China Nutrifruit Group is to quit beverage production to focus on its glazed fruit business.
The New York-listed business said it would stop making drinks at its headquarters in Daqing in Heilongjiang Province.
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Drinks made up just 6% of China Nutrfruit’s most recent nine-month sales and the company said its board had decided that high costs and increasing competition was weighing on margins from beverages.
“The company plans to sell all equipment used for production of beverages to unrelated third parties, resulting in availability of free space at the Daqing facility to improve the production efficiency of its new glazed fruit production line,” China Nutrifruit said.
In addition, China Nutrifruit is upgrading its fruit concentrate production lines at the company’s facilities in Daqing and Mu Dan Jiang, which have an annual production capacity of 9,960 tons.
China Nutrifruit estimates the capital expenditure for the upgrade to be around $1.5-1.8m.
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By GlobalData“By exiting the beverage production business, we can now turn our full attention to producing our more profitable and high growth products. We will utilize the free space from the beverage lines to improve the efficiency of production lines for our high-margin glazed fruit products, positively impacting our overall gross margins,” added Changjun Yu, China Nutrifruit chairman.
