EVANSTON, Ill. -- Calgene Fresh, which has been awaiting the government's seal of approval to market its genetically altered Flavr Savr tomato, said it is scaling back its operations here to avoid absorbing "further heavy operating losses." According to a statement issued by Calgene's parent company, Calgene Inc., Davis, Calif., the losses stem from months of delays in the approval process.
Calgene Fresh has laid off a "substantial number of personnel primarily in its Chicago distribution center and in-store support functions," according to the statement.
Although Calgene representatives refused to disclose the exact number of layoffs, one industry source, who asked not to be identified, said that at least 100 were affected, some of them in senior-level positions.
The cuts are centered primarily on the production, distribution and marketing of Calgene's vine-ripened tomatoes grown by conventional methods and sold under the MacGregor's brand. Those tomatoes, which carry a premium price tag, have been sold at retail for some time in a test.
Retailers currently carrying the MacGregor's brand will likely be affected by the move to scale back because of lack of supply. Although crops to be marketed as MacGregor's tomatoes are still being harvested in Mexico, once supplies are exhausted, the product from Calgene won't be available unless the genetically altered tomato wins government approval. Then the tomatoes would be grown using the new process.
"We launched the MacGregor's brand . . . 18 months ago in order to establish a grower base, to develop and test our logistics system and to validate consumer demand and premium pricing for superior tasting vine-ripened tomatoes," said Roger Salquist, Calgene Inc.'s chief executive officer, in the written statement.
"We substantially accomplished those objectives early last fall, but continued to expand distribution to over 500 stores in the Midwest in anticipation of FDA clearance of the transgenic Flavr Savr tomato. However, we cannot justify further heavy operating losses."
Company representatives declined to elaborate on the total amount of losses incurred.
Calgene was expecting FDA to complete its technical review last summer, and to give them the green light to market the Flavr Savr tomato if the outcome had been affirmative. When the review was prolonged, the company chose to continue marketing it's conventionally grown, vine-ripened tomato.
"We were losing too many tomatoes to spoilage," said Carolyn Hayworth, Calgene's spokeswoman. "That's why you don't see that many companies marketing a vine-ripened tomato. The technology of the Flavr Savr tomato slows down the rotting process."
Since MacGregor's tomatoes are still being harvested, it's too early to tell when stores will see supplies dry up and who will be affected first, Hayworth said.
If approved, the Flavr Savr tomato will be the first commercially available genetically altered food product. Calgene voluntarily requested FDA's review of the technology, despite the fact that FDA approval is not mandatory for introducing such a product.
Calgene "could have put it out on the market," said Brad Stone, a spokesman for FDA, "but they wanted to go the extra mile to assure the public that the technology is safe. We're dealing with a new technology. We've had to review a lot of data supplied by the company. It has taken more time than we would have liked, but the purpose [of the review] is to do a thorough evaluation so consumers will have confidence in the safety.