Ocean Spray—a cooperative of 750 farms across Massachusetts, New Jersey, Oregon, Washington, Wisconsin, and Florida—is looking to product innovation to grow revenue. They plan to go from $1.7 billion to $2 billion in annual revenue by developing and marketing extracts—”powdered or gelled concentrate that can be added to water to make health drinks.”

Currently, the cranberries go straight into juice, or into creating the ever-popular dried cranberry Craisins. But that’s about to change under the direction of CEO Randy Papadellis. The CEO can get behind extracts, he says, because “you can take the same berry and now have three profit streams off it, and that’s amazing.”

But there are some sizable risks involved in entering the extract game:

  • It will cost Ocean Spray as much as $25 million to develop and market them.
  • Every major beverage company—from Kraft to Coca-Cola—is making their own extract formula.
  • Ocean Spray (a private co-op) is bound by financial obligations public companies don’t have—like the requirement to buy ingredients from its grower-owners at top dollar (which changes how members view profits).

But being a single-crop, privately held company continually pushes Ocean Spray to innovate and spend on R&D. The new “extract” Ocean Spray product is currently in development, and will hit shelves in 2014. “Executives brag that they have an innate competitive advantage in their beloved cranberry. Tart, with low sugar content and known health benefits like treating urinary tract infections, each berry can pack a lot of nutrients in a low-calorie water additive,” says director of innovation Kelly Reilly, who’s been at the company for 18 years. Down the road, Reilly says she can see Ocean Spray yogurts, beauty products, and even cat food.

[via Forbes]