JAB adds American donut icon Krispy Kreme to expanding portfolio of global hot beverage and bakery acquisitions
Will Peet’s Coffee & Tea customers soon be adding Krispy Kreme Doughnuts to their order? Not likely.
But it must have sent a momentary shiver down the corporate spine of Dunkin’ Donuts to picture thousands of Krispy Kreme shops flashing neon “Hot Now” signs across Asia.
The fabled Southern brand of donuts was acquired for $1.35 billion by JAB Beech Holding, whose $30 billion in acquisitions—beginning in 2013 with Jacobs Douwe Egberts—has transformed the European and North American coffee market. The feeding frenzy in the US began with Peets and then Mighty Leaf Tea and Caribou Coffee. Last fall JAB Beech, Inc. added Intelligentsia Coffee and Stumptown Coffee Roasters; then capsule behemoth Keurig Green Mountain.
Krispy Kreme is privately owned and will operate independently from its headquarters in Winston-Salem, N.C.
Premium coffee is apparently an affordable luxury for multinationals as well as consumers. JAB is not the only big player adding coffee and baked goods retailers to its menu. Luxury goods power houses LVMH’s recently bought Milan-based Caffè Cova and Prada acquired Milan pastry shop Pasticceria Marchesi — two acquisitions that demonstrate new potential for premium consumables.
“The pace of premiumization is such that any ‘coffee-centered’ brand, whether retail or foodservice-focused, is now a viable acquisition target, as the high-end coffee halo expands further across categories and geographies,” explains Michael Schaefer, head of beverages at market research firm Euromonitor.
A close look at JAB Beech suggests that they are seeking a presence anywhere consumers are paying a premium for coffee, said Schaefer. “This marks a massive potential for global brands, a trend that will drive further consolidation in the industry as JAB and others stake their claim.
Asia is ripe for expansion, particularly for bakery based chains like Krispy Kreme which offers a gentle introduction to coffee. “In the US we talk about Krispy Creme as a coffee chain, in Asia it is more of a bakery chain, offering an affordable, premium, and snack item,” says Schaefer. In markets where coffee consumption is still in its infancy, bakery chains open the door for coffee.
“The move suggests an ongoing drive by the holding company to control every step on the retail “coffee ladder,” from donut and dessert shops with a mission to attract new coffee consumers all the way to high-end boutiques for connoisseurs,” says Schaeffer. Growth of coffee culture in China and Southeast Asia is expected to accelerate, he predicts.
Krispy Kreme is a storied brand whose store openings stop traffic and attract block-long lines of customers mesmerized by the flashing neon signs.
After spending billions establishing a reputation for excellence in hot beverages, Krispy Kreme caught the acquiring eye of JAB Beech which will clearly benefit from being first in line.