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M&A activity by coffee’s corporate giants

From the February 2018 issue.

As the craft coffee market picks up speed, so does acquisition activity among its brightest stars.

German conglomerate purchased Berkeley-based Peet’s, it was gaining control of one the first purveyors of specialty coffee – and a business that had fallen 6 per cent in the 12 months prior.

Shares in Peet’s jumped as a result of the transaction, however, and a simultaneous coffee feeding frenzy began, with JAB playing a very active role.

At that time, coffee only represented a small share of JAB’s expanding portfolio, which included luxury accessory and beauty brands. JAB only owned a minority stake in European coffeemaker D.E. Master Blenders 1753 (the owner of Douwe Egberts).

But since the Peet’s acquisition, JAB has started divesting some of its luxury goods brands in pursuit of big or up-and-coming names in the coffee and café sectors. By the end of 2012, JAB also acquired Minneapolis-based Caribou Coffee. Next it purchased the remaining stake of Douwe Egberts, before acquiring a number of coffee and café brands over subsequent years.

By 2015, other coffee giants were catching on – both to the coffee empire JAB was quietly building and to what was happening in the greater coffee industry. With high-quality, specialty and niche coffee at the receiving end of increasing consumer dollars, indie brands with loyal Third Wave customers became the focus of investors.

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