They say the best way to make a fortune at the Gold Rush is by selling shovels, and when it comes to the juice market, the most valuable tool in recent memory has been the equipment that allows manufacturers to use high pressure processing (HPP) to kill bacteria without cooking away great taste.
It’s that technology that powered, at least in part, the growth of several of the hottest beverage companies in the past decade, including Suja, Evolution Fresh, Temple Turmeric, Blueprint, Daily Greens and more. The HPP market for juice is currently the leading application for the technology, but it has also been used to preserve products like guacamole and other spreads, deli meats, and other foodstuffs.
Brands that deploy HPP have been the darlings of the food and beverage industry, receiving investment and in some cases getting scooped up by larger strategics. But Avure and Hiperbaric, the two key companies providing the machines that offer the technology, have rarely received the kind of attention and speculation that’s accompanied the growth of the brands they’ve supported.
That changed earlier this month, however, when JBT Corporation, a technology solutions provider for the food and beverage industry, scooped up HPP equipment manufacturer Avure Technologies for about $57 million, depending on valuation adjustments at the close. Steve Smith, the president of JBT FoodTech, said that the company had been looking at various sterilization techniques that do not use heat for over two years before making the decision to purchase Avure. The pressure-based method will serve as a complement to JBT’s current set of offerings, which include thermal pasteurization.
“People that we knew well in the industry, that we had a lot of respect for and who were doing their own evaluations of technologies that are out there, were starting to invest in HPP,” Smith said in an interview with BevNET, acknowledging JBT and Avure’s shared experience with protein and liquid foods. “From our perspective, it has turned the corner from an acceptance standpoint from our customer base as well as governmental authorities and everyone else.”
Avure has long trailed Hiperbaric in revenue and size, but Smith hopes JBT’s resources can help boost the company’s customer support and HPP equipment maintenance offerings. Along with integrating its existing service and support programs into Avure, Smith said the company plans to make further investments in training, staff and engineering as opposed to just trying to sell more new equipment.
“We are going to be leveraging our existing organization to service those customers more effectively overseas,” he said. “We have found across our product line that being able to work with customers on an ongoing basis after the installation of the equipment is critical for our long term success.”
Smith said that Avure’s in-house food science team will also be a critical component of helping customers in the formulation process to ensure that their products are best suited for HPP.
“We’re going to be working with the customer base as to what they want to do, and help to make sure that they know that this is a viable technology that in many cases can help them meet their objectives,” he said, adding that the company will also explore opening new drink categories to HPP.
In interviews with BevNET, several industry experts agreed that, while the selling price was somewhat lower than expected, JBT’s acquisition of Avure is good news for HPP food and beverage makers overall.
“Just thinking about what this means for the industry, I think it is very promising,” said Joyce Longfield, an independent HPP Regulations and Food Safety Scientist and a former employee at Hiperbaric who retains close ties with the company. “I think it’s kind of exciting to think of a big company like that investing in this technology.”
Speaking about her former employer Hiperbaric, which focuses exclusively on food and beverage products, Longfield acknowledged that an empowered Avure would be cause for apprehension.
“Having Avure as an equal competitor in terms of scale and reachability is different to JBT, which is a big company,” she said, adding that she expects JBT to pitch HPP to customers in a larger set of food and beverage. “In general, I’m sure that Hiperbaric is just concerned about them being a competitor in all areas, not just beverage.”
Kurt Cahill, operating partner at investment group Alliance Consumer Growth, and the former head of operations at Suja, noted that JBT’s expertise in fresh foods, specifically vegetables and citrus fruit, made Avure a “perfect fit” for the parent company.
Shawn Sugarman, president of cold-pressed organic juice maker Moon Juice and a former chief executive at the Starbucks-owned HPP juice brand Evolution Fresh, which owns its own HPP equipment, agreed with Smith’s prediction that JBT’s muscular service and support system — a key cost center for many HPP manufacturers — will help the company compete with Hiperbaric in ways that extend beyond just building a better machine.
“Avure’s existing customers should see better results in the form of more technical support, better access to parts and shorter downtimes for maintenance procedures,” he said.
While Smith speaks of the industry turning the corner, several barriers remain to keep HPP an expensive and exclusive process.
When asked how the purchase of Avure could potentially make HPP services more affordable or accessible across the industry, Smith responded “We are currently in evaluation mode to see if there are some different way that we can go to market.”
Sugarman was less optimistic that a price drop may be forthcoming.
“The cost of owning HPP machines is beyond most smaller beverage brands,” Sugarman said, noting that larger brands have driven prices for cold pressed HPP juice down to the point where the margins are being squeezed for smaller companies. “I don’t expect this to change.”
Yet the purchase signals that HPP is not going away anytime soon, and with a strong base to continue its development and maturation as a pasteurization method and as a business, the potential for cost-saving innovations to emerge remains a cause for optimism amongst the industry experts who spoke with BevNET.
One of the primary drivers of that cost can be found in the physical limitations of the HPP machines themselves. The highest volume capacity machines on the market can handle about 5,000 lbs. per hour — approximately 5,000 16 oz. bottles — and they are fed into the machine in batches, rather than continuously. Any innovations that increase output volume and reduce time between batches, or eliminate it altogether, would have a significant impact on beverage companies’ bottom line, experts say.
“I’m assuming that with [JBT Corp.’s] knowledge they would be able to help figure out a way for HPP to have more throughput through the machine, which would ultimately translate to a lower pricing and more competitive pricing than let’s say Hiperbaric, as far as, let’s say, we as a toller could charge,” Susan Ricci, CEO of co-packing facility Cal Pack Foods and of HPP Food Services, told BevNET.
She continued: “As a co-packer making juices and salad dressing and baby food, I’m hoping that JBT could offer us some solutions on the production side — through automation and different types of equipment on that side, as well as packaging,” adding that she hoped the company would “run R&D basically for other possibilities.”
Cahill went further. “Obviously, speeding up the system will decrease operating costs, but there’s only going to be so much time that you can pull out of a cycle, because it does take, with the current technology, a certain amount of time to get up to pressure,” he said, noting that further time saving may come from looking to integrate other part of the process with HPP. “Can they combine with a pulse electric field? Can they combine it with a certain amount of thermal temperature? We know that increasing the temperature of the process water will increase the lethality step, so can we get either a higher log reduction or be able to reduce the whole time?”
However, as Cahill noted, HPP is still a relatively nascent technology with numerous other potential uses that have yet to be explored. He predicted that over time companies may “take the HPP concept and tweak the innovation to fit something else and then launch that specific item.”
More innovation could come in the form of packaging formats that simply fit better when loaded in the pressure chamber.
“The more water that has to be filled into the machine because of wasted space costs the company more money and ends up in less throughput,” said Longfield, mentioning the pouch-style packaging from juice maker FreshBev and probiotic smoothie brand Nomva as examples of recent relevant innovations.
On the operational side, Avure’s new parent company could also potentially leverage its status as one of the leading lessors of industrial citrus process equipment to explore similar arrangements in HPP, or even packaged deals for both sets of machinery, with manufacturers that can’t afford to purchase the equipment outright.
“If you think of how expensive HPP equipment is historically, how many juice companies actually own their own HPP equipment?,” said Longfield. “If they take the same approach with their juicing equipment for these other big companies like Pepsi or whomever, there might be more HPP out there just because they go into the same type of leasing arrangement that they do with their juicing equipment.”
However, she noted that focusing on the price and accessibility of HPP equipment may miss the larger issue. For cold-pressed juice manufacturers in particular, the high cost of ingredients, labor and of meeting supply chain requirements will continue to squeeze margins.Bringing ingredient expenses down by purchasing in large volumes at a discount, for example, could potentially open the HPP cold-pressed juice market even further for small and mid-sized brands, but that onus may ultimately fall on co-packers.
“Somebody has to redefine cold-pressed juice co-packing,” said Longfield. “That’s why a lot of these little guys are not surviving. I heard at [this year’s Natural Products] Expo West from a company that closed up because they told their co-packer ‘You guys are really the reason why I had to close down my business. You made mistakes, you cost me so much money, I couldn’t afford to keep going out there and raising more capital. Eventually, I just had to close and go do something else.’ It wasn’t pointing the finger and being resentful — it was just stating a fact. I hear that repeatedly.”
The true impact of JBT’s acquisition of Avure on the HPP food and beverage market will be apparent over time, but at the present, it confirms that the technology and the business still has plenty of runway ahead of it.
“Innovation — longer shelf lives, enhanced nutritional properties — is occurring in the traditional juice categories, but we are hopeful that we can take the tech to some newer areas,” Smith said. “Avure already has some efforts underway there, and we are going to be supplementing those with money and some technical talent.”