Chile

Behind Frutura’s acquisition of Subsole 

With its acquisition of Chilean table grape grower Subsole, Frutura has quickly emerged as an important player in the supply of table grapes to the global market, complementing its purchase of Peru’s Agricole Don Ricardo in 2021. Frutura CEO David Krause spoke with The Grape Reporter about this strategic move and the synergies it brings.

The expansion is unprecedented, allowing the California based company to quickly create an enviable position in the table grape supply chain in just a couple of years with two key South American grape growers as part of its operation. For Subsole, it provides a wider operational and marketing network at a difficult time for Chilean grape growers and the next chapter in the company’s story.

A natural decision

On one hand, Krause said that there was a structural alignment between Frutura’s expansion and Subsole’s operation. In fact Subsole President and founder Miguel Allamand has a long standing relationship with the principal investors behind Frutura’s founding.

Therefore, working together has been a point of discussion between the two entities for some time.

“This conversation became more serious as Frutura became a viable strategy that we started to implement.  It was natural for us to seek a Chile based business unit,” Krause said.

Krause said that he sees Subsole as a “blue chip” company with an incredible reputation and a fantastic management team. This made it a desirable and strategic asset. After these talks became more serious, Krause said that the Frutura’s principals were convinced that the acquisition made sense for the Frutura brand.

Chile’s grape sector has experienced a tough set of seasons, but Kreus said that Subsole’s business foundation is sound even in current market conditions affecting that country’s grape business.

Rather, Subsole is a company which is contemplating a “succession” dilemma as its seasoned leadership contemplates the next step for the business and a generational change.

“This was a natural logical decision for them to create the next chapter for the company”, Krause added.

By joining a larger, regional operation it also helps bolster the business, and this is particularly important when things happen which affect the business.

“And we are in farming, so stuff happens, nature has its way in certain regions, but by working together we are stronger as a group”, Krause said.

Synergies and the path forward 

Going forward, Subsole and Agricola Don Ricardo will continue to operate as they had in the past, as separate units with separate management structures, in order to keep the operations that made them successful  in place .

But there are synergies where new benefits can be reaped for the group and for the individual units. Supply chain logistics and negotiations with shipping lines are one clear arena where the alignment could be found.

The logistical complications experienced by the produce industry are a primary concern throughout the supply chain. Krause said that members of his team are looking at new options and with others in the industry, finding new solutions for the bottlenecks and logics issues has become a daily concern.

An important benefit of the acquisition for Futura’s overall operation is an improved ability to create fruit supply programs, with an eye on a role as a 52-week supplier for the market, offering a more seamless handoff from one harvest window to the next.

Regarding new varieties, Krause said that there are other new developments on the way. 

In the case of the Peruvian unit, Agricola Don Ricardo, harnessing new varieties is a strategy that has been front and center for quite some time, in a growing region which has also been known for its ability to quickly implement variety shifts.

For Subsole, Krause said that the company has been working on a grape variety renovation, and has some developments in the pipeline that have been at work over the last 3-5 years.

“They are just coming into their prime production for new varieties, there is a little more work to do but I would say they are about 90% of the way”, the executive said.

Another element that Krause said Subsole also brings to the overall group is its focus on Environmental and Social Governance (ESG), which is also an important part of Frutura’s regional presence and the message it brings to the market and its customers.

“When you can add a company or business that has a good reputation in that space it makes you happy, and that will be more and more important as you move forward”.

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