January 3, 2017

GreenSpace Brands announced it has agreed to acquire Canadian organic juice company, Nothing But Nature, for a total consideration of between $8.88 and $9.88 million.

Founded in Ontario in 2005, Nothing But Nature is owner of the Kiju Juice brand, and is a distributor and seller of a range of organic juices throughout the Canadian and U.S. markets. For the 12 months ending October 31, the company saw gross revenue of approximately $8.4 million.

Under the terms of the deal, GreenSpace has agreed to pay $6.22 million in cash, along with $2.66 million in common shares issued at $1.27 per share, and an earn-out of up to $1 million to be based on the net revenue of Nothing But Nature for the 12 months ending December 31, 2017.

“This acquisition is a perfect example of the type of transaction we wish to do in the Canadian natural and organic food market,” said Matthew von Teichman, CEO of GreenSpace. “Kiju is one of the best known organic brands in Canada, with strong regional distribution and fantastic products. We believe our team, in particular our sales, marketing and operations groups, will be able to have a strong impact on the Kiju business and will be able to assist in growing its revenues and improving its profitability margins.”

This is the second acquisition within the organic food sector for GreenSpace, after its purchase of Love Child, an organic baby food manufacturer, in September 2015, reports Beverage Daily; however it is the company’s first acquisition within the beverage segment.

For GreenSpace, the acquisition aligns with its strategic goal of having 30 percent of its revenue generated from new product launches, the company’s management team told Beverage Daily.

The ‘Better for You’ Boom

Following in the footsteps of Danone, which purchased organic giant WhiteWave Foods in a $10 billion deal this past summer, or Pinnacle Foods, which acquired Boulder Brands for $975 million in December 2015, building a presence in the organic food and beverage sector will likely prove profitable for GreenSpace.

U.S. sales for organic food and beverages reached $43.3 billion in 2015, representing year-on-year growth of 11 percent, and significantly outpacing the three percent growth seen by the overall food market.

Additionally, the Organic Trade Association states that the increase in demand within the organic space was most pronounced for organic “fresh juices and drinks” which was the fastest growing of the eight organic sub-segments with growth of 33.5 percent.

These trends are not lost on some of the largest global beverage groups, particularly the top carbonated beverage groups that have seen U.S. demand decline over the past 30 years as health-conscious consumers have been turning away from soft drinks.

In early December 2016 both PepsiCo and Dr. Pepper Snapple Group announced separate, major acquisitions in the ‘better for you’ beverage space, with Dr. Pepper Snapple Group announcing that it had agreed to acquire Bai Brands LLC, a better-for-you brand portfolio of premium antioxidant-infused beverages including flavored water, coconut water, and ready to drink teas for $1.7 billion in cash, and PepsiCo announcing a definitive agreement to acquire KeVita – a leading North American maker of fermented probiotic and kombucha beverages in a deal that Fortune reports was in the neighborhood of $200 million.

Once completed, the takeover of Nothing But Nature will not only give GreenSpace a solid footing in this strong and growing market, but it is also expected to expand GreenSpace’s relationships with distributors and provide it with the ability to increase its penetration of new untapped channels while also providing the company with the opportunity for innovation within the beverage space and the enhancement of its business.

The deal, which is expected by GreenSpace to be “immediately accretive” to its earnings and cash flow, is scheduled to close by January 17, 2017.

-Lynda Kiernan