I earlier wrote about my beef with weak German coffee, so the recent news about wealthy Germans buying up Krispy Kreme Doughnuts, Inc. for about $1.35 billion caught my eye. German-owned JAB Holding Company is almost unknown to the average person, but this giant investment group has a controlling interest in many brand names you know and love.
Today’s trivia question: What do Bally, Caribou Coffee, Coty, Jacobs Douwe Egberts (JDE), Jimmy Choo, Keurig Green Mountain, Krispy Kreme, and Peet’s Coffee & Tea all have in common? Answer: They are all held by JAB Holding Co., a family-owned enterprise that dates back to 1823 in Pforzheim, Germany. German chemist Ludwig Reimann took over the company in the mid-1800s after the original founder Johann Adam Benckiser (now immortalized as JAB) sold his interest to Reimann – who had married Benckiser’s daughter. Today the privately held investment group is in the hands of four adopted Reimann (RYE-MAN) siblings: Wolfgang Reimann, Stefan Reimann-Andersen, Renate Reimann-Haas, and Matthias Reimann-Andersen. Their combined wealth is estimated to be around $17.6 billion, or about $4.4 billion each.
JAB Holding, along with its various subsidiaries, has been on a buying spree over the last few years. Although it has stakes in cosmetics, fragrances, cleansers, clothing, and shoes, JAB’s focus of late has been on coffee – and doughnuts. Five of its recent acquisitions have added coffee and tea to the fold. The latest purchase, expected to be finalized in a few months, is that all-American institution known as Krispy Kreme Doughnuts. For $1.35 billion (along with minority investor, BDT Capital Partners), JAB-controlled JAB Beech will add the doughnut chain to its holdings, with coffee on its mind. JAB and its subsidiaries already control many popular coffee brands: Jacobs, Kaffee HAG, Kenco, Millicano, Gevalia, and Tassimo (under its Mondelez division), plus Douwe Egberts, Senseo, and Pilão (under D.E Master Blenders). With its recent Caribou, Peet’s, and Keurig acquisitions, JAB Holding, the former number three in coffee now becomes number two in the world, better able to compete with number one Nestlé, the giant Swiss player in Kaffee.
Since coffee and doughnuts go so well together, JAB’s Kripsy Kreme move makes sense. Founded in Winston-Salem, North Carolina in 1937, Krispy Kreme has a boom-and-bust-then-back history. I remember when their doughnuts became a wild craze that even spread to my hometown of Reno – until the local Krispy Kreme store shuttered its doors. The unusual, bowtie-shaped sign is still there, but it now reads Einstein Bros. Bagels, another JAB holding. (See the photo above.) In some markets, Caribou Coffee and Einstein Bros. Bagels are merged into single, co-branded stores called “Coffee & Bagels.”
Following some financial bumps in the road in the mid-2000s, Krispy Kreme today is an international concern with about 1,100 stores operating in 24 markets from Canada and Mexico to Thailand and Saudi Arabia. Founder Vernon Rudolph (1915-1973) originally sold his tasty creations only to grocery stores. A few years later, Krispy Kreme also began selling to passersby attracted by the doughnut bakery’s aroma. Amazingly, coffee was not introduced until 2011. But it was definitely coffee that attracted JAB to Krispy Kreme. Along with its stakes in Caribou, Peet’s, and Keurig, JAB’s coffee empire is now better positioned to compete in North America with the likes of Starbucks, Dunkin’ Donuts, and Tim Hortons.
Luxembourg-based JAB is no silent partner. JAB Holding’s active management is largely in the hands of three senior partners: Peter Harf, Bart Becht and Olivier Goudet. It was Herr Harf who announced the Krispy Kreme deal in May 2016. Peter Harf is a global manager who spends his time on several boards located in London, New York, and Vienna. He is constantly commuting between the Old and the New World, with homes in Milan and New York City’s trendy Tribeca neighborhood. JAB Holding has offices in Luxembourg, London, Mannheim, and Washington, D.C.
In its offical press release, JAB stated: “At the close of the transaction, Krispy Kreme will be privately owned and will continue to be independently operated from Krispy Kreme’s current headquarters in Winston-Salem, N.C.” Currently Krispy Kreme is a corporation whose stock was valued at $21 per share in the JAB deal, representing a premium of approximately 25% over the doughnut company’s closing stock price on May 6, 2016.
The Reimann family
Albert Reimann Jr, Ludwig Reimann’s great-grandson, was the last of the Reimanns actively involved in running the Joh. A. Benckiser firm that is now known as JAB Holding Co. He had inherited the firm in 1952 and moved it more into consumer goods. When Albert died in 1984, he left each of his nine adopted children an 11.1 percent share in Benckiser. But by 2003, only four of the Reimann siblings still held a stake in Benckiser. Today those four – Wolfgang, Stefan, Renate, and Matthias – are the sole owners, but they are not involved in the day-to-day operations of JAB Holding. The three senior partner managers mentioned above consult with the four Reimanns, who make the final decisions. But once a course has been set, the three advisers do all the work. For instance, it was Peter Harf, the adviser has been with the firm the longest (since 1981), who guided the Krispy Kreme transaction.
There are some similarities between JAB and the Brazilian private-equity company 3G Capital Partners LP. 3G owns a majority in Restaurant Brands International Inc., which in turn owns Burger King and the Canadian Tim Hortons chain. The three Brazilian tycoons controlling 3G want to expand Tim Hortons presence in the US. But unlike JAB, the 3G Capital partners put up their own cash and are actively involved in 3G’s businesses.
In the world of global enterprise it is sometimes difficult to keep track of who owns what. What the Reimanns and JAB Holding will do next is as big a mystery as the family itself, but Starbucks, Dunkin’ Donuts, Tim Hortons, and others are keeping their eyes on JAB, the new king of Kaffee.