Hain Celestial’s acquisition of Orchard House Foods could lead to higher own-label fruit juice prices for supermarkets and shoppers, according to the competition watchdog.
The Competition and Markets Authority (CMA) said the deal would be referred for an in-depth merger inquiry unless acceptable undertakings were offered by the UK arm of the US food group.
Hain, which owns Ella’s Kitchen, New Covent Garden and Tilda, agreed to buy Orchard House from Wellness Foods in December in a move to make its portfolio healthier.
Hain’s UK arm and Orchard House were the only two own-label suppliers to supermarkets, with other suppliers of freshly squeezed fruit juices having limited sales to foodservice retailers such as cafes and restaurants, the CMA said.
The regulator added that other juice manufacturers would not start supplying freshly squeezed juices to replace the lost competition in the £112m UK market.
However, the CMA decided the combined business would not hold a monopoly over the prepared fruit sector as, despite it supplying a large share of the market, there was sufficient competition from other suppliers.
Sheldon Mills, CMA senior director of mergers, said: “Fruit juices are an increasingly popular purchase for UK consumers, in supermarkets, cafes and restaurants. Freshly squeezed juices are different in taste, quality and price from other concentrate juices. This merger removes the rivalry between two long-standing suppliers of freshly squeezed fruit juice to supermarkets and food service retailers.
“Therefore, unless acceptable undertakings are offered, this merger will be referred for an in-depth investigation to ensure that it does not result in higher prices or worse quality for retailers and consumers.”
Orchard House was one of the two remaining brands in Wellness, along with Fruit Bowl, following the sales of Rowse Honey to Valeo Foods and Dorset Cereals to Associated British Foods 2014. Hain said in December that it expected Orchard to generate between $60m (£40.4m) and $65m (£43.8m) in net sales in 2016.
The US food group plans to use Orchard’s shelf life expanding technology for new products under the Ella’s Kitchen, Hartley’s, Johnson’s Juice Co and Sun-Ripe brands.
The two companies will continue to operate independently until the deal gets the regulatory green light.
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