JPG set for string of fresh juice acquisitions after Friesland purchase
- June 25, 2008
||joint announcement of acquisition agreement, June 2008;
||Hoogesteger Fresh Specialist BV (Holland), fresh juice subsidiary of Friesland Foods;
||Jamaica Producers Group (Jamaica), global fresh fruit producer and distributor;
||Friesland Foods (Holland), multinational dairy, fruit juice and ingredients producer;
||expansion of fresh fruit juice business into continental Europe;
||focus on branded fruit juices and drinks;
||Hoogesteger is Holland’s leading producer of private label fresh juices and smoothies.
Why would Friesland, a € 4,5 bln turnover giant with a major fruit juice business, sell a leading fresh juice producer in its home market, adding the comment that JPG will now become ‘the most important fresh fruit juice producer in Europe’ ? There are two main reasons, (i) Hoogesteger is focused only on private label and foodservice, and (ii) it caters to the fresh juice market, meaning very short shelf –life. These are not areas of interest to multinational groups. By contrast, JPG now has a very clear path to acquiring a string of other fresh juice production units across the continent. Fresh juice, even more than other beverages, needs to be produced close to where it’s sold. So start looking for candidates.
JPG has a very interesting history, being established as a banana growers’ co-operative in Jamaica in 1929. Although now a commercial entity, it’s still largely owned by banana growers and their descendents, and went through a major diversification in the 1980, into citrus fruits and fruit juices, which included the establishment of Sunjuice in the UK in 1987.
Sunjuice, or The Serious Food Company, is now market leader in the UK in short shelf –life fruit juices and smoothies, which is mostly an unbranded category in that market. It also provides fresh soups, fruit desserts and snacks and chilled distribution. By acquiring its largest peer in Holland, it has a bridgehead to implement JPG’s strategy of expansion across Europe. JPG, which was loss –making in 2007, is keen to grow this value –added activity, next to its farms business. It is also well capitalized and, as can be seen from the valuation in this case, fresh juice pressers and squeezers aren’t expensive to acquire. So the ingredients are all there.
What’s more, all beverages need to be produced near to where they’re sold, because they’re a bulky product that’s expensive to transport. That’s why most beer is sold under local brands, and why Coca-Cola has bottling companies everywhere. With fresh juice this is even more important – it’s often unpasteurised, with a shelf life as short as one day sometimes, so it has to be produced and delivered very frequently, like fresh milk.
A company that sets a precedent for JPG is Refresco, the Dutch producer of private label soft drinks. In the space of less than five years it’s acquired 18 production sites in eight countries across Europe. JPG could be about to do the same thing, although the valuations will be in the low € millions.