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[Tvoivozhd <tvoivozd AT infionline.net>]

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.

ADVERTISEMENT
        

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.