Issue link: http://read.dmtmag.com/i/694455
8 STiR tea & coffee industry international / Issue 3, 2016 (June/July) Incorporating Representation for STIR Asia & Middle East / Southern & Eastern Europe Glenn Anthony John October Inter Co. Ltd. Interchange 21 Bldg., Room 3225, 399 Sukhumvit Road 32nd Fl. Bangkok, 10110, Thailand Tel +662 660 3789, Fax +662 660 3881 Mobile +1 917 843 0000 or +66 818 299 409 gaj@octobermultimedia.com The Americas / Northern Europe Emerson Leonard Cardinal Media LLC 2 Glenfield, Barrington RI 02806 United States Tel +1 917 680 1050 edl@octobermultimedia.com Printing/Distribution overseen by: October Inter Co. Ltd. Interchange 21 Bldg., Room 3225 399 Sukhumvit Roa, 32nd Fl. Bangkok, 10110, Thailand Tel +662 660 3789 Fax +662 660 3881 Printing and Pre-Production by: Post Publishing PLC Printed in Thailand Distribution by: DHL Express International (Thailand) Ltd. Published by: October Multimedia Co., Ltd. ON THE COVER Up Front *Coffee shops in the Ukraine are divided by hostilities that interrupt supplies, drive up the cost of green coffee and scare customers away. Alexander Voevodin, founder of the My Coffee chain is pictured on the cover. By Ann-Marie Hardie Will Peet's Coffee & Tea customers soon be adding Krispy Kreme Dough- nuts to their order? Not likely. But it must have sent a momentary shiver down the corporate spine of Dunkin' Donuts to picture thousands of Krispy Kreme shops flashing neon "Hot Now" signs across Asia. The fabled Southern brand of donuts was acquired for $1.35 billion by JAB Beech Holding, whose $30 billion in acquisitions—beginning in 2013 with Jacobs Douwe Egberts—has transformed the European and North American coffee market. The feeding frenzy in the US began with Peets and then Mighty Leaf Tea and Caribou Coffee. Last fall JAB Beech, Inc. added Intelligentsia Coffee and Stumptown Coffee Roasters; then capsule behe- moth Keurig Green Mountain. Krispy Kreme is privately owned and will operate independently from its headquarters in Winston-Salem, N.C. Premium coffee is apparently an affordable luxury for multinationals as well as consumers. JAB is not the only big player adding coffee and baked goods retailers to its menu. Luxury goods power houses LVMH's recently bought Milan-based Caffè Cova and Prada acquired Milan pastry shop Pasticceria Marchesi — two acquisitions that demonstrate new potential for premium consumables. "The pace of premiumization is such that any 'coffee-centered' brand, whether retail or foodservice-focused, is now a viable acquisition target, as the high-end coffee halo expands further across categories and geographies," explains Michael Schaefer, head of beverages at market research firm Euromonitor. A close look at JAB Beech suggests that they are seeking a presence any- where consumers are paying a premium for coffee, said Schaefer. "This marks a massive potential for global brands, a trend that will drive further consolida- tion in the industry as JAB and others stake their claim. Asia is ripe for expansion, particu- larly for bakery based chains like Krispy Kreme which offers a gentle introduc- tion to coffee. "In the US we talk about Krispy Creme as a coffee chain, in Asia it is more of a bakery chain, offering an affordable, premium, and snack item," says Schaefer. In markets where coffee consumption is still in its infancy, bakery chains open the door for coffee. "The move suggests an ongoing drive by the holding company to control every step on the retail "coffee ladder," from donut and dessert shops with a mission to attract new coffee consumers all the way to high-end boutiques for connoisseurs," says Schaeffer. Growth of coffee culture in China and Southeast Asia is expected to accelerate, he predicts. Krispy Kreme is a storied brand whose store openings stop traffic and attract block-long lines of customers mesmerized by the flashing neon signs. After spending billions establishing a reputation for excellence in hot bever- ages, Krispy Kreme caught the acquiring eye of JAB Beech which will clearly benefit from being first in line. A Shifting Coffee Landscape JAB adds American donut icon Krispy Kreme to expanding portfolio of global hot beverage and bakery acquisitions