Frucor takes can-do franchise approach

By Dita De Boni

The newest guardian of the Pepsi brand name in New Zealand has been interested in the franchise for 12 months and is eager to start turning Lion's loss into a profit.

Frucor Beverages, previously owned by the Apple and Pear Marketing Board, has been eager to find a way into the carbonated drinks market, which comprise 55 per cent of cold-beverage sales, says chief executive Mark Cowsill.

He believes Pepsi is that opening, and is confident that with good sales management and brand investment, Pepsi can exist profitably in a market overwhelmingly dominated by Coke, without having grandiose ideas.

Frucor currently produces iconic Kiwi brands Fresh Up and Just Juice as well as NZ Natural mineral water, McCoy fruit juice and "V" energy drink.

The company has acquired Lion's H2GO mineral water line along with the Pepsi franchise, and will have the largest share of the grocery bottled water market once H2GO joins NZ Natural in the Frucor stable.

Although Fresh Up and Just Juice comprise 50 per cent of Frucor's portfolio, the company sees its greatest growth potential in both carbonated and energy drinks.

Mr Cowsill says sales for top performer "V" - a super-charged energy drink aimed at the fast-moving 15-34 year old set - would reach $250 million in Australia and New Zealand in the next 12 months.

The newly acquired New Zealand Pepsi franchise will contribute a further $50 million, he says.

Speaking to the Business Herald last month, Mr Cowsill said that under the Apple and Pear Board, fruit juice beverages had been secondary to the exporting of fresh apples before the business was sold.

Greater autonomy and freedom to act as well as an increased ability to take risks in the market have distinguished Frucor under its present owners, he said.

The board's sale of Frucor Beverages to a consortium of international bankers in July last year netted $50 million.

Private Boston-based company Bain Capital is the major shareholder within the consortium, with Wisconsin-based bank Resource Financial and Kiwi firm Fryers Wickham holding minority interests.

Pacific Equity Partners, Australasia's largest private equity funds manager, is also part of the consortium and is responsible for guiding Frucor's management strategy.

Mr Cowsill, who first joined Frucor in 1992 as general manager, said that the company was looking to double its growth by implementing long-term strategic plans and was spending $500,000 a year on research and development to launch products both in New Zealand and internationally.

The Manukau-based company, employing 300, was now "very excited" about taking the reins of Pepsi and management hoped the deal would grow turnover to almost $200 million.

He said Pepsi's group of soft drinks, including Mountain Dew and 7UP, were a great fit with Frucor's portfolio.

"Our marketing expertise and our excellent track record in the total cold beverages market will ensure the success of all our complementary brands."

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