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.
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."
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.