Brynwood Partners has bought Nestlé USA brand Juicy Juice for a multi-million dollar deal and reportedly insists the brand can still be hugely successful in a troubled juice category the Swiss multinational has jumped out of.
Launched in 1977, Juicy Juice sales have fallen from $500m seven years ago to around $275m, while the $7.3bn market for shelf stable juice declined 3% from between 2011 and 2013.
Private equity firm Brynwood’s senior managing partner, Hendrik Hartong, told the Wall Street Journal (WSJ) that the brand could still be “hugely successful in a declining category by being flexible and responsive to consumer and customer tastes”.
“There’s a substantial opportunity to accelerate marketing and product innovation,” he said, noting that increasing the market share of the kid’s juice brand by 1% would net an extra $70m+ in sales.
"By further leveraging the brand’s nutritional and wellness attributes, we plan to continue providing our loyal customers with its high quality, great tasting products in innovative packaging formats," Hartong said of the Juicy Juice acquisition in a release today.
Neither Brynwood Partners nor Nestlé have disclosed the sale price, but the Wall Street Journal (WSJ) quotes an unnamed source saying that the total price couldn’t exceed $200m due to the fund’s investment criteria.
Juicy Juice is a 100% fruit juice brand targeted at kids and sold in a wide range of pack sizes – from 4.23oz (125ml) to 96oz (2.72 liters) – and in 12 different flavors.
Nestlé markets it as a good source of vitamin C with no added sugars or artificial flavors.
Nestlé inks Coffee-Mate deal with Keurig Green Mountain
Nestlé is pruning its US portfolio by selling off non-core brands to focus on faster-growing businesses including Coffee Mate, Nesquik and Nescafe, and its waters business under the Nestlé Waters banner.
2013 sales hit $2.04bn with 4% CAGR from 2011-2013, said Nestlé USA beverage division president Rob Case, at a Boston investor seminar on June 3-4.
Case cited 7% segment growth for coffee creamers in 2013 ($2.7bn category sales) where Nestle brand Coffee-Mate plays, 1% growth for soluble coffee and mixes to $900,000, where Nescafe is present, and 3% growth for flavored milk ($2.1bn, Nestle has Nesquik), shelf stable juice sales fell 3% to $7.3bn.
Case said 'segment dynamics' showed this last - where Juicy Juice is present - is a "highly fragmented, lower margin" category where the brand has lost share - it had 4.6% in 2011, 4.2% in 2012 and 3.9% in 2013.
Today the company announced a partnership with Keurig Green Mountain to package Coffee-Mate coffee and creamer in '2-in-1' K-Cups for the Keurig brewing system (and single-serve roast and ground coffee packs with the creamer in general), with a spring 2015 launch date penciled in.
Despite its success in Europe, Nestlé single-serve coffee poster child Nespresso has failed to make inroads in the US, and holds only a circa. 3% market share versus rival Keurig's 72%; in this respect we can see Coffee-Mate as something of a Trojan horse to boost its coffee market exposure.
Brynwood picks up 'underperforming and undervalued' companies
That said, Nestlé recently launched a new 'large cup' Nespresso system VertuoLine to meet the tastes and preferences of US consumers, and hopes the machine will prove a "game changer".
Brynwood says its investment strategy involves targeting “underperforming and/or undervalued companies, or companies that are under-financed and in need of an equity infusion”.
The buyout firm has done business with Nestlé six times now, and this is the third acquisition from the Swiss multinational in the past 14 months.
In the past, Brynwood Partners has also bought brands from Mondelez, Sara Lee, Frito Lay, Quaker Oats, Unilever and Procter & Gamble.
Senior managing partner Hendrik Hartong also has experience in the food and beverage arena, as former president and CEO of Lincoln Snacks Company and a sales executive at Nestlé USA.