Probi (STO:PROB) and U.S. food company NextFoods are strengthening their partnership on the North American market through a revised agreement which will run until 2020, with an option of further extension. This involves closer collaboration, a higher level of royalties for Probi starting from July 1, 2014, and prominent placement on GoodBelly® packaging and in advertising of the Probi Digestis® brand.
”The revised agreement is a clear indication from NextFoods that they will continue promoting products based on Probi’s technology. NextFoods believes the addition of the Probi Digestis ingredient brand will represent a seal of quality. During 2012, sales of the GoodBelly range increased by just over 20 percent, and we believe that there is scope for the brand to grow strongly in the U.S. market,” says Probi CEO Michael Oredsson.
Probi entered into a licensing agreement with NextFoods in 2007. The revised agreement will apply with immediate effect, and gives Probi higher royalties from July 1, 2014, as well as clear exposure of its ingredient brand on packaging and in advertising in one of the most exciting markets in the world. Probi has received minimum royalty payments from NextFoods between 2007 and 2012. This arrangement has been replaced with an exit fee in the revised agreement, which will be paid to Probi if NextFoods terminates the agreement prior to 2020. NextFoods’ objective for the period until 2020 is for sales to exceed the level that corresponds with Probi’s minimum royalty under the previous agreement.
”We are pleased that there is a revised agreement in place which means that we can develop our partnership over the longer term. GoodBelly continues to be the leader in probiotic juice in the U.S. and Probi is a key partner. We have an aggressive plan to guide consumers to an upgraded juice option. and should see sales of GoodBelly in the U.S. grow significantly over the next few years¨, says Alan Murray, CEO of NextFoods.