Tit for Tat

Germany’s coffee giant JAB grabs British chain Pret a Manger

One coffee chain to go, please. Source: Reuters

JAB Holding, the investment arm of Germany’s billionaire Reimann family, has acquired British sandwich and coffee chain Pret a Manager from European private equity company Bridgepoint for £1.5 billion ($2 billion) in the latest addition to its global coffee empire.

The purchase is the most recent salvo in a coffee war that recently saw Swiss rival Nestlé score a major marketing deal for Starbucks coffee to boost its position in the US market

Pret a Manger, French for ready to eat, caters to the very British love of sandwiches and its outlets are ubiquitous in London, home to two thirds of its stores. But it’s also present in other countries and has announced plans to expand to Germany this fall. JAB’s takeover will likely reinforce that strategy.

The purchase will put Nestlé under further pressure in the lucrative coffee market which has been the focus of a major investment drive by JAB. The group, which owns stakes in well-known fashion brands including Calvin Klein, Jimmy Choo and Bally, has invested €32 billion ($37 billion) since 2012 in acquiring coffee chains around the world.

It spent €14 billion in Europe on acquiring Jacobs Douwe Egberts, along with smaller chains like Scandinavia’s Espresso House. The other €18 billion was spent in America, where it bought Keurig, the market leader in capsules, alternative brands like Intelligentsia Coffee and Stumptown Coffee Roasters, and doughnut franchise Krispy Kreme, whose profit comes almost entirely from coffee.

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Stumptown, also now owned by JAB, is not just a coffee brand, it is also the original name of Portland, Ore., home to Stumptown Coffee. Source: ddp

The Reimanns, who made their fortune in the chemicals industry back in the 19th century, hold 90 percent of JAB, with the remainder owned by the management headed by Dutchman Bart Becht, the former CEO of consumer goods giant Reckitt-Benckiser.

Pret a Manger started out with one store in 1983 and now has 530 outlets which generated revenue of £879 million last year. The company prides itself on its freshly prepared, upmarket sandwiches, like the “Balsamic Chicken and Avocado” and the “Maine Lobster Roll,” each made in the shops’ kitchens, and its organic coffee.

“Management’s proven track record and commitment to customer service, investment in innovation and approach to freshly prepared food position Pret well as it capitalizes on evolving consumer taste and lifestyle preferences,” said JAB CEO Olivier Goudet.

JAB sweetened the deal for Pret a Manger’s 12,000 staff with the promise of a £1,000 bonus for each of them once the deal is finalized.

Kerstin Leitel is a correspondent for Handelsblatt in London. To contact the author: leitel@handelsblatt.com

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