It’s not just La Colombe – consolidation is happening everywhere

  • JDE Peet’s will acquire Maratá’s coffee & tea business in Brazil from JAV Group
  • Overseas brands are starting to recognise the growth in Brazil’s coffee consumption
  • This could be a sign that consolidation in the coffee industry is spreading beyond classic consuming markets

BRAZILIAN COFFEE & tea business Maratá is set to be acquired by JDE Peet’s. The deal includes Café Maratá and Chá Maratá brands, along with two manufacturing plants in northern Brazil, and is set to be completed in 2024.

With this acquisition, JDE Peet’s aims to expand its presence in northern Brazil, complementing its existing coverage – which is more prominent in the southern regions of the country.

One of the driving factors behind this was growth in Brazil’s specialty coffee consumption, with notable spikes in the popularity of single-serve coffee and a wider demand for better quality overall.

Following a public and private initiative to drive internal consumption in Brazil (led by ABICS), specialty coffee in Brazil has been steadily growing. It reached new highs earlier this year when the first-ever Brazilian competitor, Boram Um, won the World Barista Championship in Athens.

This acquisition is further evidence that large corporate actors from overseas recognise this growth in consumption – and see that this wave of premiumisation is something that can be capitalised on.

consolidation is happening everywhere

A couple of steps behind

Consolidation is not a new phenomenon in specialty coffee. And while there’s some debate about when it really started, the landmark moment was Nestlé’s 2017 acquisition of Blue Bottle.

But now that consolidation has become more commonplace in traditional consuming markets, larger multinationals seem to be turning their attention to regions beyond Europe and the US.

Companies aiming to consolidate their specialty coffee presence in emerging markets have a significant growth opportunity as they can enter these markets at an earlier stage and reap more of the profits.

These markets offer promising opportunities for growth and expansion, as they are less competitive compared to traditional coffee-drinking countries.

In some of these markets, companies can benefit from lower costs. If they capitalise on rising demand, it has the potential to be more profitable than in traditional coffee-consuming countries.

consolidation happens at farm level too

What about production?

It is well-established that consolidation is happening at the consumption end – but producing countries are also open to consolidation at earlier stages of the supply chain.

Consolidation is not a new thing for these countries. It has been happening at farm level for some years. Rising production costs and a fragmented supply chain have led to widespread consolidation of coffee farms.

For instance, Green Coffee Company (GCC) owns 14 farms in Colombia, and in July 2022 it acquired an additional 1,400 acres of land, bringing its total landholdings to 6,372 acres. The idea behind GCC was to streamline the operations of multiple farms and establish advanced infrastructure; as well as attract the most skilled coffee producers to be a part of the venture.

However, there is a key difference between the GCC model and the acquisition of Maratá in Brazil: JDE Peet’s is aiming to strengthen its market share in the consumption end, rather than the production end. This means that producing countries may experience consolidation from both the production and consumption sides.

Many of us in the specialty coffee sector are familiar with the concept of consolidation. But as it stands, it’s the same old household names and multinationals acquiring brands that mainly operate in the US and Europe.

As consolidation spreads further afield, there are a number of interesting questions to ask. Will moving into emerging markets be a wise move for consolidators, or do they need to let them mature before they establish a presence? And what about production – is there scope to consolidate beyond the consumption end of the supply chain?

Ultimately, nobody has these answers yet – only time will tell.