ROCKVILLE, Md., Dec. 8, 2015 /PRNewswire/ -- JAB Holding's acquisition of Keurig Green Mountain for $13.9 billion (a roughly 78% premium over Keurig's recent stock market valuation) shakes up the top tier of the global coffee market.
"The acquisition is a natural step toward making JAB Holding a global coffee powerhouse," observes David Morris, a market analyst with research firm Packaged Facts, which recently published the report Single-Cup Brew Beverage Products in the U.S.: Coffee Pods and Beyond, 2nd Edition. "Keurig gives JAB a strong position in single-cup brew, the coffee market's fastest growing retail segment."
Other recent JAB purchases—including Peet's Coffee & Tea, Caribou Coffee, and Baresso Coffee (Denmark)--have already positioned it as a major coffeehouse player. The restaurant brands benefit from JAB's increasing scale while leveraging brand differentiation to target a range of customer segments.
"By combining its restaurant brands with a strong retail position in premium and super-premium single-cup and whole bean coffee, JAB becomes a formidable competitor to Nestle S.A. and Starbucks," says Morris. "JAB's tradition of granting its companies independent latitude should help them set trends, not just follow them."
For its part, Keurig Green Mountain (formerly Green Mountain Coffee Roasters) has emerged in the last decade as a specialty coffee and coffee maker behemoth, spanning the home and away-from-home markets. At the retail level, Keurig claims a 43% share of the single-cup brew coffee market, not including sales of K-Cups by other marketers and licensed for use in its machines. While market growth has been hampered by Keurig Green Mountain's rocky transition to the Keurig 2.0 platform and fallout from a private label share war, Packaged Facts estimates an 18% jump in U.S. retail sales of single-cup coffee for 2015.
In 2015, more than half of adults use a Keurig/pod brewer either at work or home. The majority of use occurs at home, with 43% penetration. And the movement of single-cup brewer purchasing into middle-class households bodes well for future market growth. The workplace, additionally, offers a great opportunity for industry players to reach a broader demographic.
