SunOpta seals purchase of Tradin Organic

The deal will create a sizeable force in the organic foods industry.

Tradin is a leading supplier of organic ingredients sourced worldwide while SunOpta is a major producer of organic and natural foods.

In a statement earlier this month, Steve Bromley, president and chief executive of SunOpta, said the deal would position SunOpta as "a global leader in the provision of organic ingredients in the world", consistent with the firm's strategy to become the leading global supplier of natural and organic food products.

"It's an absolutely complementary deal," added Wim Rabbie, one of the founders of Tradin.

"They're very big in Canada and the US and produce big quantities of organic foods for which they need lots of raw materials."

He told FoodNavigator.com that the merger would give Tradin a bigger presence in North America where it currently has a 'relatively small' sales office.

It will also provide better insight into demand, an area that the organic industry is currently struggling to meet.

The organic foods segment is one of the fastest growing in the industry, with sales up 21 per cent in 2006 to $16.7 billion, according to the Organic Trade Association's 2007 Manufacturer Survey.

"The demand is enormous and supply is certainly not endless," explained Rabbie.

"The challenge is to keep the stream of agricultural projects on a par with the growing market."

Tradin has subsidiary companies in the Netherlands, China and Ethiopia as well as sales and sourcing operations in the United States, Germany, Austria, France and Thailand.

It works closely with farmers on organic certification.

Rabbie added that being part of Sunopta will allow the firm to better forecast future demand.

"From a strategy point of view, it's much easier when you know already what the internal demands of a producer are," he said.

Under the deal, Tradin's existing management will remain with the company and will play an important role in its future development, according to a statement from Toronto-headquartered SunOpta.

The Canadian firm declined to reveal the deal price but said it consisted of cash paid on closing, notes payable and certain deferred payments which will be paid in the future based on the performance of the company.

The transaction is expected to be earnings neutral in fiscal 2008, before the impact of operating synergies which are expected to transpire as the combined strengths of the operations are realized.

Tradin has annual revenues of about US$120 million and sources organic products ranging from frozen fruits and vegetables, dried fruits, cereals, seeds, nuts, oils, coffee and dairy products.

Rabbie says none of the produce is air-freighted, an issue that has prompted concern in the UK organic foods industry.