What should I ask about a cidery’s apple supply and grower contracts?
Ask who grows the apples, how much comes from each source, what is agreed in writing and what happens in a short crop year. Then ask whether the grower agreements pass to a new owner. A cidery without steady fruit has nothing to press, however good its brand.
Start with a source map. List every orchard or supplier, the varieties each provides and the share of the total. If one grower supplies most of the fruit, treat that grower as a key relationship. Ask how long each has supplied the cidery, how prices are set and whether quality is checked at delivery.
Read the agreements. Do they cover price, volume, varieties, delivery timing and what happens if the crop fails? Do they require consent to transfer? Ask your lawyer to read them. Ask whether any grower has hinted at selling to someone else, changing crops or retiring. Handshake deals are common in farming, so ask what is actually understood and by whom.
Ask about plan B. Where did the cidery buy fruit in a poor year, and at what quality? Does the seller own trees or lease an orchard? Ask whether special cider varieties are planted for the cidery’s own recipes. Ask the growers, with the seller’s permission, how the relationship works from their side. Diversifying suppliers can reduce risk, and you may want to plan for that after closing. Ask how deliveries are scheduled around the harvest and whether the cidery has cold storage for fruit that arrives early. Finally, ask what the seller pays for fruit compared with last year, and whether growers have asked for changes.
Key takeaways
- Map every supplier, variety and share of the total.
- Have your lawyer check whether grower agreements transfer.
- Ask what the seller did in a short crop year.
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Due diligence
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to diversify your supply chain
- 02Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
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