Too few customers and a saturated frozen concentrate market hurt Pasco Beverage.
By CHASE SQUIRES
Published May 26, 2004
DADE CITY - Declining sales of frozen concentrate juice and too much production capacity in the juice industry led to the downfall of Pasco Beverage. In the end, there were too many producers and not enough customers, company officials said Tuesday.
The buyout of Pasco Beverage's frozen concentrate line was completed Friday. By December, the venerable plant near Dade City on U.S. 301 will stop producing frozen concentrate orange juice, the facility's last major product.
Pasco Beverage spokesman Jim Frankowiak said Tuesday the company sold its frozen concentrate line and its juice can production equipment to Louis Dreyfus Citrus, part of a global corporation with interests ranging from orange groves to telecommunications.
While the sale became known Monday, Frankowiak said the company wanted to notify employees, including late shift workers Monday night, before making a public statement Tuesday morning.
Terms of the deal were not disclosed.
"The decision to sell was difficult," Pasco Beverage chief executive officer Gary Viljoen said in a news release. "We would have preferred to have our business merged or acquired with other industry participants in order to keep our Dade City facility operating, but our potential partners were highly skeptical that Dade City could be cost-effective."
Louis Dreyfus senior vice president for citrus operations Rick Tomlin said it made more sense to buy Pasco Beverage's customer base and equipment and move everything to his company's Winter Garden plant. The Dade City facility is too big and too old, he said.
"That plant over there was a very large, inefficient plant," he said.
According to the history section of Pasco Beverage's Internet site, the plant started as a cooperative packing house in 1936 with major expansions in the 1940s, '50s and '70s. The plant covers about 110 acres of a 500-acre parcel. The Lykes family bought the facility in 1949 and sold it in 1999.
Tomlin said there will be a significant number of jobs available for Dade City workers, if they are willing to commute or move to Winter Garden, about 15 miles east of Orlando. About 200 union and up to 100 administrative and support jobs at the factory are being eliminated.
When the transition is complete, Frankowiak said, the plant near Dade City will be quieter than it is now, but he said there will still be some activity. The company sold storage tanks to Cargill Juice, and those tanks remain active. Pasco Beverage will continue to package concentrated liquid coffee at the plant for its sister company, Vitality, which provides juice-dispensing equipment for industrial and restaurant uses. The coffee operation employs less than 20 people.
Vitality was not included in the sale.
Pasco Beverage sold its chilled juice segment last year to Johanna Foods of New Jersey.
Tomlin said there are rumors in the industry that Pasco Beverage is negotiating to sell its frozen concentrate storage tanks at the plant, but Tomlin said his company is not going to be involved.
Pasco Beverage bought the plant from Lykes Pasco in 1999 and shut down fresh fruit processing. The company sold its ready-to-drink juice business last year, leaving just the frozen concentrate operation in a market that declines at about 15 percent per year industrywide, Viljoen said.
"The facility was simply too large for our remaining operations to be run cost-effectively," he said. "I must commend our management team and employees for their untiring efforts over the last four years to make Dade City a viable and profitable operation."
Tomlin said consumers are less willing to buy frozen juice and mix it themselves nowadays. The trend is toward ready-to-drink juice. By consolidating with Pasco Beverage, Tomlin said, his company can guarantee frozen concentrate will remain available to consumers as an inexpensive alternative to chilled juice. Like Pasco Beverage, Louis Dreyfus juices are sold under store brand labels.
The combined assessed taxable value of the Dade City juice plant and its equipment is about $30-million. The annual county tax bill is about $600,000 a year, Property Appraiser Mike Wells said Tuesday. About two-thirds of the value is the equipment, which could mean a drop of about $400,000 in annual tax revenues if all the equipment is sold and moved, Wells said.
For a county with property valued at $16-billion, the loss of that revenue is "a blip on the radar screen," Wells said.
The property and buildings are valued at about $10-million, Wells said.
Pasco Beverage has, for the past five years, contested the assessor's valuation in court. The cases remain unresolved. While the company's arguments that the tax assessments are unfair continue, the company has been paying about $250,000 annually as an estimate of what it should owe. The company has been withholding the rest until a judge rules.
Wells said the county contends Pasco Beverage owes about $1.9-million in back taxes, plus interest. He said he expects the disagreement will have to be settled in court.
