Caribou Coffee

Background
In 2013, Joh. A. Benckiser Group (JAB), a private German holding company, purchased Minnesota-based Caribou Coffee.  JAB had already acquired Peet’s Coffee & Tea, and went on to buy European coffee company D.E. Master Blenders 1753. JAB is now in the process of merging D.E Master Blenders with Kraft spinoff MondelÄ“z International, which would create the first or second largest coffee company in the world.

Just prior to being taken over by JAB, Caribou Coffee had become the first major coffee company to source 100% of its coffee from Rainforest Alliance certified farms. At the time of the changeover, I was concerned that JAB would begin sourcing less certified coffee, in part because they were closing many Caribou locations and/or converting them to Peet’s, which had little in the way of certified coffee of any type.

In 2012, Caribou had approximately 550 stores. Their website says that today they have fewer than 500 (although an exact number seems elusive). While we can go with a 9% reduction in stores, some were considered “under performing” and there’s no good way to determine if Caribou buys more or less coffee than it used to; around the time JAB acquired it, Caribou was buying over 9,000 metric tons of Rainforest Alliance certified coffee a year.

How they’re doing
I’m pleased to see that under JAB, Caribou is still publishing a “sustainability” report, which they refer to as their “Do Good” report. The report discloses that Caribou does not have a department dedicated to sustainability efforts. Instead, they rely heavily on employee volunteerism and community engagement. That seems like a lot of heavy lifting for employees. Since coffee sourcing is rolled into the Do Good strategy, one can’t help but wonder if or how sustainable coffee sourcing is baked into the company policy.

Initial sourcing goals, from their 2013 report (PDF), indicated that they wanted to source more Rainforest Alliance certified coffee from Kenya and Sumatra, and expand into East Africa and Papua New Guinea by encouraging and educating suppliers. I consider this a positive move, as East African coffees are often lacking in organic or Rainforest Alliance certifications (see my post on coffee growing in Kenya). Details in the report were scarce, but it appears they met this goal.

Their 2013 goals were more of the same — diversifying Kenyan and East African suppliers. However, the 2014 report doesn’t state any specific headway, and Caribou gave itself only 2 out of 3 “cups” (points), meaning they only met a portion of their goals.

The lack of detail is frustrating, but expected from a privately held company. Unfortunately, Caribou no longer discloses the amount of coffee they buy, but it is still all Rainforest Alliance certified. I’m glad to see that JAB hasn’t completely retreated from public disclosure and sustainability efforts. Their recycling, energy, and charitable accomplishments are very nice, but I think consumers would like to see much more specifically about their coffee.

In mid-December 2012, Caribou Coffee Co., the first U.S. major coffee company to source all its beans from Rainforest Alliance certified farms, was acquired by the Joh. A. Benckiser Group (JAB), a private German holding company.

Currently, the plan is for Caribou to continue to be headquartered in Minneapolis, with its own management team.

Joh. A. Benckiser Group is controlled by the Reimann family, the fourth-wealthiest in Germany. Other brands under their umbrella include cosmetics giant Coty and high-end shoe company Jimmy Choo. This is not JAB’s first foray into coffee, though. In summer 2012, JAB acquired Peet’s Coffee & Tea, one of the oldest family-owned coffee companies in the U.S. and a precursor to Starbucks. In October 2012, they increased their stake in D.E. [Douwe Egberts] Master Blenders 1753 to around 15%. Douwe Egberts is the Dutch company created when Sara Lee spun off all of its coffee and tea business.

The deal is not generally viewed as a fix-it-up-and-sell it, American-style private equity grab. There is a possibility that there will somehow be a merger of mostly West Coast Peet’s and mostly Midwest Caribou, or at least some sharing of buying or processing. I really hope that Caribou will retain its independence. When Caribou was public, they provided plenty of information on their overall corporate responsibility and coffee sourcing. Private companies, especially coffee companies, rarely do. I can only hope that under JAB, Caribou can continue with its transparency, excellent sustainability record, and its all-Rainforest Alliance coffee sourcing.

Update: In April 2013, JAB purchased D.E. Master Blenders.

Footnote: In poking around for background on this piece, I once again came across blog and social media comments from dopes that have persisted in calling for a boycott on Caribou because it was Muslim-owned and followed Shari’ah law. For a number of years, Bahranian-based Arcapita Bank was Caribou’s major shareholder. While you couldn’t get a ham sandwich at Caribou at the time, there was little reason for the Islamaphobia that followed. At any rate, the haters haven’t kept up with the times, as Arcapita divested itself of the last of its shares in Caribou in 2011.