Get Juiced: Old Orchard looks to grow by innovating beverage market
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By Joe Boomgaard | FoodBiz
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Sparta-based Old Orchard makes bottled juices and frozen juice concentrate for the U.S. and select global markets. President Mark Saur said the $155 million company could look to expand in another 12 to 18 months. PHOTOS: JOE BOOMGAARD |
SPARTA—Open a bottle of juice anywhere in the U.S. and there’s a strong likelihood it has a West Michigan connection.
Old Orchard Brands LLC, which it started as an offshoot of a family farming business in 1985, is the fourth-largest bottled juice brand in the country and the second-largest producer of frozen juice concentrate. Annual sales were $155 million in 2010, according to a company spokesman.
It sells to most major grocers, including locals such as Spartan Foods and Meijer, as well as to the U.S. military. Old Orchard exports products to about a half-dozen countries, including China, Mexico and the Philippines.
“I think people are surprised when they realize we’re based here in Sparta and hear the amount of product we produce and ship all over,” said Mark Saur, president of Old Orchard.
The bottler and juice blender, located on 12 Mile Road near M-37 in Sparta, has continued to invest in its operations, specifically in equipment designed to improve efficiency. The plant, which employs 90 people on two, 12-hour shifts, can produce 45,000 to 50,000 cases of juice per day. Its juice lines can fill 270 bottles per minute.
The facility is SQF, HACCP, Kosher, and organic certified.
Saur and Old Orchard’s senior managers are pushing for aggressive growth that could have the company looking for additional capacity in the next 12 to 18 months. The existing facility operates at about 60 percent capacity in its bottled juice line. Saur said it was too early to speculate where any additional plant would be built.
“(West Michigan) is where our roots are and where we all live. This is where we are to stay. It’s a beautiful place to live and work and be in business, and we’ve got some great customers here in our backyard,” Saur said.
VP of Marketing Kevin Miller said Old Orchard has developed an expertise in juice blends, which are increasingly finding favor as consumers diversify their tastes to a wider variety of fruits instead of just orange, apple and grape juices.
Unlike major beverage competitors such as Welch’s or Ocean Spray, Old Orchard is not a grower or a co-op. It sources its fruits from around the world, which gives it the freedom to choose from a wider variety of fruits and therefore allows it to be more innovative.
“Our niche is a high-quality, value-added product at a competitive price,” Miller said.
While some cherry and apple concentrates are sourced locally, the company works with global suppliers for more exotic fruit concentrates like acai and pomegranate.
“It’s expensive to come out with a new product, and we don’t want to come out with something that we don’t feel would be successful,” Saur said. “The guy that comes up with the ideas has the opportunity to grow. Over the last 20 years, there were times when we thought we’d reached a ceiling, but through innovation, you break through that ceiling. Innovation is what got us to where we are today, and it will be innovation that takes us to the next level, too.”
In the beginning, Old Orchard focused mostly on commodity juice products. But as the company matured, the management realized it needed to become a premium brand because commodities tend to be driven by price only.
Meanwhile, Old Orchard had brand identity, unique products and strong customer loyalty. Thanks to its lean management structure, the company was able to innovate quickly and easily, coming up with new product offerings in a matter of days where competitors took years.
“Being a smaller, mid-sized business and an entrepreneur, we can never say no. We have to take care of the customer. It doesn’t matter who you are in this company, everyone has a big part in it,” Saur said. “If you’re an entrepreneur and running a small business, you have to get everyone fired up about being 100-percent (behind) customer service. We have to be relentless in taking care of our customers and consumers.”
That customer service focus translates into laser-like attention to product quality and safety. Saur, Miller and the rest of the team taste test every run of juice, and the company has its own onsite quality and assurance lab.
The company has developed some private label contracts for key retailers, but as a growth brand, Old Orchard has not had to focus much on private label business, Miller said.
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Last year, Pfizer completed a $100 million investment to construct an aseptic processing area in the company’s Portage manufacturing facility to allow it to make injectable drugs. PHOTO COURTESY OF PFIZER |
Over the last 25 years, the company has had to learn to be flexible. When Old Orchard started in 1985, frozen juice concentrates were a $3 billion market nationwide, but that segment has shrunk to $450 million as ready-to-serve bottles came more into favor, Saur said.
Today, Old Orchard makes about 50 million plastic cans per year of frozen concentrate, about half of the plant’s frozen product capacity. Saur said the company is considering broadening its exports of frozen concentrate to Canada, where the products maintain popularity.
“We still have a lot of ground to cover. In the Midwest states or Great Plains states — at customers’ (stores) Mark has sold to for 20-plus years — you walk into a store and you might find 30 varieties of our product. We have the lion’s share of the category, a huge assortment. But as you go farther out west or down south, that assortment tends to be smaller,” Miller said. “There’s a growth opportunity there. There are still accounts we’d like to develop. … Retail space is at a premium. The average grocer stocks 40,000 products, and we beg for shelf space on a daily basis. We have to be vigilant, or we lose that.”
That means the company has to pay attention to packaging design and to the customer experience even when the product is sitting on a shelf. For example, Old Orchard recently redesigned some labels to put select nutritional information on the front of the package so consumers know the data without having to take the product off the shelf. At the same time, they’ve worked to respond to growing consumer health consciousness by removing high fructose corn sweeteners from their products and shifting to 100-percent juices and juice blends, Saur said.
“Nothing stays the same at all. There’s change in the retailers and consumers’ buying habits constantly,” he said.
