Cott said the deal will strengthen its overall strategic portfolio

Cott said the deal will strengthen its overall strategic portfolio

Soft beverage firm Cott Corp. said its purchase of privately-held juice maker Cliffstar Corp. will strengthen its overall strategic portfolio as it continues to remain focused on private label.

Cott announced the US$500m deal that will combine the number one private-label carbonated soft drink and number one private-label juice manufacturers yesterday (7 July).

Speaking on a conference call today, Cott's CEO, Jerry Fowden, told analysts the combination will be good for both of the firms.

“We see Cliffstar as an ideal strategic partner and we expect the deal to improve our position in private label over the coming years,” Fowden said. “I believe longer term there will be what I call cross-scale and up-scale opportunities for some of their products to go into stores that we use and vice versa.

“From smoothies to enhanced waters, we will together remain focused on private label and create product quality for our customers,” he added.

In addition to the $500m purchase price, Cott will also pay $14m to Cliffstar in deferred consideration over a three-year period, while also offering the company an "additional contingent earnout consideration" of up to $55m, dependent on its performance up to the end of this year.

“Cliffstar is the number one producer of private label juices," Fowden said. "It supplies most of the largest retailers in the US and they lead in several important flavour segments, such as apple, grape and cranberry.

“In apple they are the single largest player based on Nielsen data with a 28% market share. In cranberry they are the number two in the market, and in cranberry-blend their position is the same. Their relative scale of market share is higher than Cott's,” Fowden said.

The CEO added that the combined firm will have one dedicated project office, one US business, one set of terms and conditions and one sales force, made up of the management of Cliffstar and Cott.

Based in New York, Cliffstar operates 11 facilities in the US, including five bottling and distribution operations, three fruit processing facilities, two fruit receiving stations and one storage facility. It employs around 1,200 staff.