Sometimes, all it takes is one great idea to start a revolution. That was certainly the case with Keurig Green Mountain, the company who made one of the first ever in-home coffee and tea brewing systems. That particular idea has spawned a number of spin-offs, including the Keurig Kold for cool beverages like Coca-Cola, and the Keurig Rivo, whose name comes from the Italian word for “revolutionary” and which lets users make their own espressos and cappuccinos.
Now, Keurig is seeing the fruit (bean?) of their labors pay off…literally. A billionaire European family is buying Keurig for a stunning $13.9 billion cash. We know you’re probably asking yourself: what sort of family could pony up $13 billion like it’s chump change? Meet the Reimann family of Germany. The New York Times reports that the Reimmans are heirs to a German consumer goods company, and are seeking to become major players in the global coffee marketplace. The more Keurig in-home systems take a bite out of coffee sales at coffeehouses, the more it makes sense for investors to get in on the action.
You might not think it’s super lucrative to be the corporate equivalent of a college intern who gets everyone their coffee, but the market for the drink is huge, as evidenced by corporations like Starbucks who do billions of dollars worth of business per year. In fact, the U.S. Government’s Economic Research Service (ERS) reports that total retail sales at coffeehouses in 2003 were $6.9 billion. Modern-day people are always looking for faster and more convenient ways to do things, and Keurig has a potential market of thousands if not millions of people for whom it can make life much more convenient.
Caroline Levy, a beverage and household products analyst, commented to CNBC that the Reimmans’ JAB Holding Company may see the Keurig Green Mountain purchase as a way to introduce European coffee brands they own to the U.S. Some of these coffee brands include Jacobs, Carte Noire, and Pilão.
With the merger, JAB Holding Company is hoping to go toe-to-toe with Nestle, the latter of which currently controls 22.7 percent of the market share. In comparison, JAB controls about 19.7 percent of the market through companies like Mondelez International and Egbert Douwes Master Blenders. The Keurig acquisition will bump them up another 3 or so percent.
[Image Via Associated Press]