Peet’s Buys Stumptown Coffee Roasters

Peet’s Coffee & Tea gave the coffeescenti something to buzz about with the announcement on Tuesday that it was buying Stumptown Coffee Roasters, a high-end specialty coffee company that has developed a cult following.

The two companies were careful to say that Stumptown coffee would not be sold in Peet’s cafes or vice versa, and that consumers would most likely see very little sign of their alliance.

“We both fit well under a family of coffee brands run independently and treated as separate businesses but with similar values,” said Joth Ricci, president of Stumptown.

Terms of the deal were not disclosed. 07peetsjpg-master675

The coffee business, especially at the expensive end, continues to grow at a pace rarely seen in the food and beverage business. Last fall, Starbucks opened a high-end roastery and cafe in Seattle, where it sells exotic coffees under a new brand, Starbucks Reserve.

And this year, Hamdi Ulukaya, the billionaire founder of Chobani yogurt, took a stake in La Colombe Coffee Roasters, another growing coffee company.

Peet’s is majority owned by JAB Holdings Company, a family-owned investment group based in Luxembourg. JAB also holds majority stakes in Caribou Coffee Company and Jacobs Douwe Egberts, a large European coffee business, as well as consumer fashion brands like Jimmy Choo and Belstaff.

Duane Sorenson, Stumptown’s founder, who was called “the Che Guevara of the rock-star barista movement” in an Esquire magazine article by the competing coffee master Todd Carmichael, once worked behind the bar at a Peet’s in Portland, Ore. While he was there, he got to know Doug Welsh, Peet’s roast master.

“They’ve known each other for a long time and often bump into each other in places where they’re sourcing coffee,” said Dave Burwick, chief executive of Peet’s.

Mr. Burwick said one of the attractions of Stumptown for Peet’s was its success with cold-brewed coffee, the latest craze in a craze-driven business. In the cold-brew process, coffee grounds are steeped in room-temperature water overnight, then filtered, producing lower acidity.

Stumptown sells cold-brewed coffee in retro brown bottles and also offers a canned version of its popular nitro cold-brewed coffee, in which tiny nitrogen bubbles are injected into the coffee under high pressure.

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“In about 2011 or 2012, when Stumptown first produced this stubby bottle that was the first cold-brewed ready-to-drink product, we knew it was onto something,” Mr. Burwick said.

He said Peet’s would benefit from sharing such innovations with Stumptown, and Mr. Ricci said Stumptown would benefit from logistics and other capabilities that Peet’s offered.

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The deal will help Stumptown grow, said Matt Lounsbury, the vice president of its wholesale and retail businesses. The company has expanded over the last four years with the help of an investment from TSG Consumer Partners, a private equity group, using what Mr. Lounsbury called a “hub and spoke” strategy to open stores around roasting facilities.

“As our growth has continued, we’ve also continued to have challenges as far as our capacity,” Mr. Lounsbury said. “Peet’s will give us more ability to resolve those issues.”

By: http://www.nytimes.com/2015/10/07/business/dealbook/peets-buys-stumptown-coffee-roasters.html?_r=1