Did Gourmet Coffee Start with Alfred Peet?
Most of us of a certain age grew up drinking mass produced ground coffee such as Maxwell House or Folgers. The concept of whole bean coffee roasted and ground just before making coffee did not exist. At least it didn’t until Alfred Peet came along. Did gourmet coffee start with Alfred Peet? Investor’s Business Daily writes that Alfred Peet brewed a better cup of coffee and folks flocked to his door.
Alfred Peet was convinced that Americans would pay up for a better-tasting cup of coffee. This was back in the 1950s and ’60s – way before today’s gourmet coffee shops.
He also saw hardly anyone willing to travel the globe in search of excellent coffee beans, teach the public how premium-quality coffee should taste and explain that with coffee beans, where they’re grown matters.
So the Dutch-born expert in coffee and tea made it his mission to serve an excellent product that was priced at a premium over the marketplace yet still was affordable enough to enjoy repeatedly.
Peet’s Coffee & Tea opened in Berkley, CA in 1961 and grew to seven locations by 1981. Today the company has 283 outlets in the USA and sells bags of gourmet coffee in retail stores. Many coffee entrepreneurs credit Alfred Peet with inspiring them to sell gourmet coffee.
Sourcing Great Coffee
Something that did not happen before Alfred Peet came along was visiting coffee plantations in search of high quality coffee. And the concepts of organic coffee, shade grown coffee and fair trade coffee followed naturally as consumers became acquainted with Peet’s gourmet coffee.
The original motive behind fair trade coffee was to develop coffee trade relationships based on respect, transparency, and dialogue between producers and sellers. The point is to guarantee fair prices to small coffee growers who would otherwise have no access to fair pricing. At its heart fair trade coffee is an idea for social betterment more so than a way to make better coffee. There is a “Fairtrade” coffee brand for which coffee packers pay a fee a “Fairtrade” logo and brand name. Coffee carrying this name must come from an associated cooperative. In general cooperative only sell part of their harvest as fair trade coffee because of lack of demand.
It was Alfred Peet who first cut out the middle man and visited coffee farms, found the best product and paid a fair price to the coffee grower.
At a time when a cup of coffee was just a cup of coffee Alfred Peet introduced us to the concept that coffee could be special. We recently asked what’s the point of organic coffee? Alfred Peet taught us that quality of coffee and sourcing are important.
You do not lose any of the health benefits of coffee when you drink health organic coffee. You get the same reduction of the incidence of type II diabetes, various kinds of cancer, Alzheimer’s and Parkinson’s diseases and depression/suicide by drinking organic coffee as opposed to regular. The point is that organic coffee production is sustainable and better for the earth.
Thank you, Mr. Peet.
Will Climate Change Destroy Coffee Production
A hotter climate is going to be bad for coffee. We have written about how coffee leaf rust wipes out coffee crops. Coffee farmers need to replant with new strains and plant higher on the mountain where temperatures are lower. Will climate change destroy coffee production? According to CNBC, the CEO of Illy, climate change is affecting coffee.
Climate change is a threat to coffee production in the medium and long term, Andrea Illy, chairman and CEO of Italian coffee company Illy, told CNBC at the World Economic Forum in Davos on Friday.
“Coffee is one of the crops which is severely affected by climate change, which is a threat both in terms of too high temperature in some regions when it is produced, (and) a threat in terms of water security – either droughts or excessive rains – in certain other regions,” Illy said.
“(The) problem is that apparently, most of the land suitable for Arabica production which is the best and most, let’s say, most cultivated, will be reduced by 50 percent from now to 2050 as a consequence of climate change,” Illy went on to add.
Despite the possibility of a reduction in coffee production, consumption is going up. The Illy CEO predicts that they will need to be producing twice to three times as much to keep up with demand by the end of the century.
Effect of Climate Change on Agriculture
Higher temperatures, more chaotic weather patterns, droughts and floods we become the norm as the world climate change, according to experts. The Tech Times writes about the effect of climate change on agriculture.
As average global temperatures begin to rise due to human activity, scientists say the drastic effects of climate change continue to take effect all over the world.
One of the most severely affected sectors is the field of agriculture. In the past decades, extreme weather conditions caused by climate change have disrupted global food production.
The researchers found that global cereal production was as much as 10% lower in the last twenty years. However, there appears to be a “fertilizer” effect of higher levels of CO2 in the atmosphere. The problem for coffee is that the fertilizer effect would not reduce the risk of leaf rust or help when crops are washed out by floods or die because of drought. Climate change may not destroy coffee production but it may well reduce it.
How about Cocoa?
The Bangor Daily News reports that as climate change threatens coffee production, many Central American farmers are switching to cocoa.
Soaring temperatures in Central America, linked to climate change, are forcing many farmers to replace coffee trees with cocoa – a crop once so essential to the region’s economy it was used as currency.
Farmers across the region, known for high-quality Arabica beans, still are recovering from a coffee leaf rust disease known as roya, which devastated crops over the past four years.
Now, lower-altitude areas are becoming unsuitable for growing coffee as temperatures heat up. Cocoa thrives in the warmer weather.
It would appear that as coffee production moves up the mountain cocoa will take its place at lower altitudes. Maybe we will all be drinking mocha in a generation or two!
Why Would You Buy Shade Grown Coffee?
The most common arguments for shade grown coffee are the ecological benefits. But there is more to why you would buy shade grown coffee. Let’s start with ecological benefits of shade grown coffee as reported by the Smithsonian Migratory Bird Center.
By reviewing more than 50 studies on shade-grown coffee farms in regions ranging from Central and South America to Indonesia over the past 15 years, the Smithsonian Migratory Bird Center (SMBC) can now make the case that shade-grown coffee production is the next best thing to a natural forest, and put to rest any arguments about the sustainability of a sun-coffee system.
In study after study, habitat on shade-grown coffee farms outshone sun-grown coffee farms with increased numbers and species of birds as well as and improved bird habitat, soil protection/erosion control, carbon sequestration, natural pest control and improved pollination. While sun-grown systems can have higher yields, the shaded farms easily outperform them in sustainability measurements with the trees providing an array of ecological services that offer both direct and indirect “income/payback” to farmers and the environment.
The “hidden yield” in the shade vs. sun comparison is that of the non-coffee products and opportunities coming from the shaded system. In addition to ecotourism on several shade coffee farms, firewood, fruits, building materials and medicinal plants are all resources harvested to varying degrees by shade coffee farmers and used and/or sold by farmers.
Shade grown coffee is coffee grown the natural way that coffee evolved. Although sun grown coffee out produces shade grown coffee in the short run, it is shade grown coffee and the preserved ecosystem that it entails that wins in the end.
The Taste of Shade Grown Coffee
As noted in a Grounds for Change article, shade grown coffee simply tastes better than the sun grown variety.
Experts agree that the flavor of shade grown coffee is superior to that of full-sun coffee and that it is significantly less bitter. Shade grown coffee shrubs mature more slowly and produce fewer coffee cherries so the flavor is more concentrated and mellowed in the resulting harvest.
If your goal is to buy the most flavorful coffee buy shade grown.
Coffee for the Birds
A few months ago we wrote about coffee for the birds. If you are going to preserve habitat for local and migratory birds you need to go with shade grown coffee.
Many birds that spend their summers in the USA spend their winters in Mexico, Central America and even South America. They live in mountain forests in these regions, the same places that coffee is grown. As sun-tolerant varieties of coffee have been developed, coffee farmers have cut down upland tropical forests and planted coffee. They may have planted the occasional plantain to help prevent wholesale soil erosion but have removed the habitat for local and migratory birds. The question is, if you want to limit your coffee purchases to growers who maintain bird-friendly habitats how do you proceed?
Good choices include Rainforest Alliance, USDA Certified, shade grown, Fair Trade and sustainable. In the end it turns out that the Smithsonian Migratory Bird Center has the strictest certification followed by Rainforest Alliance for coffee farming that is kindest to the birds.
What’s the Point of Organic Coffee?
What’s the point of organic coffee when you can walk into Starbucks and buy a good tasting cup of coffee or you can buy Folgers at the store and save money? What are the benefits of organic coffee over the regular stuff? First of all you do not lose any of the health benefits of coffee when you drink health organic coffee. You get the same reduction of the incidence of type II diabetes, various kinds of cancer, Alzheimer’s and Parkinson’s diseases and depression/suicide by drinking organic coffee as opposed to regular. The point is that organic coffee production is sustainable and better for the earth.
Sustainable Organic Farming
Not long ago we posed the question, what does sustainable mean?
Alternet writes about how we should stop using the term sustainable and instead use regenerative or degenerative. They suggest a regeneration revolution.
With the "sustainability" label co-opted by Big Food, it’s time to re-frame agriculture into two categories: regenerative and degenerative.
Last week, PoliticoPro reported that the U.S. Secretary of Agriculture wants “farmers and agricultural interests to come up with a single definition of sustainability in order to avoid confusing the public with various meanings of the term in food and production methods.”
We agree with Secretary Tom Vilsack that the word “sustainability” is meaningless to consumers and the public. It’s overused, misused and it has been shamelessly co-opted by corporations for the purpose of greenwashing.
Their argument is that at best sustainable practices maintain the status quo and at worst the term is used as an outright lie. Their proposal is that people should be able to choose food that is produced using organic regenerative practices based on sound ecological principles that rejuvenate the soil, grasslands and forests; replenish water; promote food sovereignty; and restore public health and prosperity – all while cooling the planet by drawing down billions of tons of excess carbon from the atmosphere and storing it in the soil where it belongs.
The point or organic coffee is to repair the earth and not just slow its destruction. Human kind has been farming for thousands of years but industrial scale agriculture is only decades old.
Agriculture at the Crossroads
The evolution of industrial scale farming has driven many small farmers out of business and taken over their lands. However, there is a valid argument to be made for small farmers on small plots of land which is almost always the situation with organic production. Global Agriculture writes about industrial agriculture and small scale farming.
One third of the economically active population obtains its livelihood from agriculture. In Asia and Africa, millions of small-scale and subsistence farmers, pastoralists, fishermen and indigenous peoples produce most of the food consumed worldwide, in most cases on very small plots of land. Over the past decades, agricultural policy and international institutions, as well as private and public agricultural research have often considered small-scale and subsistence farmers as backward “phase-out models” of a pre-industrial form of production. The widely held belief was that only large economic units were capable of achieving increases in productivity on a competitive basis through modern and rationalised cultivation methods, mainly with chemical inputs and the use of machinery.
An alternative view is that industrialized agriculture leads to an agricultural treadmill that crowds out small farmers to the detriment of the land. The fact of the matter is that farms of less than 2.5 acres account for 72% of all farms. These are farms whose owners have a vested interest in preserving the quality of the land. The point of organic farming is that small farmers pass their land on from generation to generation and take better care of it.
Increased Income with Coffee and Bananas
Sustainable agriculture is good for the planet and shade grown coffee is ideal. In Uganda in East Africa coffee farmers had been encouraged to cut down the highland forests to plant coffee. A new approach confirms the value of growing coffee in at least partial shade and is more profitable as well. All Africa reports about climate smart coffee and bananas and the increase coffee farmers’ incomes.
Ugandan farmers are increasingly inter-planting coffee, the country’s primary export, and banana, a staple food, as a way of coping with the effects of climate change.
Studies by the International Institute of Tropical Agriculture (IITA) and partner organizations show that a Ugandan farmer gets 50 per cent more income from inter cropping coffee and banana than from growing either crop alone.
Conducted in over 30 districts of Uganda, the study showed that coffee yield remained the same when intercropped with bananas and the farmers gained additional income from the banana.
This approach increases coffee farmers’ incomes and moves away from industrial scale growing of coffee back toward a shade grown coffee approach.
With shade grown organic coffee the consumer gets healthy organic coffee and the grower preserves the natural environment. Coffee has traditionally been grown under a canopy of trees. This method of planting on hillsides helps prevent erosion as is still seen in regions of Colombia, Panama, and other parts of the world where coffee is grown on steep slopes. However, new sun tolerant coffee strains were introduced over the last two generations. These plants thrive in full sunlight and are capable of producing up to three times as many coffee beans as traditional coffee plants in a shaded environment. Unfortunately, in order to boost production rates growers use synthetic fertilizers, herbicides and insecticides to protect the monoculture of coffee that they plant. By taking coffee out of its more normal habitat growers subject it to the same risks as other field crops and orchards in which individual infective pests can enter and destroy a crop. Considering that it can take a decade for coffee plants to mature an infection or infestation that destroys plants can be devastating. Thus the coffee planter who ceases to produce shade grown organic coffee can find himself trapped in a never ending cycle of herbicide, pesticide, and synthetic fertilizer use. The consumers of this coffee pay the price.
At least growing coffee with bananas is an economically viable step back toward traditional shade grown coffee.
The Home of Robusta
Uganda is where Robusta coffee beans got their start according to Coffee Review.
Uganda, situated in the Great Lakes region of central Africa at the headwaters of the Nile, is the original home of coffea canephora, or robusta. The main part of Uganda coffee production continues to be dry-processed robusta used in instant coffees and as cheap fillers in blends. Uganda also produces excellent wet-processed arabicas, however, virtually all grown by villagers on small plots
Coffee marketed as Wugar is grown on mountains bordering Zaire along Uganda’s western border. More admired is Bugisu or Bugishu, from the western slopes of Mt. Elgon on the Kenya border. Bugisu is another typically winy, fruit-toned African coffee, usually a rougher version of Kenya.
Coffee farmers in Uganda are seeing increased income with coffee and bananas planted side by side.
How Long Will Cheap Coffee Last?
Arabica coffee futures fell by 24% in 2016 but how long will cheap coffee last? Agrimoney.com speculates on Arabica coffee futures and asks if the rout in prices will end in 2016.
Coffee futures proved among the worst ag performers of 2015 – in particular New York-traded arabica ones which dropped by 24%, compared with the 21% decline in their London-listed robusta peer.
The drop to a large part reflected the decline in currencies in major producers Brazil and Colombia, cutting the value in dollar terms of a commodity in which they represent a large chunk of world supplies.
However, better weather in Brazil’s main Arabica-growing state, after a dryness-plagued 2014, and the continued recovery in Colombian output after a replanting program early in the decade also played a role.
As did continued strong coffee exports from Brazil, which questioned lowball ideas for the country’s inventories.
The low value of the Brazilian real made it more profitable locally for Brazilian coffee farmers to sell their coffee supplies as coffee is denominated in US dollars. The glut of more coffee coming on line from the two largest producers of Arabica coffee drove prices down in dollars but because of the weakness of the real and the Colombian peso coffee farmers were still making a nice profit in their local currencies. How long will cheap coffee last? It is a matter of supply and demand. And the relative value of the real and Colombian peso versus the US dollar.
Coffee in Colombia
Increasing Demand and Fragile Supply Side
Seeking Alpha speculates that increasing demand and a fragile supply side could strengthen the coffee market.
According to the International Coffee Organization, demand for coffee is expected to rise ~25% in the next five years (from 2015). Demand is strong in developed countries such as Norway, Canada, the United States, and Switzerland. But the biggest demand driver going forward is from emerging markets such as Algeria, Australia, Russia, South Korea, Turkey and the Ukraine. On a numerical basis, coffee demand has potential to jump to 175.8mm bags by 2020 from 141.6mm bags in 2014. (Note: A bag weighs in at 132 pounds)
This is another El Niño year and the last time this weather pattern visited South America it substantially reduced coffee production in Brazil and Colombia. That has not yet happened this year but a combination of lower production and higher demand would be a recipe for higher prices in 2016.
Lower Brazilian Coffee Production
The USDA says that estimates of Brazilian coffee production have been revised downward which would reduce supply but selling of stocks from previous years may balance out the effect on prices.
Brazil’s coffee production for MY 2015/16 was revised down to 49.4 million 60-kg bags, a nine percent drop relative to a revised number for the previous season, due to below average yields and smaller size of the beans in some growing areas. Coffee exports in MY 2015/16 reached historic levels at 36.57 million bags, indicating that the 2014 harvest was not severely affected by the drought in Minas Gerais and São Paulo. Carry-over stocks from crops prior to 2014 also supported the steady flow of exports. Carry-over stocks for MY 2015/16 are projected down at 5.2 million bags.
In short it is not clear how long cheap coffee will last although there is certainly no immediate price hike on the horizon.
Give Organic Coffee for Christmas
The holidays are upon us. What do you get for that hard-to-buy-for father-in-law? What if you give organic coffee for Christmas? Healthy organic coffee is good for you and something that helps you wake up on New Year’s Day after too much partying to let the New Year in. If you decide to give organic coffee for Christmas what are your best choices? If you think about this earlier next year contact us at Buy Organic Coffee and ask us to send you Panama Mountain grown organic coffee or one of the Colombian organic coffee brands. But, if you need to run out to get some organic coffee at the last minute here are three certifications to look for on the bag.
USDA Certified
USDA organic coffee is the gold standard for organic coffees.
According to the USDA, the following applies to USDA organic coffee as well as to all organic food production. “… Organic food is produced by farmers who emphasize the use of renewable resources and the conservation of soil and water to enhance environmental quality for future generations. Organic meat, poultry, eggs, and dairy products come from animals that are given no antibiotics or growth hormones. Organic food is produced without using most conventional pesticides; fertilizers made with synthetic ingredients or sewage sludge; bioengineering; or ionizing radiation. Before a product can be labeled ‘organic,’ a Government-approved certifier inspects the farm where the food is grown to make sure the farmer is following all the rules necessary to meet USDA organic standards. Companies that handle or process organic food before it gets to your local supermarket or restaurant must be certified, too.”
Rainforest Alliance Certified
Rainforest Alliance certified coffee is comparable to USDA certified and more.
An alternative to organic coffee certification is for a grower to be Rainforest Alliance certified. The Rainforest Alliance is a non-governmental organization that works to conserve biodiversity. It does so for agricultural products by influencing consumers to buy what is good for the environment and good for small farmers. Rainforest Alliance certified means that the coffee that you buy was produced using good land use practices. Rainforest Alliance certified coffee is part of a broader sustainable agriculture program of tropical crops, including coffee, bananas, cocoa, oranges, cut flowers, ferns, and tea. Certified coffee farms meet a strict set of environmental standards that include preservation of the ecosystem and reduction in use of synthetic chemicals of all sorts. In addition, strict health and safety requirements are part of getting Rainforest Alliance certified.
UTZ Certified
UTZ certified coffee is like Rainforest Alliance in that UTZ not only certifies organic farming practices but also helps growers find a market for their product.
UTZ Certified stands for sustainable farming and better opportunities for farmers, their families and our planet. The UTZ program enables farmers to learn better farming methods, improve working conditions and take better care of their children and the environment. Through the UTZ-program farmers grow better crops, generate more income and create better opportunities while safeguarding the environment and securing the earth’s natural resources.
If you want to give organic coffee for Christmas next year, contact us a month in advance for direct shipment. If you are under the gun right now for a gift look for the certifications we suggest.
You Are Less Likely to Die If You Drink Coffee
And here is one more study that shows that you are less likely to die if you drink coffee. Obviously, we all die eventually. But why hurry the process? There have been quite a few research studies showing that drinking coffee reduces the risk of diseases like type II diabetes, Alzheimer’s, Parkinson’s and many more. And studies from the Harvard School of Public health have shown that over a given period of time you are less likely to die if you drink coffee. (40 Years of Observations on the Effects of Coffee) One more bit of proof was recently published in the American Journal of Epidemiology. The article deals with the association of coffee consumption and mortality in general and from specific causes. In this case the authors are able to say that the risk of death from specific diseases is reduced by coffee consumption. The link is to the abstract.
Concerns about high caffeine intake and coffee as a vehicle for added fat and sugar have raised questions about the net impact of coffee on health. Although inverse associations have been observed for overall mortality, data for cause-specific mortality are sparse.
Enrollees were free of cancer and had no history of cardiovascular disease. 90,317 enrolled and 8,718 occurred during the ten years that individuals were in the study. Results were statistically adjusted for smoking.
Coffee drinkers, as compared with nondrinkers, had lower hazard ratios for overall mortality (<1 cup/day: hazard ratio (HR) = 0.99 (95% confidence interval (CI): 0.92, 1.07); 1 cup/day: HR = 0.94 (95% CI: 0.87, 1.02); 2–3 cups/day: HR = 0.82 (95% CI: 0.77, 0.88); 4–5 cups/day: HR = 0.79 (95% CI: 0.72, 0.86); ≥6 cups/day: HR = 0.84 (95% CI: 0.75, 0.95)). Similar findings were observed for decaffeinated coffee and coffee additives. Inverse associations were observed for deaths from heart disease, chronic respiratory diseases, diabetes, pneumonia and influenza, and intentional self-harm, but not cancer. Coffee may reduce mortality risk by favorably affecting inflammation, lung function, insulin sensitivity, and depression.
The hazard ratio in this instance is the risk of dying during the ten years you were in the study. A cup of coffee a day reduced your risk by about one percent while two to three cups a day reduced your risk by five percent. People who drank four to five cups a day has a fourteen percent low risk of dying during the course of the study and if you drank six cups or more your risk was reduced by sixteen percent.
Decaf and regular coffee had similar effects. Although the researchers did not find a lowering of risk of death from cancer from drinking coffee the incidence of dying from the following diseases was reduced.
- Heart disease
- Chronic respiratory diseases
- Diabetes
- Pneumonia and influenza
- Intentional self-harm (suicide)
The authors believe that coffee reduces mortality by its effects on reducing inflammation, helping lung function, improving insulin sensitivity and alleviating depression. Antioxidants in coffee have been linked to several of the benefits of coffee and would seem to fit the picture of inflammation reduction and improved insulin sensitivity as reasons for decreased mortality in coffee drinkers.
Barrel Aged Coffee
Think of liqueur coffee with the aroma but without the liqueur and you will get barrel aged coffee. The Washington Post published an interesting article about roasted coffee that is stored in a barrel previously used for liquor and comes out with some of the aroma and taste of the previous occupant of the barrel. Here is a little of what they have to say about barrel aged coffee.
The aroma alarmed me. It filled my car with the sweet, woody burn of whiskey, as if Hank Williams were riding shotgun with an open bottle in his hand. But I had nothing stronger in my to-go cup than coffee freshly made that morning at Qualia, the Petworth micro-roaster and java-slinger. Really, I swear. I don’t start with the hard stuff until, you know, noon. This was a cup prepared from Qualia’s Baby Rye Rye, a reserved line of Colombian beans that are aged for about two weeks in a charred oak rye-whiskey barrel, then roasted and rested.
The short version of the article is that roasted coffee beans stored for a couple of weeks in a barrel previous used for whisky or wine comes out with some of that aroma and taste in addition to the natural taste and aroma of the coffee. Roasters have tried this with green coffee beans which are very absorbent. Unfortunately, green beans soak up too much of the residual alcohol which imparts an ashy flavor when roasted. Barrel aged coffee takes time to prepare and there is never very much and the cost reflects this fact.
Coffee with Something from the Barrel Added
Some months back we wrote a series of articles about coffee with a little alcohol added. The best known for many people is Irish coffee.
Start your organic Irish coffee with Panama Mountain Grown organic coffee or coffee from Colombia. You can order organic whiskey from http://www.graigfarm.co.uk/ if they do not have any at your local liquor store. Use organic brown sugar and organic whipping cream. Because of all the cooler ingredients you will be adding make sure that you start with hot coffee poured into a pre-heated glass. For each cup of organic Irish coffee use the following:
- Coffee mug (A glass mug is traditional.)
- Tablespoon
- 4 ounces of hot coffee freshly ground and brewed organic coffee
- 1 ounce of organic, preferably Irish, whiskey
- 2 teaspoonful of brown sugar
- 1 ounce of organic double cream whipped just lightly
The Steps
- Have everything ready.
- Warm your coffee mug.
- Put the brown sugar into the glass and then add the hot organic coffee.
- Stir until the sugar dissolves.
- Add the whiskey and stir again.
- Add the cream by pouring gently over the back side of the tablespoon so that the whipped cream sits on top of the coffee.
- A little cinnamon and or nutmeg sprinkled on top of the whipped cream are an American addition to this treat and are optional.
Irish Coffee
Alternatives to barrel aged coffee and Irish coffee include the following.
Enjoy your coffee with any of the liqueur coffees, alcohol added and let someone else drive. Or go with barrel aged coffee and a hint of the strong stuff but no significant amount of alcohol so that you can be still be the designated driver.
Keurig Sells Out
Keurig sells out to European JAB Holding Company and the dominant player in the USA single serve market becomes a trophy for a family owned company aiming to dominate the global coffee industry. The New York Times reports that Keurig is becoming part of the coffee empire of a European investor group.
A billionaire European family is on a caffeine-fueled binge to roll up the global coffee industry, with a huge bet announced Monday: a $13.9 billion acquisition of Keurig Green Mountain.
The all-cash deal, offering an eye-popping premium of 78 percent, took analysts and investors by surprise. Keurig has lately had its share of challenges, facing a saturated market for its single-serving coffee brewers, sluggish sales of pods and a stalled new product.
But the JAB Holding Company – the investment arm of the Reimann family, heirs to the German consumer goods company, Joh. A. Benckiser GmbH – is in year three of its quest to dominate the global coffee industry. Keurig, which commands a large majority of the single-serve market in the United States, was a natural next step for the Reimanns.
The Reimann family has a controlling stake in the Jacobs Douwe Egberts coffee conglomerate whose brands include Bravo and Bach Espresso. It also has controlling interest in Peet’s Coffee & Tea which in turn acquired Stumptown Coffee Roasters plus Espresso House and Baresso Coffee A/S. Having Keurig in the group provides a platform for selling their various coffees via the single serve route. The article notes that Keurig needed Starbucks too much to drop their brand but that may not be the case with a larger company with worldwide reach.
A Reprieve for the K-Cup
We wrote recently about the death of the k-cup.
Are we going to see the death of the k cup? Keurig, the maker of single serve coffee saw its stock drop 30% after reporting diminishing sales. It would seem that the k cup fad is wearing thin and Keurig has hurt itself by trying to corner the market with a machine upgrade that excludes other brands. That, in the end, is probably the reason for the death of the k cup.
With its stock price down 30% or more Keurig has been in trouble. JAB Holding Company can use the single serve approach to improve sales of its various brands and Keurig can use other sources of coffee that reduce it dependence on the likes of Starbucks.
Global Reach
As Keurig sells out JAB has their sights on creating a coffee empire that spans the globe according to Bloomberg Business.
JAB Holding Co. wants to rule the coffee world. The closely held investment firm that manages the fortune of Austria’s billionaire Reimann family took another step toward that goal Monday by acquiring Keurig Green Mountain Inc. for almost $14 billion in the industry’s biggest-ever deal.
JAB has spent more than $30 billion in the past four years acquiring coffee companies in the U.S. and Europe to challenge global leader Nestle SA. JAB has bought assets including D.E Master Blenders 1753 NV, Mondelez International Inc.’s coffee unit and high-end chain Peet’s Coffee & Tea.
“This is part of a much, much bigger strategy. JAB wants to be the Budweiser of the coffee space,” Pablo Zuanic, a Susquehanna Financial Group analyst, said, referring to Anheuser-Busch InBev NV, the world’s biggest brewer. “Just as you’ve seen Bud consolidate beer, they want to consolidate coffee.”
Our concern is just where the small grower of healthy organic coffee fits in this picture. More later.