By Cliff Peale
The Cincinnati Enquirer

After languishing at Procter & Gamble Co. for the last several years, Sunny Delight could be growing again.

A group of P&G managers will run the juice drink brand for a Boston-based investment firm after a sale announced Thursday closes this summer.

The group hopes to sell more Sunny Delight in single-serve bottles, spend more on marketing and expand outside the United States.. That wasn't going to happen at P&G, which has concentrated expansion more on health care and beauty care.

"P&G has wonderful selling capabilities, but it's not designed for the beverage business," said Billy Cyr, who will be president and chief executive officer of the new company, Sunny Delight Beverages Co.

The parent company, J.W. Childs Associates, will keep headquarters for the new company in Cincinnati, with up to 70 employees and more than 600 more at six plants in the United States and Europe. It will have immediate sales of more than $550 million.

The companies would not release terms of the deal, which also includes Punica, sold mostly in Germany, and Elations, a dietary supplement that was tested by P&G but never rolled out nationally.

Sunny Delight sales totaled nearly $450 million last year, with Punica another $120 million, Cyr said. He said the new company would look for a local headquarters location.

P&G said last summer that it would sell the brands. That leaves it with only Folgers coffee and Pringles snacks, plus some smaller upstream drink technologies, in its food-and-beverage unit.

"This fits with our intent to sell these businesses to an owner that has beverages as a strategic priority, and it will allow us to focus on growing our key billion-dollar Folgers and Pringles brands," said Jorge Montoya, president of P&G's global snacks and beverage business, in a news release.

Shrinking segment

With increased pressure from P&G management to earn its investment for marketing and innovation programs, Sunny Delight has had a checkered history in the last several years.

Consumer advocates in the United States and the United Kingdom have criticized Sunny Delight for its high sugar content and what they called deceptive advertising. And there was a high-profile publicity nightmare in late 1999 when media around the world reported that a 5-year-old British girl had turned orange from drinking about two-thirds of a gallon of Sunny Delight.

The girl turned out to be fine, and the culprit turned out to be beta carotene, found in most juice drinks. But the incident hurt sales in England.

John McMillin, a food industry analyst at Prudential Securities in New York, said observers knew years ago that P&G either had to get bigger in the food business or jettison brands such as Sunny Delight.

"With each passing day, it becomes more evident that they decided to get smaller," McMillin said. "You just wonder if brands like Folgers and Pringles are next."

Single-serve sales

The new company's growth strategy revolves around getting Sunny Delight into more hands in smaller bottles. For example, a new six-pack in 333-milliliter bottles with a sports top has sold well, Cyr said.

There also will be changes in the Sunny Delight packaging and more marketing spending, he said.

P&G increased its marketing spending on the brand for the most recent fiscal year, and sales responded, Cyr added. Generally, sales have been increasing at single digits, he said.

Adam Suttin, a partner at J.W. Childs, said the firm's goal is to double the sales of Sunny Delight and Punica during the next several years.

Childs manages three different funds carrying brands with assets of about $3.4 billion and has made acquisitions or investments valued at more than $6.5 billion since 1995.

Brands in which it has an interest include Vlasic Pickles and Duncan Hines baking mixes. P&G sold Duncan Hines in 1997.

Drink competition

As Procter & Gamble Co. concentrated on its health care and beauty care businesses, the market share of its Sunny Delight fruit drink slipped:

1998	48.23 percent
1999	44.23 percent
2000	40.73 percent
2001	39.18 percent
2002	36.34 percent
2003	34.05 percent

Source: Information Resources Inc. Figures do not include Wal-Mart Stores, P&G's biggest customer.

E-mail cpeale@enquirer.com