Dive Brief:
- Dole is selling its fresh vegetables division to an affiliate of Fresh Express, a subsidiary of Chiquita for about $293 million in cash, the companies said in a statement.
- The transaction will close once the companies receive regulatory approval. Net proceeds from the sale will be used primarily to pay down Dole’s debt.
- The divestiture is the latest in a series of sales and proposed sales as large CPGs look to shore up their businesses and focus on faster-growing offerings.
Dive Insight:
For most consumers, Dole is a household name. A large portion of Dole’s sales in the space come from fresh fruits, such as bananas and pineapples, that were responsible for just under a third of the company’s $9.3 billion in sales in 2021.
Meanwhile, its fresh vegetables division, which includes the processing and sale of everything from leaf lettuces and cauliflower to broccoli and asparagus, as well as salads and meal kits, generated revenue of $1.28 billion during the same period. The business has agricultural operations and four processing plants across the U.S. and employs more than 3,000 people.
In a statement, Carl McCann, executive chairman of Dole, said the sale “will strengthen our financial position and increase the Group’s focus on and investments in our core activities.” He added the combination with Chiquita’s Fresh Express subsidiary “will improve the offering and service to customers and consumers through increased investments in innovation, efficiencies, and food safety.”
For Dole, the sale amounts to a pruning of its portfolio to focus on what it does best while lowering its debt load, and the resulting amount it has to pay in interest.
Its partner in the deal, Fresh Express, has a major presence in many of the areas that Dole fresh vegetables already plays in, such as lettuce and salad kits, allowing the Chiquita division to extract synergies through marketing, production and innovation and potentially further enhance its relationship with existing growers. Fresh Express will be able to tap into the widespread consumer recognition of Dole by using the brand on all items produced by the business for two years.
The divestiture by Dole is the latest by a large CPG to tailor its portfolio for higher growth, and in some cases pay down debt. Last month, Sovos Brands sold pancake and waffle mix brand Birch Benders to focus more on its “core” Rao’s and Noosa Yoghurt brands.
And recently, Danone said it was exploring strategic options, including a potential sale, for its organic dairy business in the U.S., which is made up of the Horizon Organic and Wallaby brands. “Danone needs to “stay disciplined in how we allocate our resources, [with Horizon Organic and Wallaby falling] outside our priority growth areas of focus,” said Antoine De Saint-Affrique, Danone’s CEO.
