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- RESEARCH & AWARDS
Late last week, Toronto-based Cott announced its agreement to acquire privately held Cliffstar Corp. for $500-million cash and other considerations. Founded in 1970, Cliffstar, headquartered in Dunkirk, N.Y., says it is the largest North American private label producer of apple juice, grape juice, cranberry juice and juice-blends. With about 1,200 employees, and $654 million trailing 12-month revenue, Cliffstar operates 11 U.S. facilities.
Strategic points discussed on a Cott conference call covering the acquisition were similar to those cited in other recent examples of consolidation within growing private label markets. These include gaining product diversification and market positions in growing categories; opportunities for reduced costs, up-selling and cross-selling; and participation in diverse channels.
Particular to the Cliffstar acquisition, speaking on the call, Fowden noted that private label penetration and potential is significantly greater in juice than in soft drink categories, given the commanding positions of global brands in soft drinks. Cliffstar also brings expertise in juice ingredients, processing and bottling that are complementary to Cott’s strength in carbonated drinks.
“This transaction will transform Cott into a multi-category beverage producer as a combined supplier across multiple beverage categories, including carbonated soft drinks, juices, and waters,” Fowden says. “The combination provides an attractive single-stop solution to the private label beverage needs of our retail partners.”
Cott says it has identified initial total cost synergies of $20 million on an annualized basis, $14 million of which are expected to be realized in 2011, based on economies of scale and optimized operations and administration. The combined companies will have global revenues of about $2.3 billion.