Monterey Gourmet gains full control of Sonoma Foods
April 24, 2008
by Stephanie Bloyd
SALINAS, CALIF. — Monterey Gourmet Foods increased its ownership of Sonoma Foods to 100%, effective March 31. As part of the deal, Monterey said it will write down intangible assets, inventory and accrue severances. It also plans to take cost-cutting measures expected to yield about $700,000 annually.
Monterey plans to consolidate operations as part of the cost saving program, as well as conduct a brand package conversion to reduce waste by 25%. It also will add the California Milk Advisory Board’s Seal of Approval to Sonoma packaging, since the seal was just awarded to the brand in April 2008.
"We are very pleased to have gained full control of the popular Sonoma Cheese brand," said Eric C. Eddings, president and chief executive officer, Monterey Gourmet. "Sonoma Cheese brand equity has grown among out customers; however, critical production and procurement decisions created operating losses. Therefore, similar to our successful turnaround of our Casual Gourmet brand, we intend to focus Sonoma Foods on our core cheese business and return the unit to positive cash flow before we extend the product line."
Monterey said it expects first-quarter 2008 net revenue will range between $24 million and $25 million, including about $1 million from Sonoma Foods, compared with first-quarter 2007 net revenue of $24.7 million, including $2 million from Sonoma.