One winter night seven years ago, Tom Cullen bit into the future.
He found it cold; he found it fruity; he found it delicious: and he began to dream.
For Tom Cullen, who once made his living in construction, the future was in Popsicles, or rather, frozen novelties, as they are called in the food business.
Now, a shopper can open any supermarket freezer door and find frozen fruit bars on a stick manufactured by a half-dozen food-industry giants, such as Dole and Chiquita. But back in December 1980, when Cullen first encountered a frozen fruit bar, served as dessert at a dinner party at his brother's house, the product was virtually unknown to consumers.
Since that dinner party, a lot has happened to the boyish-looking former sheet-metal worker from Somerdale, N.J. And most of it has happened because Cullen started making frozen fruit bars.
These days, Cullen, 41, and his company, California Natural Inc., find themselves in a federal courtroom in Camden, N.J., fighting one of the giants in the food industry, Nestle Enterprises Inc. Tomorrow, the jury will hear closing arguments and instructions from U.S. District Judge Stanley Brotman.
Cullen sued on June 6, 1984, alleging that Nestle's failure to follow through on a promise to buy what had grown into a $1.7 million business crippled California Natural Inc. and dashed the hopes of Cullen and company shareholders, who thought they would make millions on frozen fruit bars.
Nestle, the suit said, demanded exclusive negotiations and promised to buy the firm for $1.7 million up front and to make further payouts based on sales. Nestle then dragged out talks for so long that the company was unable to gear up for the 1984 summer season, the suit alleged. Nestle's aim, the suit said, was to force the company into bankruptcy, buy it at a lower price and give itself a cheap entree into the growing frozen-novelty business.
After the deal fell through in February 1984, the company limped along until it was sold in May 1985 for a lower price to Chiquita Brands North America Inc., enabling Chiquita to introduce its fruit-and-juice bars in the nation's supermarkets.
Cullen now works for Chiquita, earning $100,000 a year to run the frozen-fruit-bar business, according to testimony.
Nestle executives say they never promised to buy the company.
Instead, they maintain in a countersuit, Cullen and his partner, Thomas Flynn Jr., tricked Nestle in fruitless negotiations by trying to make it appear that the sales of the frozen fruit bars were better than they actually were.
During the past weeks, as summer humidity has hung heavy over Camden's streets, the jury has heard the history of ice cream treats dating from the first cone introduced at the St. Louis World's Fair in 1904. It has taken a short course in trademark law and learned about how food merchants "roll out" a new product to a national market.
Toby Rosen, marketing director of the International Ice Cream Association, a Washington-based trade organization, estimated in an interview last week that sales of frozen fruit bars should increase by 50 percent this summer, making them the fastest-growing segment of the frozen-novelty business. Sales of all frozen novelties are expected to grow by 12 percent this summer, she said.
"There's a consumer interest in low-cal, fresh and refreshing," she said. "It's the all-natural image."
It was just that image that attracted Cullen when he bit into his first frozen fruit bar. "From the very beginning, what California Natural was all about," Cullen said, "was not feeding people junk, but feeding people good food, natural, wholesome pieces of fruit, fruit juice."
The fruit bar that Cullen sampled at his brother's house was made by Jerry Naccari, a Los Angeles bartender who concocted the bars in his garage and sold them at flea markets on weekends.
Cullen testified that Naccari was "thrilled to death" with the idea of building his fruit bars into a national business.
But later, Cullen testified under cross-examination, Naccari, whom he described as a friend, began to write Cullen letters demanding $100,000 for continued use of the name, even as negotiations with Nestle were under way.
In the summer of 1981, Cullen and his wife made the bars in Ocean City, N.J., and hired "eight to 10 kids who were out of school, dressed them in cute little outfits" and sent them out to hawk $27,000 worth of bars on beaches from Cape May to Atlantic City.
By the next summer, the business had expanded into larger quarters in Westville, N.J., and landed some contracts to sell bars in amusement parks, including Walt Disney World and Disneyland. The contracts made them attractive to Nestle, testified Nestle President James Biggar.
Nestle executives testified, however, that on examining the books, they found that California Natural had paid so much in fees to get into the parks that in some cases, expenses outweighed sales.
By the end of summer 1982, with annual sales of $300,000, Cullen said, California Natural had outgrown its Westville facility. It was clear to Cullen and Flynn that the company needed a big infusion of money to expand into the national market. They began to search for corporate partners.
At the same time, the frozen-fruit-bar business was beginning to heat up, according to food-marketing expert Daniel J. McLaughlin Jr., a St. Joseph's University professor who testified for Cullen about the history of ice cream treats.
In August 1983, as part of an industrywide scramble to be first in the freezer, Nestle began negotiating with California Natural.
To attract Nestle's attention, California Natural sent some of its peaches-and-cream bars to Biggar's vacation home in Georgia. Unfortunately, the bars arrived the same day Biggar's wife made her favorite ice cream dessert. It was peach-flavored.
"Everybody liked the bars better than her dessert," Cullen testified. "So kiddingly, you know, that was kind of a funny thing to have happen. I didn't want to get in trouble with Mrs. Biggar, of all people."
Cullen said Nestle and California Natural Inc. struck a deal in a meeting he and Biggar had on Oct. 19, 1983. All that remained was to draw up the final papers, he added.
Meanwhile, said Cullen, California Natural was beginning to experience a "cash crunch." But, he said, the Nestle people had told him not to continue promotions and not to worry about setting up for the 1984 season. By the time negotiations ended in February 1984, Cullen said, the potential for success in the summer of 1984 had been badly damaged.
Biggar testified that California Natural's business records did not reveal some of the company's problems. For example, he said, the company included fruit bars that were given away in its $1.7 million in sales.
He said lab tests showed that the products were neither low-calorie nor completely natural. Besides, Biggar said, the company did not even have the clear right to use the California Natural name.
"What had started off to be a very attractive business with a young entrepreneur that I believed in" turned out to be "the young entrepreneur, but nothing else," he testified.