Old Orchard Brands, LLC

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Old Orchard Brands, LLC

P.O. Box 66
Sparta, Michigan 49345
U.S.A.
Telephone: (616) 887-1745
Toll Free: (800) 330-2173
Fax: (616) 887-8210
Web site: http://www.oldorchardjuice.com

Private Company
Incorporated: 1985
Employees: 67
Sales: $135 million (2003 est.)
NAIC: 311411 Frozen Fruit, Juice, and Vegetable Manufacturing; 312111 Soft Drink Manufacturing; 311421 Fruit and Vegetable Canning

Old Orchard Brands, LLC is the third largest producer of frozen concentrated juice in the United States, and the ninth largest bottled juice maker. Its product lines include 100 percent juice blends, sweetened fruit juice cocktails, reduced-calorie juice drinks, and USDA certified organic juice in nearly 30 frozen configurations and more than 40 bottled versions. The firm is owned and run by founder Mark Saur.

Origins

Old Orchard Brands was founded on the site of an apple orchard in the small town of Sparta, Michigan, in 1985. The company's 23-year-old founder, Mark Saur, purchased the land from his father, Roger, and formed two businesses, Apple Valley International and Old Orchard Brands, to make and sell frozen concentrated apple and orange juice. Over the next several years the small operation began selling its products to growing numbers of retailers in Michigan and in such nearby states as Wisconsin. They were offered in 12- and 16-ounce cans under brand names including Valu Time, Mega, and Old Orchard.

In 1993 Apple Valley International was fined $480,600 by a U.S. District Court judge, and Saur was fined $100,225, for using invert beet sugar in what the firm had labeled frozen unsweetened orange juice concentrate. While beet sugar was similar to the natural sugars found in orange juice, it was much less expensive to buy, and over the years a number of juice producers had used it to lower production costs and increase profits. FDA investigators had determined that the company sold 475,000 cases of adulterated juice between 1986 and 1988. Saur admitted authorizing the deception, and pled guilty to three misdemeanor counts.

After settling the matter, Saur and the business moved forward, and by 1995 Apple Valley was marketing 12 different varieties of frozen juice and had annual revenues of $35 million, while employing just 23. The juices continued to be distributed primarily in the Midwest, but during the year an agreement was reached with the Orlando Magic basketball team to make the firm its exclusive juice supplier for five years. The team's logo would appear on Apple Valley juices, 11 varieties of which would be marketed in the Orlando area. Orange juice was omitted, as the firm believed it was unlikely to do well in the heart of orange country. The deal had largely come about because the Orlando Magic was owned by Amway Corp. affiliate RDV Corporation, located in nearby Grand Rapids.

Bottled Juice Sales Beginning in 1998

In 1998 the company began to produce bottled ready-to-drink juices in an effort to offset a steady decline in sales of frozen juice. Bottling was initially performed by several outside firms, but in late 1998 the company began the first stage of an expansion that would eventually double its 70,000-square-foot facility in Sparta and add a bottling line. With sales of frozen orange juice dropping especially fast, Old Orchard also reconfigured its frozen juice offerings to focus on apple-based blended flavors. Six new varieties were introduced during the year, including apple kiwi strawberry, apple raspberry, and apple passion mango, with suggested prices of between $1.09 and $1.39 per 12-ounce can of concentrate. Over the next few months, the new frozen juice varieties grew to account for one-quarter of the company's sales. With consumers becoming more aware of the healthy qualities of food, the firm was also increasing the availability of unsweetened 100 percent juice drinks at this time.

The year 1999 saw completion of the firm's $6 million expansion program, which was supported in part by a 12-year, 50 percent tax abatement from Sparta that would save over $21,000 per year in taxes. The company would henceforth be able to bottle its juices onsite in PET plastic containers, rather than relying on outside contractors. Though Old Orchard obtained its juice from Michigan growers where possible, most was imported from such countries as Argentina or China, where the entire apple crop was used for juice production. For 1999, the firm, which was now using Old Orchard Brands LLC as its primary business name, had revenues of $63 million.

The company offered 18 flavors of frozen juice, six bottled juice cocktails that contained 30 percent juice and enhanced vitamin C levels, two lemonades, and Cranberry Raspberry Flavored Iced Tea. In 2000 Old Orchard also begin offering calcium- and vitamin-fortified juices, plus smaller single-serving sizes.

In July 2001 the firm had a small ammonia leak in its plant, and called the local fire department for assistance, which led to a regional Hazardous Materials Team being mobilized. The city later billed the firm $20,000 for this service, and when Old Orchard protested that the response had been excessive, the city sued. The company later settled by agreeing to pay $15,000.

The fall of 2001 saw Old Orchard begin bottling apple cider and fruit punch drinks in new one-gallon plastic jugs. By now the company's distribution area had expanded to include most of the Midwest, the Great Plains states, and the Southwest, and it reached the West Coast over the next few months.

In the fall of 2003 Old Orchard sent five truckloads, containing 45,000 bottles of juice, to Californians affected by wildfires. The company typically donated a truckload of juice per month to food banks and Christian aid organizations. In December the firm also gave 88.5 acres of former orchard land adjacent to its plant to the local school district for construction of a new high school. In addition to its charitable activities, Old Orchard looked after the welfare of its employees, many of whom had been with the firm for years because of good pay, benefits, and a profit sharing program, as well as perks including free lunches one day a week and a weekly case of juice.

The year 2003 also saw the firm's products reach the East Coast, giving Old Orchard coast-to-coast coverage and penetration of about half of the U.S. national market, as well as the Bahamas, Jamaica, and Panama. Riding a wave of 15 to 20 percent growth per year for five years running, the firm racked up sales of more than $135 million for 2003.

New Drinks, Expanded Production in 2004

The year 2004 was a busy one for Old Orchard Brands. In January, a new low-carbohydrate juice cocktail line was introduced, for use by followers of the then popular Atkins and South Beach diet plans. The diets required that adherents cut down on their intake of carbohydrates, which were abundant in sweet foods, including juice as well as grain-based products such as bread. The new 25 percent juice drinks were sweetened with artificial sweetener Splenda, and contained one-quarter the carbohydrates of pure juice. They were sold in 64-ounce bottles in such flavors as apple, grape, and apple cranberry under the Old Orchard LoCarb brand name.

In the summer the firm started bottling juice at an Anaheim, California plant that was operated as a joint venture with several other companies, and added more new equipment in Sparta. A deal was also signed with retailer Target to put Old Orchard products in its 1,200 stores nationwide, expanding on an existing regional presence with the chain. Other customers included Wal-Mart, Costco, Publix, Kroger, and Food Lion, as well as many smaller retailers. Old Orchard was the third largest frozen juice producer in the United States behind Minute Maid and Welch's, and one of the ten largest bottled juice makers.

Other additions for 2004 included products and services targeted at the growing U.S. Hispanic population, such as the Old Orchard Nectars line in such flavors as Mango and Papaya, and a Spanish-language web site. The firm also added five USDA-certified organic bottled juices and frozen drink mixes in daiquiri, pina colada, and margarita varieties. With the low-carb craze fading rapidly, by year's end the firm had renamed its LoCarb line Old Orchard Healthy Balance, repositioning it as a beverage for consumers on a low calorie diet.

Early 2005 saw the company roll out new ten-ounce plastic bottles of some of its more popular juices including five 100 percent juices and three reduced calorie juice cocktails. In the summer Old Orchard relaunched its 100 percent juice line with new label designs that emphasized their pure juice content. New flavors were also being added, including grape juice with added grape seed extract, and a blend of blueberry and pomegranate, which capitalized on recent reports of the health benefits of their respective ingredients.

Company Perspectives:

For twenty-five years, Old Orchard has been making apple interesting. That means we use only the finest ingredients. We carefully craft our juices to make sure they not only beat our expectations, but yours as well!

Key Dates:

1985:: Mark Saur founds juice-making business in Sparta, Michigan.
1993:: Saur and firm are fined nearly $600,000 for selling adulterated orange juice.
1998:: Company adds line of ready-to-drink bottled juices.
1999:: A $6 million plant expansion adds in-house bottling capability.
2003:: Distribution reaches East Coast, giving firm coast-to-coast coverage.
2004:: New low-carb, organic, nectar, and drink mixer lines are introduced.

The company was now producing some 45 million cans of frozen juice per year and 55 million bottles of ready-to-drink juice. Despite a 50 percent decline in frozen juice sales over the most recent five-year period, the firm was steadfast in its commitment to the category, running radio and television advertisements and adding innovations such as recloseable and micro-waveable plastic cans.

After two decades in business Old Orchard Brands LLC had grown from a small regional frozen juice producer into one of the largest juice makers in the United States. The company offered quality products for a variety of different consumers, and with full national penetration not yet achieved, its future growth appeared certain.