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  • From: Tvoivozhd <tvoivozd AT infionline.net>
  • To: homestead AT lists.ibiblio.org
  • Subject: [Homestead] Cranberru Bogs
  • Date: Sat, 25 Sep 2004 11:58:27 -0700

Anytime I see anything that smacks of monopoly I get the pitty-pats, and I have a special affection for the Wisconsin cranberry bogs in which I used to hunt deer as a young man.

However, the quasi-monopoly of Ocean Spray and my favorite Northland (who makes real cranberry juice, not pallid imitatios like the others), is necessary to avoid making the monopoly of Tropicana et. al. complete.

ome <http://www.boston.com/> > Business <http://www.boston.com/business>
The Boston Globe <http://www.boston.com/news/globe/>


Ocean Spray buys competitor's assets


$28m Northland deal puts an end to antitrust suit

By Naomi Aoki, Globe Staff | September 25, 2004

Ocean Spray Cranberries Inc. <http://studio.financialcontent.com/Engine?Account=bostonglobe&PageName=QUOTE&Ticker=OCESO> purchased Northland Cranberries Inc.'s <http://studio.financialcontent.com/Engine?Account=bostonglobe&PageName=QUOTE&Ticker=NRCNA> processing plant and inventory for $28 million in cash to bolster its manufacturing and ingredient business.

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The deal ends Wisconsin-based Northland's antitrust lawsuit against Ocean Spray and follows Northland's unsuccessful $800 million bid for Ocean Spray's juice business.

''Ocean Spray is growing, not only as a brand, but as a manufacturer of cranberry concentrate for the worldwide market," said Ocean Spray chief executive Randy Papadellis. ''This agreement sends a clear signal that our presence -- and the cranberry industry as a whole -- is growing."

The deal allows Lakeville-based Ocean Spray to expand three months after it rejected an offer by PepsiCo Inc. <http://studio.financialcontent.com/Engine?Account=bostonglobe&PageName=QUOTE&Ticker=PEP> to buy a controlling interest in the cooperative's branded beverage business. Though Ocean Spray is the nation's top brand of bottled juice, it is tiny compared to its primary competitors, PepsiCo's Tropicana and Coca-Cola Co.'s <http://studio.financialcontent.com/Engine?Account=bostonglobe&PageName=QUOTE&Ticker=KO> Minute Maid, and has long been the focus of speculation that it would have to sell out to one of its bigger rivals.

After a years-long debate over the issue, the 925 growers who own the 74-year-old cooperative voted in June to stay independent. But beverage industry consultants remain skeptical that the $1.4 billion cooperative can compete against behemoths like Pepsi and Coke.

''The deal is practical -- it clears the air from an antitrust perspective; it shows that Ocean Spray is trying to nail down some more hard assets, and manufacturing," said Tom Pirko, president of Bevmark Inc., a Santa Barbara, Calif., consulting firm. ''But it doesn't have any material effect on the central issues facing Ocean Spray. What Ocean Spray needs is to make an investment in marketing that allows them to stand up and compete and not to be pushed around by Tropicana and everyone else in the juice business."

Ocean Spray is buying all of Northland's processing operations, including a 172,000-square foot plant in Wisconsin, and its current inventory of unprocessed, frozen cranberries. It also is paying $5 million for an option to buy 14 of Northland's 17 cranberry bogs. The six-month option allows Ocean Spray to buy the bogs for $42.5 million.

The companies also signed a 10-year deal for Ocean Spray to process cranberries from Northland's remaining bogs and its contracted growers. Northland will continue to bottle, market and sell its own juice, and manage contracts with 44 growers in Wisconsin and Oregon.

The alignment of Ocean Spray and Northland reverses what had been a bitter rivalry. Northland joined Clermont Inc. in November 2002 in the antitrust lawsuit against Ocean Spray. Clermont, of Duxbury, had been the second-largest US cranberry processor until it left the business in 1999, blaming Ocean Spray.

After Ocean Spray rejected Northland's $800 million offer for its juice business in February 2003, it had accused its smaller rival of trying to sow dissension among Ocean Spray's growers. Ocean Spray's members then narrowly voted, in June, to reject PepsiCo's offer to buy half of its branded business. Afterward, Ocean Spray said it would cease talks with potential investors and explore partnerships with others. The Northland deal is a result of those efforts, and comes as the industry emerges from a slump caused by a glut of crop and falling demand.

As part of their agreement, Ocean Spray and Northland agreed to settle their litigation unconditionally. Ocean Spray had fiscal 2004 sales of $1.4 billion. Northland, maker of Northland and Seneca brand fruit juice products, reported a net profit of $6.6 million for fiscal 2003 on $96.5 million in revenue.

Naomi Aoki can be reached at naoki AT globe.com. Material from Globe wire services was used in this report.






  • [Homestead] Cranberru Bogs, Tvoivozhd, 09/25/2004

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