Brewing Up a Deal: Peet’s Coffee Buys Stumptown

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Peet's Stumptown

Peet’s Coffee & Tea is about to become the morning caffeine supplier of choice for a lot more people. The San Francisco-based company is buying high-end coffee company Stumptown for an undisclosed amount.

“In order to win, you want to be able to win with more than one brand,” Peet’s Chief Executive Dave Burwick told the Wall Street Journal.

Fans of the two brands need not worry, though, since the current plan calls for no crossover or shutdowns to occur as a result of the sale. “We both fit well under a family of coffee brands run independently and treated as separate businesses but with similar values,” said Joth Ricci, President of Stumptown, according to the New York Times.

Stumptown Cofffee

Though there will be no store mergers the pair will certainly share data, with Peet’s picking up valuable info on how Stumptown creates its cold-brewed concoctions. Meanwhile, the much smaller Stumptown—which made national news recently with its Stephen Colbert-honoring cold brew, Col’ Brew—will get more data on how to package its product and build up sales in grocery stores and other retailers from Peet’s, which has 236 locations. Stumptown has less than a dozen shops of its own.

Col-Brew

Coffee, of course, has been an obsession of sorts in recent years for Americans who seem willing to make budget cuts in other areas but still pay out high-margin sums for a cup of java. Joe DeRupo, a spokesman for the National Coffee Association USA, told the Wall Street Journal that daily coffee consumption of gourmet coffee beverages has increased “about threefold to about one-third of US coffee drinkers” from 2000 to 2015.

Peet’s owner, JAB Holdings Company, which is based in Luxembourg, has also been enjoying those statistic through its majority stakes in Caribou Coffee and European coffee business Jacobs Douwe Egberts. Caribou has had some rough times in the past few years. In 2013, it closed 80 of its locations and renamed 88 of its shops Peet’s (which also struggled in the Midwest as well).

Peet's Coffee

As the Twin Cities Business Journal noted, this was basically a total “retreat” from such Midwestern and Eastern markets as Ohio, Michigan, Pennsylvania, Maryland and Washington, DC, for Caribou. The company also controls Einstein Bros. Bagels, which accounts for the combination Caribou/Einstein shops that are now opening.

Big coffee companies will likely continue to go after smaller, funkier brands—similar to the trend taking place in the Big Beer/microbrew space. “We can expect further consolidation among top-tier craft roasters,” Ross Colbert, a beverage strategist at Rabobank International, told the Journal. “Big Coffee sees further upside in smaller, regional roasters. In coffee—like beer—small is beautiful.”

As the Seattle Times notes, Starbucks certainly took notice of the sale. Corey duBrowa, senior vice president of global communications for the Seattle company, taking to Twitter:

 

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