Ocean Spray expands operations

Related tags Ocean spray Cranberry

US cranberry co-operative Ocean Spray will purchase the cranberry
processing assets and current inventory of unprocessed cranberries
of Wisconsin-based Northland Cranberries as part of the expansion
of its fruit receiving and concentrating operations.

In a $28 million purchase-and-sale agreement signed by the two companies, Ocean Spray​ will buy Northland's 172,000-square-foot cranberry receiving and concentrate manufacturing plant, as well as its adjacent office building, and the company's existing inventory of frozen, unprocessed cranberries. However, Ocean Spray will not buy the Northland brand or its retail juice business.

In addition, Ocean Spray will pay Northland $5 million to secure first option on the purchase of 14 Northland-owned cranberry marshes in Wisconsin, leaving three cranberry properties in the hands of Northland. Ocean Spray and its grower-owners will have 180 days to exercise the option of buying those acres at a set price.

Ocean Spray and Northland today also signed a 10-year agreement through which Ocean Spray will receive and convert into concentrate all of the cranberries produced by Northland and its contracted growers. Using that concentrate, Northland will continue to bottle, market and sell its own juice brands.

"Ocean Spray is growing, not only as a brand, but as a manufacturer of cranberry concentrate for the worldwide market,"​ said Randy Papadellis, president and CEO of the Lakeville, Massachusetts-based grower cooperative.

In June, Ocean Spray snubbed a joint venture proposal from soft drinks giant PepsiCo and opted instead to continue as a farmer-owned coop.

Despite challenging finances in recent years the grower-owners at Ocean Spray - more than 900 fruit growers making it the world's largest cranberry producer - voted roughly 52 to 48 per cent against pursuing the Pepsi venture. The "no" verdict on the Pepsi deal means Ocean Spray will stop all talks with PepsiCo and other potential equity investors, bringing to an end a lengthy 'options' process launched by the board more than a year ago.

Pepsi's Tropicana juice drink is one of Ocean Spray's toughest competitors in the juice business, along with Coca-Cola Co.'s Minute Maid.

The cranberry fruit market has been hit in the past two years by high yields and low prices that damaged the bottom line for Ocean Spray. But a current modest pick-up in prices could herald a marginal recovery.

Early last year, Ocean Spray rejected an $800 million offer for its juice business from rival Northland Cranberries.

The credibility of cranberries as a health-giving ingredient received a boost in April when, AFSSA, the French government's food safety authority, confirmed that the powder and juice of North American cranberries (vaccinium macrocarpon) "help reduce the adhesion of certain E. coli bacteria to the urinary tract walls"​.

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