Butterfly-backed Bolthouse Farms’ acquisition of a carrot operation stands to benefit from a surge in demand resulting from the coronavirus outbreak.
Bolthouse’s acquisition of Arizona-based Rousseau Farming Company’s carrot processing facilities was finalized in late March, although the deal had been in the works for almost a year. Financial details were undisclosed but Butterfly operating partner and Bolthouse Farms chief executive Jeff Dunn referred to it as a “single-digit million dollar” deal.
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Dunn also told Agri Investor the company has noted a 300 percent increase in carrot demand, although it has only been able to benefit from around half of this due to transport constraints.
The company stockpiled packing materials from China in January, explained Dunn, after realizing covid-19’s spread there was likely to cause widespread supply chain disruptions.
“I don’t think it was that the pandemic made people want to eat more fresh carrots, we were just better able to respond quickly to a seismic shift in demand. We’re still seeing it; it hasn’t slowed down,” he said.
Though carrot planting and harvesting are highly automated and require minimal staffing, Dunn said Bolthouse has brought in new workers to process increased demand for carrots and smoothies. He added that the company has also strengthened health and safety protocols for the new employees, which Bolthouse hopes to retain after the virus has been contained.
“We don’t have unlimited carrots in the ground, but as this thing moves around the country, I think you’ll see some of the same CAGRs [compound annual growth rates] you’ve seen in the more affected parts of the country. It’s very unpredictable.”
Rousseau had been a carrot supplier to Bolthouse on an intermittent basis for years, said Dunn. He added that Bolthouse plans to double processing capacity at Rousseau’s carrot processing plant over the next few years. Dunn declined to provide specific figures regarding the facility’s current or target capacity.
Bolthouse’s expansion into Arizona, he said, is also designed to provide further geographic and climate diversification from California, complementing established leased operations in Washington, Georgia and Eastern Canada and a distribution center in Chicago.
“As we build out these regional farming operations, we think – over time with rotation crops – we can grow a lot of other things and run them through our platform, other than just carrots,” said Dunn, who declined to identify specific crops the firm will pursue as part of its growth strategy.
Los-Angeles headquartered Butterfly drew from both its $520 million debut fund a $320 million separate account vehicle to finance its $510 million acquisition of Bolthouse from Campbell Soup Company in April 2019.