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Developing an Australasian growth drinks business

Jul 30, 2012

Cranleigh has been instrumental in the creation of one of the country's biggest cider production, marketing and export businesses.

DB Breweries has bought boutique cider maker Nelson-based Redwood Cellars to form a joint venture giving it the biggest portfolio of brands in New Zealand and a 30% share of the cider market.
The joint venture, known as Redwood Cider Company, will operate as a standalone business incorporating both partners cider brands and production will remain in Nelson.
The brands include DB's Monteith's Crushed Apple and Pear Cider, Johnny Arrow, imported Swedish label Rekorderlig and Redwood's Old Mout Cider.

Justin Hall, one of the key shareholders of Redwood Cellars, is staying on as managing director of the of the merged cider operation. Cranleigh director Andrew Bayly says the deal took four months to stitch together and involved complex financial modelling, an understanding of pricing arrangements, determining how Old Mout would be managed and how Redwood's interests would fit in under the DB umbrella.

It is an exciting acquisition for DB as more consumers turn to cider as their drink of choice, says Andrew. DB will have a majority stake in the new joint venture company and the five member board will be headed by DB's managing director Brian Blake.

Redwood Cellars Company will concentrate solely on cider, freeing up DB to capitalise on its core assets and business strength in the beer market.
Andrew says the combined cider brands give Redwood the leverage to ramp up marketing in the fast-growing New Zealand and Australian markets.

Once seen as old-fashioned, the new cider brands are now regarded as premium products. DB has been an innovator in developing the cider market and it is the fastest growing beverage in the New Zealand liquor sector and Old Mout is the fastest growing product. DB says for the past three years cider growth has been at about 70% year- on-year.

Andrew says DBs acquisition of Redwood Cellars was a natural purchase as Redwood was already producing Monteith's ciders from juice apples and pears grown by Nelson orchardists.
Redwood Cellars, originally a wine and vinegar company, was established more than 60 years ago in Redwood Valley between Nelson and Motueka. The business was bought by Justin Hall and Scottie Chapman in 2006 and they set about developing Old Mout cider to become a leader in the New Zealand market.

The business employs about 40 staff and was last year awarded the Deloitte Fast 50 regional award for the fastest growing retail and consumer products business. It was listed at the 44th fastest growing company in New Zealand with 159% market growth. Hall says Kiwis drink 600ml of cider per person per year and he expects this will rise to two litres a person by 2014.

Andrew says the fit between DB and Redwood and the subsequent structuring of a standalone joint venture company will propel the cider market to greater innovation and growth.
There will be a short integration period before Redwood Cider Company becomes fully operational on October 1.


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