Glenboden M & A Originations

Chilled juice confirmed as distinct category after Simply Squeezed acquisition

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Origination Status buyer announcement of acquisition agreement, July 2009
Asset Simply Squeezed Holdings Ltd (New Zealand), leading domestic chilled juice producer
Buyer Frucor Beverages Ltd (New Zealand), leading fruit juice and energy drinks producer in Australasia
Seller founder (Steve Brownlie), private equity firm (Crescent Capital Partners)
Buyer Rationale expansion into high-potential chilled juice segment
Seller Rationale acceptable valuation, timing
NBs Frucor was acquired from Danone by Japan's Suntory for € 600 mln in 2008
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There's increasing evidence that chilled juice is not only a distinct category, but is also the new frontier for non-alcoholic beverages. Chilled also means any combination of single-serving, convenient, tasty, fresh and healthy. We look at most recent M&A activity in this category; we also consider future candidates in that space.

Frucor is shifting from ambient to chilled ...Frucor, acquired from Danone by Suntory in late 2008, is a leading non-alcoholic drinks producer in Australia and New Zealand. Its brand portfolio covers not only fruit juice but also energy drinks (its flagship), enhanced waters, functionals and regular CSDs. Most of this offering is ambient shelf, and far from being 'fresh'.

By acquiring Simply Squeezed, Frucor has taken a bold step into the chilled category. That brand claims to have 65% market share in the supermarket chilled juice shelf in New Zealand; its products have only a 30 day shelf-life, and are sold by over 40 distributors nationwide, through a 'short' supply-chain system.

... as part of a global trend to chilled juices ...This is not the first, and probably not the last, example of a big non-alcoholic drinks producer diversifying into chilled juices and drinks.

The rationale is that the consumer will turn increasingly to the convenience, taste and health qualities that chilled products can deliver, especially where 'fresh', i.e. short shelf-life, is part of the formula. In the current economic environment, admittedly, many consumers are avoiding the premium pricing that comes with chilled alternatives. However, this is likely to reverse in the longer term.

... that bigger groups can commercialise effectivelyBigger groups are in a better position to commercialise and to mainstream chilled juices, most of whom are small -scale and independent so far. They can also help to buttress the brands with recognised health and authenticity claims.

Simply Squeezed has already run into this problem, with its rejected claim that all of its oranges were locally sourced. At the other end of the globe, Innocent in the UK had to withdraw an antioxidant claim in 2007. These issues can be addressed by the R&D functions of bigger acquirors.

Numerous cases of chilled juice deals since 2006 ...The last two years have seen a plethora of chilled juice acquisitions, of this kind.

Coca-Cola acquired Fuze Beverage in the US in 2007, and a minority stake in Inncocent, smoothie market leader in the UK, in 2008. Not to be outdone, Pepsico bought Naked Juice in the US in 2006.

A more determined approach has been taken by Eckes-Granini of Germany, the leading, and most pioneering, pan -European branded fruit juice producer.

They acquired Sweden's leading premium chilled juice maker, Bramhults, in 2007. In the following year, they made no less than three further chilled juice purchases; Elka in Germany, Ulti in France (renowned for its 14-day shelf life products), and Zamba in Switzerland.

... with more potential buyers emerging...This is a story that will run for several years to come, as there are a large number of small, independent chilled juice producers, across Europe and beyond, that are all potential acquisition platforms for bigger groups.

At the same time, larger groups have entered this segment. Companies like Hero (Schwartau) of Germany, and Chiquita of the US, have launched their own offerings. Even Unilever's Knorr and Pepsico's Tropicana are experimenting in this space. They could all be buyers of add-on chilled brands in future.

A serial acquiror might also be emerging, from the 'blind-side', in the form of the Jamaica Producers Group, owners of Sunjuice in the UK and, more recently, acquirors of Hoogesteger from Friesland in Holland. They have pan -European ambitions in fresh juice.

... and sellers positioning themselvesAs for sale candidates, a couple of private -equity owned players come to mind.

The French group Materne, owned since 2006 by Activa Capital, has recently diversified beyond fruit compotes and into chilled 'spoonable' fruit.

Meanwhile in the US, SunnyD, owned by JW Childs since 2004, is transforming itself from a maker of value-segment fruit drinks, into a producer of premium and chilled juices. First it launched a range of smoothies, called FruitSimple; next it acquired the Veryfine brand from Kraft in 2007; then in 2009 it bought the Bossa Nova superfruit juice specialist in 2009.

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