MARKET SAVVY : Crop Surplus, Competition Force Ocean Spray to Evaluate Options

A crop surplus and increased competition has prompted Ocean Spray Cranberries Inc., the country’s largest cranberry juice maker, to consider a corporate restructuring.

The Lakeville. Mass.-based cooperative of 950 cranberry and grapefruit growers said Thursday that it has hired strategist Bain & Co. of Wareham, Mass., to evaluate a number of options, including a merger, according to Chris Phillips, an Ocean Spray spokesman. He declined to discuss any other options.

Analysts say Ocean Spray, which posted $1.48 billion in sales last year, needs to align itself with a much larger company to be able to compete in the increasingly competitive juice market.

“They’ve really done a poor job of staying ahead of the curve and bringing innovation to their brand,” said Skip Carpenter, a beverage analyst with Donaldson Lufkin & Jenrette in New York. “Almost every aspect of their business seems to be stale.”

As the grocery business continues to consolidate, Carpenter said, independent brands such as Ocean Spray will have a harder time claiming space on supermarket shelves because they have far less marketing firepower than such competing brands as Tropicana, owned by PepsiCo, or Minute Maid, owned by Coca-Cola Co.

Ocean Spray’s largest shareholder, Wareham, Mass.-based A.D. Makepeace Co., sent a letter to cooperative members saying a merger should be the top consideration. Several global food and beverage companies already have contacted the cooperative to discuss a merger, said Robert Rosbe, Makepeace vice president of finance. The company’s board is expected to make a recommendation on restructuring in November.