Sunday, June 10, 2018

UPDATED—"This Secretive German Firm Is Consolidating The US Coffee Industry"

Update: The headline from CB Insights is a bit confusing. The company (JAB) itself is based in Luxembourg City but the very German Reimann family owns 90%.
Through an Austrian company.
Which is a subsidiary of a German company.

From CB Insights, May 30:

JAB Holding has acquired a number of coffee chains and most recently has expanded to baked goods and sandwiches, with its latest acquisition of Pret A Manger for $1.99B.
Since 2012, Luxembourg-based holding group JAB Holding has been quietly consolidating international coffee and bakery businesses under its umbrella.

JAB, which does not disclose its financial information and tends not to speak to the press, began its coffee shopping spree by acquiring Peet’s Coffee and Tea in 2012. Since then, JAB has acquired a number of other chains, including its most recent majority stake in Pret A Manger for $1.99B in May 2018.
After acquisition by the JAB empire, some of these companies have turned into acquisitive powerhouses themselves.

Using CB Insights data, we analyzed JAB’s growing family tree to see where the company and its subsidiaries are placing their bets across the US coffee and bakery space.
JAB serves as the investment vehicle for the Reimann family, the descendants of businessman Johan A. Benckiser who founded industrial chemicals company Benckiser in the 1820s.

JAB continues to hold a stake in Benckiser, which merged with Reckitt & Colman in 1999, and then rebranded to RB in 2014. RB’s early successes included bringing Lysol to market in the 1890s, and today the company owns brands from Mucinex to Woolite to Durex condoms. With its shift to coffee, JAB reduced its RB ownership to 7.9% in September 2017.

Besides its home goods holdings, JAB Holding initially focused on luxury. It acquired luxury goods company Bally International, and became the majority shareholder for leading beauty company Coty, which owns the beauty businesses of Calvin Klein, Marc Jacobs, and 75 other brands.

Starting in 2012, JAB began to focus on the US coffee and bakery space. To strengthen its shifting focus, JAB sold over $30M worth of its Coty stock in 2015. It also sold luxury shoemaker Jimmy Choo to Michael Kors for $1.2B in July 2017.

Below, we look at JAB’s acquisitions (as well as those of its subsidiaries) to highlight the company’s shifting focus.

The US coffee industry has transformed over the past few decades, driven early on by Starbucks and Peet’s, and more recently by startup players like Stumptown and Blue Bottle. With Americans spending roughly $23.4B in coffeehouses in 2017, it’s no surprise that the industry continues to gain attention.
In November 2017, JAB spurred a rash of articles speculating that the financial behemoth was considering acquiring Dunkin Donuts. With a $5.3B+ market cap, Dunkin Donuts would be pricey, though not out of line of JAB’s prior deals.

Peet’s Coffee and Tea: JAB acquired Peet’s Coffee and Tea for $973.9M in July 2012, marking its entry into the coffee space. Founded in 1966, CA-based Peet’s operated 196 coffee shops when it was acquired, a number that has grown to over 240 today. The deal represented somewhat of a pivot for JAB, which two months prior had attempted, then withdrawn, a $10.7B takeover bid of Avon Products from its portfolio company Coty.

The company went on to acquire Mighty Leaf Tea in 2014, its first of 3 acquisitions in the space.
Peet’s then dove into premium third-wave coffee, a movement marked by the desire to produce high-quality coffee, and acquired both Stumptown and Intelligentsia in 2015. Both brands emphasize artisinal coffee and transparent sourcing.

More recently, in August 2017, Peet’s made its first equity investment — into Revive Kombucha, a bottled kombucha startup which signifies a departure from Peet’s core business. Kombucha has grown as a trend over the past several years, often catering to similar demographics as artisinal coffee does, and Revive had even launched a coffee-kombucha crossover product prior to the Peet’s deal.

Caribou Coffee: Six months after its Peet’s acquisition, JAB acquired Caribou Coffee. The Minnesota-based chain operates over 400 coffee shops and franchises in the US, concentrated in the Midwest, as well as international franchises in 10 countries.

Keurig Green Mountain: In 2016, JAB announced a $13.9B cash acquisition of Keurig Green Mountain. Coffee and coffee machine maker Keurig Green Mountain had seen its stock plunge over 70% throughout 2015, which perhaps made it an attractive target. In early 2018, Keurig acquired Dr Pepper Snapple for $18.7B, which is JAB’s largest acquisition to-date.

JDE/D.E. Master Blenders 1753: In 2013, JAB acquired D.E. Master Blenders 1753 for $9.8B. In 2015, that company became known as Jacobs Douwe Egberts, or JDE, when JAB merged it with Mondelez International’s coffee division.

Espresso House: In 2015, JAB acquired Nordic coffee chain Espresso House, one of the region’s largest coffee chains. In 2017, Espresso House acquired German coffee shop chain Balzac Coffee Chain, which was founded in Hamburg in 1998....