- On 15 December, Greek yoghurt company Chobani announced its acquisition of La Colombe for $900 million
- This is yet another example of where the industry thinks the future of coffee is going
- The industry’s fastest-growing segment is moving away from what people think specialty coffee stands for
ONE WEEK ago, Chobani acquired La Colombe for $900 million. This is just the latest step in a decade-long back-and-forth between the two brands, as Chobani CEO Hamdi Ulukaya invested $60 million in the coffee company in 2015.
Earlier in the year, Keurig Dr Pepper invested $300 million in La Colombe for a 33% stake, focusing on distribution agreements for the coffee brand’s ready-to-drink (RTD) products. The acquisition deal includes a $550 million loan, cash on hand, and the exchange of Keurig Dr Pepper’s (KDP) minority stake in La Colombe into Chobani equity.
These two brands have a remarkable amount of overlap – perhaps something Ulukaya recognised eight years ago. They have synergised across various aspects of their operations, including the marketing potential of health and wellness in the coffee industry.
“I think that the marketing synergy is present because the two companies already had shared values,” says food and beverage expert Jake Leonti. “La Colombe always cared about clean label ingredients from the time they first created their RTD canned products. Those values are what attracted Hamdi in the first place.”
Additionally, producing and distributing RTD coffee isn’t a significant departure from yoghurt. This is particularly the case for these two companies, as Chobani already has expertise in plant milks – something that marries well with what La Colombe offers.
“A key aspect of this deal is the potential for production and distribution synergies,” says merger and acquisition specialist Emil Parthenides. “The manufacturing processes of Chobani’s yoghurt and La Colombe’s canned lattes are remarkably similar, offering opportunities for efficiency.
“Moreover, Chobani’s well-established distribution channels, marketing expertise, and cold chain capabilities are set to enhance La Colombe’s growth significantly. This integration is further supported by Chobani’s partnership with Keurig Dr Pepper, aimed at expanding La Colombe’s retail presence, especially in convenience retail channels.”
The absence of a distribution network is a significant obstacle blocking many coffee brands from entering the market in any meaningful way. Indeed, for a brand aiming to operate at this level of scale, this is arguably the most decisive factor in how successful it’s going to be.
“At this point, having access to distribution channels is far more important than the quality of the beverage,” says Jake. “Creating a quality cold brew is not very challenging anymore; however, creating a national distribution network is.”
Adapting to market trends
More broadly, this acquisition is significant as it represents the convergence of two of the most important trends in coffee at the moment: RTD and plant milks. These segments have demonstrated remarkable growth in recent years, reflecting strong consumer demand.
Some in the specialty coffee community continue to believe that chasing the highest-scoring coffees represents the future of the industry. However, this perspective overlooks the reality of what’s going on in the market.
In reality, the market has moved on from a focus on single origin or micro lot coffees; customers want convenience and customisation. Indeed, the most significant market growth in the industry in recent years has been in products that contain some combination of additives, and consumers are increasingly receptive to products that cross the boundaries of different market segments.
For roasters aiming for any meaningful growth, targeting these markets is now becoming the only path to a broader market. Indeed, recent years have shown us that reaching larger audiences can’t be achieved by “converting” individuals to drink ultra-high-scoring black coffees – but rather by adapting to market trends and consumer preferences.
This is something La Colombe must have learned since co-founder Todd Carmichael published his 2011 article, which takes a bleak view of one of specialty coffee’s pioneers selling a majority stake to a private equity firm.
“Chances are, it will be another in a long history of promising roasters sold and promptly suffocated by corporate America,” he wrote.
Indeed, four brands are listed at the bottom of the article giving a supposed assurance that they won’t follow a similar path – two of which, including his own, have since done exactly that.
This shows just how much the market has shifted in only ten years – when one brand claiming it would never “sell out” has now been involved with one of the landmark acquisitions in the coffee industry in recent history.
Indeed, the real opportunity for roasters is in aligning with the mass market’s preference for convenience-driven trends, and segments like RTD coffee, flavoured beverages, and plant milks.
It’s about recognising market trends and adapting, rather than trying to bend the market to your will. In essence, this acquisition is a call for specialty coffee brands hoping to grow: adapt or risk preaching to an empty room.
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