazil.
Sucocitrico Cutrale denies any wrongdoing and said in an email that it’s cooperating with investigators. The company said that it created 20,000 jobs globally and “contributes positively” to its communities, citing donations of robotics to a local hospital and daily servings of orange juice for 2,000 schoolchildren.
Cutrale also has faced inquiries into its labour practices. Prosecutors in São Paulo state say that they’ve investigated the company’s labour practices 286 times over the past decade, compared to 50 times for Citrosuco and 71 for Louis Dreyfus Commodities. Some probes have resulted in lawsuits and others in settlements.
In March 2014, a tribunal ordered Cutrale and two other companies to pay 113 million reais ($43 million) and to stop the irregular subcontracting of orange-pickers. Cutrale denied any wrongdoing and declined to comment on active cases.
Politicians covet Cutrale’s support despite the accusations. The billionaire pledged 21 million reais in last year’s election, including 6 million reais to President Dilma Rousseff’s re-election campaign and 9.8 million to members of the opposition party that governs São Paulo state.
In 'Entreatos', a documentary directed by fellow billionaire Joao Moreira Salles on Luiz Lula da Silva’s 2002 campaign, the future president orders an aide to write a declaration of support and ask Cutrale to read it on TV.
“I had dinner yesterday with Cutrale,” Lula told a campaign ally in the film. “I said, ‘You’re really my friend, this is the third time we meet. So, when are you going to declare your support? I want you to say you are the biggest exporter in this country.'”
Bloomberg News, edited by ESM
