The fresh produce industry is witnessing consolidation. "We're observing this trend globally, but it's particularly evident in the northern hemisphere," says Juan Gonzalez Pita, COO of Salix Fruits, an importer and exporter of fresh fruit. Aging business owners, a lack of generational transition, escalating costs, and increased investor interest are some of the logics behind the sale of company. For the buying company, an acquisition generates economies of scale and could be a way to quickly expand into a certain space. "Many of these acquisitions are driven by private equity firms," Gonzalez Pita said. "This is particularly the case in family-run businesses that don't have a clear succession plan. In that context, acquisition becomes a natural path."
Juan Gonzalez Pita in a meeting.
Revolutionizing the industry through technology
However, the use of increasingly advanced technology and the desire to drive the produce industry forward with the help of technology has recently prompted more and more investments from tech companies. An example is California-based GrubMarket that made numerous acquisitions in the produce industry in recent years. GrubMarket is a food technology company based in the Silicon Valley, the heart of the tech industry in the United States. Their mission is to transform the fresh produce industry through technology. "They don't just want to improve the status quo, but their goal is to achieve something no one has done before," commented Gonzalez Pita. "They want to truly revolutionize this industry through technology, not just consolidation."
With this mission in mind, they acquired the first fresh produce company back in 2020. Since then, the company has been on an acquisition streak and more than 50 acquisitions have been made in the past five years. Salix Fruits was acquired in 2022 and some other U.S. produce companies that have been welcomed into the GrubMarket family include Sierra Produce, SunFed, Sally Produce, A&B Tropical Produce, and Bengard Marketing. Just in early April, the company announced the purchase of Delta Fresh Produce.
Alignment
GrubMarket's vision and values very much align with those of Salix. "Innovation has always been at our heart and technology is part of our DNA as we were one of the first companies in our sector to launch an app that allowed us to communicate with our customers," Gonzalez Pita said. "When GrubMarket approached us to be acquired, we felt a strong alignment. This wasn't just a sale; it was a unique opportunity to join a much larger and forward-thinking ecosystem."
Joining GrubMarket in 2022 allowed Salix to become part of a family of over 70 companies, backed by a $3.5 billion valuation. While Salix's core activities haven't changed, Gonzalez Pita shares how the acquisition has created synergies and how Salix and the other companies in the GrubMarket family benefit from each other's presence. "We are now part of a strong network that gives us protection, access to shared knowledge, as well as scalability in many areas of the business."
Specialists
The company's core activities have remained the same since the acquisition and so has Salix's management team and organizational structure. "We have an agile structure and a keen eye for spotting emerging market trends. If I had to describe Salix in one word, it would be "specialists". Combined, our management team has more than 100 years of experience in the produce industry, and we know both the production side of the business and the commercial side very well. We continue to provide tailored solutions for both our growers and customers globally that best meet their individual requirements."
Dynamics in the citrus market
Up until the acquisition, Salix was run by four partners and a team of 25 people. The company's two main lines of business included importation and global cross-trading. With offices in eight different countries, the company was internationally structured. Today, those activities have remained unchanged. While fresh fruits are imported globally, South America is the most significant procurement region with citrus being the dominant commodity. "In citrus procurement, Argentina, Chile, Urugay, and Peru are the main countries and we've recently added Egypt, which has become a very important origin for us. In addition to these countries, South Africa is a key player in our global citrus sourcing structure."
This time of year, citrus is the main focus, and Gonzalez Pita describes the season as unusual. While there is a decent supply of lemons in the U.S., Europe has been hit by a strong frost in Turkey and other Mediterranean areas. "As a result, we expect a shortage of lemons towards the end of the European season."
Europe is a challenging market
Most of Salix's products find their way into the U.S. and Canada, as well as Latin American markets. "In addition, the Middle East and Russia are significant markets for us." The company also ships substantial volumes of citrus into Europe, mainly from Argentina and South Africa. While Europe remains a strategic market, it is challenging at the same time. "It is highly regulated, especially in terms of phytosanitary controls. These often function as non-tariff barriers." In addition, there is strong protectionism towards local citrus from countries like Spain and Italy. It's very dynamic and the situation changes every year. "Within Europe, Germany, France, the Netherlands, and Spain are the largest buyers of our fruit. However, due to regulatory complexity, we need to be extremely careful and adapt quickly in order to be able to keep supplying these countries."
For more information:
Juan Gonzalez Pita
Salix Fruits
[email protected]
www.salixfruits.com