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More acquisitions in produce industry expected

The produce industry first heard about Frutura two years ago, when the company made its initial acquisition. Frutura was established with the goal of delivering the high-quality fruit their customers require, 365 days a year.  

“The idea behind Frutura began with RRG Capital Management, an alternative asset manager whose founders spent 20 years developing water, sustainable agriculture, and renewable energy assets,” says David Krause, Frutura’s CEO. “Together with a group of investors, they wanted to craft a new company, founded on the principles of ESG and meeting the needs of today’s much-changed global ag business. They approached me to drive this effort, and the opportunity to build a company from the ground up in a thoughtful way, proved irresistible.”

Going back to 2021. “It was important to me to signal our seriousness of intent via our first acquisitions,” said Krause. “California-based Dayka & Hackett (D&H) and Agricola Don Ricardo (ADR) in Peru are both mature and highly sophisticated operators.” D&H is a global importer, seller, and marketer, while ADR is a grower, packer, and shipper of primarily table grapes, citrus, avocados, and blueberries.

“These companies formed the foundation of present-day Frutura, giving us a nimble and smart distribution network as well as a critical launch pad in Latin America.” The principals of both companies, Tim Dayka (D&H), Ricardo Briceno, and Rafael Ibarguren (ADR), have been invaluable. “Ricardo and Rafael gave us critical learning and smoothed subsequent deals in Latin America and Tim has been an incredible source of wisdom and a partner to me in the past two years,” shared Krause.

Next came the acquisition of California-based Terra Fresh Organics. “The company’s founders Greg Holzman and Steve Akagaki had been working together since 1987, when organic produce was still a cottage industry,” Krause commented. Agri-Cooling & Logistics, a Texas-based cold storage, repacking, and cross-docking facility, was later acquired, which gave Frutura a critical receiving and North American redistribution site.

Frutura Dayka & Hackett citrus display.

“One of the hallmarks of the way we do business is to look for strong, existing management at a target company,” said Krause. “And we spend the time necessary in collaboration following an acquisition. Post-deal time is spent listening, and then planning for a successful outcome and value-add collaborations with other Frutura companies. We have adopted a ‘quick-quick-slow’ acquisition formula, which means we make a couple of acquisitions, then hit pause and spend critical time in discussion and discernment with the management team.”

Two Latin American companies were added to the portfolio in 2022. The assets of a large-scale citrus operation were acquired, and the company was named Frutura Uruguay. It is led by Alejandro Buratovich and Romain Corneille. Krause knew both gentlemen personally and selected them as the ideal executives to build a strong presence for Frutura Uruguay. Frutura’s latest acquisition is Subsole, Chile’s largest exporter of table grapes, as well as a significant presence in citrus, kiwifruit, avocados, cherries, and pomegranates. “The company is led by CEO Juan Colombo, one of the most capable and dynamic young leaders I’ve had the pleasure to work alongside.” said Krause.

Frutura Subsole grapevines.

Future plans
Frutura specializes in six crops; grapes, citrus, avocados, berries, mangos, and cherries. “If we are serious about supplying these crops in the broadest range of geographies at scale, and we are, we will continue to make acquisitions. I’m optimistic that in the first half of 2023, we will be announcing deals that will both expand our footprint and add centers of excellence in new crops,” shared Krause. The balance of 2023 will be spent integrating those companies while looking for attractive new opportunities. “Those opportunities should have a Frutura-like commitment to the environment and to the principals of ESG, but also a realistic potential for meaningful growth given the right resources and direction, as well as strong leadership.

Recently, other well-known companies like Frieda’s and Vision Import Group announced they were being acquired. What is driving these acquisitions? “I believe these important acquisitions speak to the increased value and visibility the fresh produce sector has as an economic engine,” commented Krause. “Smart companies are looking for best-in-class organizations to jumpstart their capabilities. The pace of all businesses has quickened exponentially in the past 10 years and operators are looking to add high-potential companies to their portfolios, and the quicker the better.”

Krause also reflects on the challenges the produce industry has been facing. “I’ve worked in ag since I pedaled my bike to my uncle’s packing house as a teenager, and I can’t remember a time with more institutional challenges,” he said. “Weather was always the constant inconstant, but the current specters of undeniable climate change, labor upheaval, and political unrest have made the always-hard ag business that much harder. I’m struck by the overarching importance of being in business with good people, as facing challenges together makes it somehow all easier. Revenue aside, it is one of the reasons our global network is so effective, and sometimes, we even get to have lots of fun and laughter as we work. I believe there are bright days ahead for our industry and for our company, but only if we collaborate as effectively and frequently as possible.”

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