Calavo Growers, a key player in the US fresh produce sector, has recently finalized a sale of its fresh-cut business.
Earlier this year, the company announced that it was negotiating to transfer these assets to local counterpart F&S Fresh Foods for approximately $100 million.
On Friday, Calavo Growers confirmed that it successfully concluded the transaction for $83 million, “subject to various closing adjustments.”
The fresh-cut assets encompass “substantially” all of Calavo Growers’ Prepared division, excluding its guacamole segment, which will remain within the company.
In addition to guacamole, the Prepared division includes a wide range of products, such as fresh-cut fruits and vegetables, ready-to-eat sandwiches, wraps, salads, snacks, and salsa, catering to retail and foodservice customers. It also provides avocado pulp to foodservice clients.
Lee Cole, President and CEO of Calavo Growers, emphasized that this strategic move “will allow us to focus on our core avocado and guacamole businesses.” This streamlining aligns with current food and beverage industry trends that emphasize efficiency and specialization.
Cole further stated, “The fresh-cut business will be in the very capable hands of F&S, a leader in the industry and one of our long-trusted co-packing partners.”
According to Calavo Growers’ annual report for the fiscal year ending October 31, 2023, the fresh-cut business “fell short of our expectations.” However, Cole noted, “the division’s performance did improve as the year progressed,” highlighting the evolving dynamics in the food and drink business.
In the report, Cole expressed that the sale of assets to F&S would “enhance shareholder value as we sharpen our focus on our core avocado and guacamole businesses and streamline our corporate structure to generate efficiency.” This approach complements ongoing food and drink consumer trends that prioritize operational effectiveness.
He concluded, “While the contemplated divestiture will reduce Calavo’s top line, it will make our company better equipped to generate compelling returns for shareholders.”
For the fiscal year ending October 2023, Calavo Growers reported net sales of $972 million, reflecting a 13% decrease compared to the previous year. The group experienced a net loss of $8.3 million, compared to a loss of $6.2 million in the prior year.
In June, the company announced net sales of $312 million for the first half of its current financial year, marking a 7.2% increase. However, it recorded a net loss of $205,000, compared to $7.1 million in the same period the previous year.
