The coffee world is abuzz today with another coffee purchase by JAB Holdings. In addition to majority stakes in Caribou coffee, Peet’s Coffee and Tea, Intelligentsia and Stumptown, news is out today that they’ve put $13.9 Billion down on Keurig. Their previous purchases of Mondelez International an DE Master Blenders brings this family owned holding company a big, big player in the coffee business.
Of course, the Twitter world has erupted with tweets detailing the impending doom of coffee as we know it. I already have several tweets and text messages with questions. Admittedly, not so much with the Keurig deal as they did in the previous couple of purchases that JAB Holdings made of third-wave coffee leaders Intelligentsia and Stumptown.
It’s Not Going To Change Much
The coffee world needs to take a step back and look at JAB’s investment portfolio before they completely freak out.
First of all, JAB is not a coffee company. They’re an investment holding company. They make their money seeking out profitable businesses, buying them and holding them for the long run. Potentially providing investment dollars for those companies to continue to grow. It’s highly unlikely that anyone at JAB is going to have input on the roast profiles that Intelligentsia uses.
Secondly, look at their current investment portfolio at least as far as some of their US-centric holdings go:
- Douwe Egberts – an institutional coffee standout since Kaladi was still herding goats and a huge presence outside the US
- Intelligentsia / Peet’s / Caribou – Three cafe chains that basically gives JAB coverage across the entire US market to compete against Starbucks. Not to mention several nice roasting facilities.
- Keurig – catering to the low end grocery store coffee market and consumer coffee
- Stumptown – Undoubtedly the king of the cold brew coffee market which is just now coming into its own.
And these are just their US based holdings. They have several others around the world in similar markets.
With the breadth of their investment holdings, no matter how you get your morning brew – conveniently at home, at the cafe on your way to work, iced, or from the food service vendors at your huge downtown office building, you’re likely going to be dumping cash in the pockets of JAB.
Why The Keurig Deal is Good for the Coffee Biz
Given that JAB has all of these coffee companies in different markets, I think it’s highly unlikely that they’re going to make any huge changes that we’d notice right away. Yeah – we saw some changes with Peet’s and Caribou. Especially here in the Midwest. I don’t think you’re going to see a Douwe Egberts coffee being served in an Intelligentsia cafe anytime soon.
This is good news for the coffee business because it speaks volumes to the potential for growth in this industry. Here we have a huge, international, corporate investor looking at the coffee business as a whole and saying “Hey – there’s some serious potential for growth here – we should buy a whole bunch of this stuff”.
What better pat on the back could we get than that?