What you need to start the week.
- Big Investment Consortium Backs Coffee Bean & Tea Leaf
- World Tea Expo | Healthy Beverage Expo Move to Long Beach in May 2014.
- India Green Leaf Price Minimums a Pittance
Remarkably, investments in coffee retail during this same period top $10 billion.
The latest move is a sizable (but undisclosed) investment in California-based Coffee Bean & Tea Leaf. The deal was disclosed Friday by a consortium led by private-equity firm Advent International in Boston and CDIB Capital (the overseas investment arm of Taiwan-based China Development Financial Holdings Corp.) along with Mirae Asset Private Equity, a Korean venture.
The privately held Coffee Bean & Tea Leaf was founded in 1963 and has a large-scale tea blending facility in Camarillo, Calif. The company owns 178 stores and franchises 764 stores in 30 countries with 250 in Korea. It opened its first Asian store in 1996.
Victor Sassoon and his brother Sunny remain significant shareholders, according to a Sept. 12 release.
“Since 1996, we have worked very hard to build The Coffee Bean into the global and innovative company it has become today that touches the lives of millions of guests every week. The Coffee Bean & Tea Leaf® celebrates its 50th anniversary this year and we feel very blessed and excited to join our new partners in continuing to realize the Company’s significant potential as we look forward to the next 50 years of growth on all levels,” according to a joint statement by CBTL Executive Chairman Sunny Sassoon and Victor, who is CBTL CEO Asia.
“The Coffee Bean is the largest independent global player in a dynamic industry,” said Jeff Case, a Principal at Advent International. “The coffee and tea market is poised for continued growth, driven by rising coffee consumption globally and an expanding middle class in Asia and other growing economies throughout the world. We believe this investment will serve to accelerate the brand’s development and market share and we look forward to working with the management team to accomplish that growth.”
Will Kussell, a member of Advent’s Operating Partner program, will serve as Vice Chairman of The Coffee Bean Board of Directors. Kussell was previously president and chief brand officer of Dunkin’ Donuts Worldwide where he led the successful repositioning of the company as a coffee and bakery segment leader, increasing U.S. sales from just over $1 billion in 1994 to more than $5 billion in 2009. He also established an international growth strategy for Dunkin’ Donuts that led to a 60% sales increase from 2004 to 2009.
CBTL President and Chief Executive Mel Elias told Nation’s Restaurant News “The brand was well accepted in Asia, in part because The Coffee Bean had long focused on premium tea in addition to coffee — offering a leg up in a part of the world that had yet to adopt coffee-drinking ways.
The brand’s emphasis on tea will also be an advantage in the U.S., where consumer interest in tea is booming, Elias said. “When I started about 15 years ago, tea was about 4 percent of sales. Now it’s 15 percent, and it’s our fastest growing category,” he told NRN reporter Lisa Jennings.
Coffee Retail Investments
CBTL (Private) – $undisclosed – Advent International (Sept. 2013)
Master Blenders 1753 (Public) – $9.8 billion – Joh. A. Benckiser Group (April 2013)
Caribou Coffee (Public) – $350 million – Joh. A. Benckiser Group (Jan. 2013)
Peet’s Coffee & Tea (Public) – $974 million Joh. A. Benckiser Group (July 2012)
JAB paid $73.50 a share, a 29 percent premium for Peet’s in July 2012 and $16 per share for Caribou, a 30 percent premium. The company then paid $9.8 billion or $16.71 a share for Master Blenders, the largest coffee acquisition in history. Illinois-based Sara Lee Corp. became Hillshire Brands last year, spinning off its international coffee and tea business in June 2012 to create DE Master Blenders 1753. The previous high was the $3 billion paid by JM Smucker Co. for the Folger’s coffee brand which it purchased from Procter & Gamble Co. in June 2008.
Tea Retail Investments
T2 (Private) – $80 million est. Unilever (Sept. 2013) – See Tea Biz T2 Post
Teavana (Public) – $620 million Starbucks Coffee (Nov. 2012)
DAVIDsTEA (Private) – $14 million (April 2012)
Tea represents at least 10 percent of sales at the coffee firms listed above with greater margin contribution than coffee. This means the Peet’s, CBTL and Caribou deals represent at least a $150 to $200 million investment in tea retail. Tea represents much less of the the Master Blenders portfolio which include Tea Forte and Pickwick Tea, a multimillion dollar brand with about 70 percent of the Dutch market and 12 percent of Europe’s tea sales. If you assume Unilever paid at least $80 million for Australia’s T2 the total investment in tea retail tops $1 billion. Unilever did not disclose what it paid for T2.
Ready-to-drink teas, sparkling teas and juice fusions, bottled and fortified waters; natural juices like coconut and juice blends all bring health benefits welcomed by young and old.
Healthy Beverage Expo focuses on better-for-you beverages with healthful ingredients, facilitating the dialogue surrounding what “healthy” means to the industry and ultimately the consumer, according to organizer George Jage, founder and director of The Beverage Group (formerly World Tea Media).
The Healthy Beverage Expo and World Tea Expo will co-locate at the Long Beach Convention Center May 29 – 31, 2014, Jage announced last week.
“Moving World Tea Expo and Healthy Beverage Expo from Las Vegas to SoCal is a strategic decision that many industry leaders asked us to consider,” he said.
The combined theme for the event: “ReThink Your Drink: Better Beverages, Better Business,” was inspired by Long Beach’s own “ReThink Your Drink” efforts to encourage healthier consumption.
The event will generate an estimated $2.3 million for the local economy, according to the Long Beach Business Journal. “The World Tea and Healthy Beverage Expo is a cutting-edge-type of program, so it brings people who are innovators and are trendsetters into our city,” Convention and Visitor’s Bureau President Steve Goodling told Business Journal Assistant Editor Tiffany Rider.
“I’m delighted to welcome World Tea Expo and Healthy Beverage Expo to Long Beach,” said Long Beach Mayor Bob Foster. “Long Beach is the perfect fit to host these two expos as our City is certainly a health-minded community, and I look forward to showcasing our City’s waterfront, attractions, local businesses and beaches.”
The decision to relocate World Tea Expo is a smart move for these reasons.
- Long Beach is a great venue. The downtown is vibrant, the waterfront lovely and the facility is first-rate. Accommodations are reasonably priced, there are great restaurants in walking distance of the venue and the weather and cooling onshore winds combine to make Los Angeles quite pleasant that time of year. More significant, the move encourages a wide range of beverage retailers to attend. I exhibited at the convention center for several years as publisher of Natural Food magazine, a trade publication circulated among grocers. Specialty and natural grocery buyers are far more likely to travel to Long Beach. In addition Southern California is a hub of beverage distributors including some of the nation’s largest bottlers.
- There are 460 tea retailers headquartered in Southern California. Expo has always been the ideal place for exhibitors to spend a few minutes face-to-face with their key customers. The move to Southern California won’t change that. The region is home to some of the largest specialty tea importers (International Tea Importers) and blenders (QTrade Teas & Herbs) wholesalers (Sungarden Tea) and retailers (Coffee Bean & Tea Leaf) all staunch Expo supporters. Together these firms supply much of the nation’s premium teas.
- While World Tea Expo remains the leading trade show and conference focused on premium teas, its foundation is enhanced by exposing retailers to innovative products with consumer appeal. Parent company F+W Media rebranded the division to emphasize this broader range of “good-for-you” drinks. Healthy beverages are of growing importance to beverage retailers who wish to generate most of their income from non-alcoholic drinks. The alternative is to serve food which changes the character of the establishment as food sales exceed 50 percent of total revenue. The two shows share a theme this year but The Beverage Group will continue to emphasize the importance of premium tea hosting the World Tea Expo and World Tea East and producing the North American Tea Championships, operating the World Tea Academy and publishing World Tea News.
“We’re thrilled about the new opportunities and business this will bring attendees and exhibitors, and the Expos will see more ‘walk-ins’ and local ‘traffic’ from SoCal, as the area is one of the west coast’s most dynamic beverage marketplaces,” said Jage. “In addition, Long Beach is the perfect host city with its ideal climate, charismatic city-center and numerous attractions. We know the tea and healthy beverage communities will be excited about the Expos’ move and how it positively impacts their participation in the shows and their organizations,” he said.
KOLKATA, West Bengal, India – This week marks the debut of a minimum benchmark price for green leaf in several of India’s tea growing regions. The Tea Board of India notice insures small growers will be guaranteed at least the average sales price at auction from the previous month.
The prices are announced by district. In Darjeeling and North Dinajpur the August price averaged INRs 11.15 per kilo (18-cents/kg) and in Jalpaiguri (Doers) INRs 11.72 (19-cents/kg). In Assam prices were generally higher ranging from 21-cents to 29-cents per kilo. It takes 4.6 kilos of green leaf to make a kilo of tea.
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