More corporate coffee consolidation

by JulieCraves on February 19, 2015

Two of the giants in the corporate coffee world want to merge in an attempt to rival the world’s current biggest coffee buyer, Nestlé I’ve been waiting for the merger to go through to write about this deal, but it is being investigated by European anti-trust regulators, so I’ll go ahead and provide some background now.

The proposed merger is between the #2 and #3 coffee companies in the world: Mondelēz International and D.E. Master Blenders 1753.

mondelez-logoMondelēz International was the name given to the Kraft Foods division that spun off from the company’s grocery segment in 2012. Coffee brands include Gevalia, Tassimo, and Kenco. (Kraft Food Group and Kraft Foodservice control Maxwell House, Yuban, General Foods International and the Gevalia and Tassimo brands in North America. Although I’ve not read that Kraft brands are part of this deal, Maxwell House is shown as an included coffee brand in this fact sheet put out by Mondelēz.)

master-blenders-logoD.E. Master Blenders 1753 is owned by JAB Holding Company (Joh. A. Benckiser) — the private firm that recently purchased Caribou Coffee and Peet’s Coffee.  Their main coffee brand, though, is Douwe Egberts (once owned by Sara Lee Corporation). There are other coffee brands owned by D.E. Master Blenders, mainly European; the most familiar to Americans is probably Senseo.

A merger between these two companies was agreed upon in mid-2014. If approved, the new company will be called Jacobs Douwe Egberts. Mondelēz will own 49% of the new company, and JAB will have controlling interest at 51%.

Mondelēz International purchases about 500,000 tons of coffee annually. D.E. Master Blenders purchases 300,000 tons, according to Coffee Barometer 2014 (PDF). Combined, their purchases equal Nestlé’s 860,000 tons. Thus, if the merger proceeds, Nestlé and the new Jacobs Douwe Egberts will be purchasing around 20% of the entire world production of coffee.

In my table describing Corporate Coffee: How much is eco-certified, you can see how little of this coffee is falls under any of the meaningful eco-certifications (Smithsonian Bird-Friendly, Rainforest Alliance, or organic). A mere 57,000 tons — 3.3% — of the coffee purchased by Nestlé, Mondelēz International, and D.E. Master Blenders* falls under these three certifications!

I can fall back on my usual advice: avoid inexpensive, mass-produced, commodity traded, grocery store coffee. The largest coffee companies in the world control this category, and do little, if anything, to make sure the coffee they buy is produced under conditions that protect farmland, natural habitat, biodiversity, or the farmers that grow it.

*I’ve not historically included D.E. Master Blenders in my table as I have concentrated on North American brands, but I will do so if the merger goes through. D.E. Master Blenders mainly purchases UTZ Certified coffee, which does not have strong, specific, or meaningful ecological criteria; Coffee Barometer 2014 indicates the company has plans to procure more organic and Rainforest Alliance certified coffee in the future. Even adding in UTZ and Nestlé’s own self-certified, mystery Nespresso AAA Sustainable Quality program purchases, the total only amounts to 202,000 tons, or 12% of what these three companies buy each year.

Revised on January 15, 2022

Posted in Corporate coffee,Jacobs Douwe Egberts/KraftHeinz

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