Ocean Spray Goes to China; Top U.S., Chinese Juice Companies Finalize Agreement to Market Cranberry, Citrus Beverages to World's Largest Nation.

Business Editors

BEIJING--(BUSINESS WIRE)--March 22, 2001

Ocean Spray's line of cranberry and grapefruit beverages will be launched in the People's Republic of China within the next six months under an agreement finalized this week with the largest juice company in China.

Under an agreement with the Beijing Huiyuan Beverage Group, Ocean Spray, the number-one brand of canned and bottled juice drinks in the U.S., will grant a 10-year license to Huiyuan for the Ocean Spray brand and technology. The business plan calls for an initial launch of a line of Ocean Spray cranberry and grapefruit juice drinks in the major centers of Beijing, Shanghai and Guangzhou later this year. Sales will be extended to other major markets in China over the next three years.

Ocean Spray CEO Robert Hawthorne and Zhu Xin Li, chairman of the board of Huiyuan, finalized the agreement this week in Beijing. A ceremony was broadcast on Chinese national television to an audience of more than 200 million people who heard for the first time about the healthy benefits of Ocean Spray juices.

"This is a momentous opportunity for Ocean Spray," said Hawthorne. "It gives us access to what will undoubtedly become the largest juice market in the world over the next 20 years. And more important, we are partnering with a Chinese company that is second to none in quality and marketing skills."

Hawthorne said the agreement will benefit not only Ocean Spray - a cooperative of 804 cranberry growers and 126 grapefruit growers - but also growers outside of Ocean Spray.

"This agreement will open doors," he said. "It will create opportunities for all North American cranberry and grapefruit growers to expand sales into a huge new market at a time when market growth at home is an increasing challenge."

Huiyuan chairman Zhu, who started his business as a concentrator of locally-grown apple juice, said this week his decision to partner with Ocean Spray was strongly influenced by the fact that Ocean Spray is a cooperative of hard-working American farmers.

The privately owned Huiyuan brand, launched only six years ago, is the clear brand leader in the rapidly growing Chinese market for fruit juices. Its line of products - primarily 100% apple and orange juices - has been growing at rates of more than 100 percent for several years running. The company now has eight factories servicing all the major urban markets in China and employs more than 3,000 salesmen across the country.

While marketing plans still are in development, Ocean Spray officials said they will focus in China on some of the same brand qualities that made Ocean Spray a household name in the U.S. - its uniquely American heritage and its strong health appeal.

As it prepares to enter a nation of 1.2 billion people, Ocean Spray officials estimate that the market for juices and juice drinks in China already exceeds 100 million people, and expect that number to grow at double-digit rate for the foreseeable future.

Ocean Spray had been exploring the prospect of marketing in China for several years. The company made its initial contact with Huiyuan through the consulting firm Boston Capital & Technology, which had a personal working relationship with its chairman, Zhu. Their rapport with Huiyuan management helped secure the agreement.

Ocean Spray CEO Hawthorne also credited Senator Edward M. Kennedy of Massachusetts and his staff for their assistance in navigating the issues and details involved in establishing a business presence in China.

"We're excited about moving ahead and working with our new partners to build a major Ocean Spay franchise which will provide real growth for our cranberry and grapefruit crops for many years to come," said Hawthorne.