Grove Fresh Ltd - Marketing Organic Juices

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"Many companies have already stopped producing organic grapefruit juice, because there is not enough supply. The same thing is happening now with orange juice," ¹

- Amarjit Sahota, Director, Organic Monitor² in 2005.

"The British and French organic juice markets are to show the lowest growth rates. The organic juices market in these countries showed very high growth in the late 1990s and market expansion has slowed due to consumer demand stabilising. Retail penetration is reaching saturation in these countries with most food retailers offering organic juices." ³

- A research publication analyzing the future prospects for organic juices in the UK in 2002.

Introduction

In April 2005, Grove Fresh Ltd. (GFL) was ranked 68th in the Fast Track4 2005 Profit Track 100. The rankings, published in The Sunday Times, were based on profit growth over a three year period ending 2003. GFL's profits rose from £ 0.9 million in 2000 to £ 3.2 million in 2003; the company registered a 52 % year-on-year growth in its profits in 2003. The company was also admired for its high-quality products and innovative marketing. However, the situation, as of 2006, is quite different. Competition in the UK organic juices market has become severe. Though GFL posted healthy sales growth, the market for organic juice, especially in the UK, was expanding at a much slower rate. This was expected to affect sales in the near future. Besides, GFL has also been facing supply shortages.

Background

Grove Fresh Limited (GFL) was founded by John Taylor (Taylor) in 1994 to market chilled organic fruit and vegetable juices. Prior to his foray into the organic juices market, Taylor owned a successful bakery business, Freshbake Foods, which he sold to Borthwicks, a food and drink flavoring supplier for several million pounds. However, Borthwicks soon faced financial problems. Taylor re-purchased his business from Borthwicks for a token payment of £1. He brought the company back to profitability and subsequently sold it to Campbell Soup Company⁵ in 1988 for about £ 100 million.

After selling off his bakery business, Taylor was living a life of semi-retirement in Florida, in a house surrounded by orchards. Possibly inspired by his surroundings, he decided to enter the then nascent market for organically grown fruit juices.

Aiming to bring a wide assortment of high-quality organic fruit juices to the UK, he established GFL with its headquarters in Surrey, UK in 1994.

Taylor spent his first two years in the business convincing orchard owners and growers in Florida to shift to organic farming and building the supply chain through to the UK. In 1996, GFL became the first company to market organic juices in the UK.

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1] "Organic marketing stunted by undersupply, says consultancy firm," www.nutraingredients-usa.com, December 19, 2005.

2] Organic Monitor, established in 2001, provides business information on the global markets for organic goods.

3] "The European Market for Organic Juices," October 2002, www.organicmonitor.com.

4] Fast track Profit Track 100 ranks Britain's fastest-growing medium-sized companies by profit growth over their last three years.

5] Campbell Soup Company was founded by Joseph Campbell in 1869 in New Jersey. In 2005, the company posted sales worth US$ 7 billion. Campbell's products, which are sold in 120 countries around the globe, include soups, confectionery, pasta, sauces, and prepared food products.

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