RTD Coffee Mania ☕️

Author

CPG WIRE
August 01, 2023

GM and welcome back to This Week in CPG. After taking a week off of the newsletter to enjoy a much-needed vacation, it’s nice to be back.

Here’s what we’re covering this morning:

  • RTD coffee M&A 📈

  • Birkenstock IPO in September 💰

  • Bansk Group closes fund 💵

  • Haeckels collabs on soap 🧼

  • Hermes delivers huge H1 👜

The Big Story 📰

It’s been a wild two weeks for consolidation in the ready-to-drink coffee space with M&A activity reaching a fever pitch.

Keurig Dr Pepper (KDP) kicked things off on July 20th by purchasing a 30% interest in La Colombe Coffee for $300m. In addition to the equity investment, KDP also signed a long term distribution agreement for La Colombe’s RTD coffee line, as well as a licensing agreement to produce and market La Colombe-branded K-Cups.

Next, on July 25th, another darling of the RTD coffee category, Austin-based High Brew Coffee, sold a 78% stake to Argentine beverage firm Beliv for an undisclosed sum. High Brew, which was founded in 2013 by serial CPG entrepreneur David Smith and backed by CAVU Consumer Partners, is available at over 15,000 points of distribution including 7-Eleven, Circle K, and Wawa.

Lastly, on July 27th, British beverage firm Britvic acquired Jimmy’s Iced Coffee, a fast-growing RTD coffee player based in southern England. Jimmy’s, which launched in 2010 and boasts over 10,000 points of distribution, posted sales of £17m last year, which was a year-over-year increase of 43%.

This wave of consolidation in RTD coffee shouldn’t come as a major surprise. For acquirers, RTD coffee represents one of the fastest-growing beverage categories in the U.S., and besides the ubiquitous RTD line from Starbucks & Nestle, most of the category innovation has come from startups like Bizzy, Chameleon, Grady’s, High Brew, La Colombe, etc. Beverage firms like KDP have to buy emerging brands in order to compete.

For acquirees, partnering with a larger beverage firm provides security and a reprieve from rising input prices — price increases that are a serious existential threat to coffee startups — while enabling them to tap into a stronger distribution network. For La Colombe, KDP offers one of the strongest direct-store delivery (DSD) operations in the U.S., enabling La Colombe to reach nearly every point of purchase across the country.

Deals 💰

Mergers & Acquisitions 

  • L Catterton is eyeing a September IPO for Birkenstock which could value the company around $8B. Catterton purchased a majority interest in Birkenstock in 2021 at a $4B valuation. If the IPO prices at $8B, this would be another huge win for L Catterton after ODDITY’s massive IPO last month. Financial Times

  • Activist investor Sparta Capital acquired a considerable stake in footwear brand Dr. Martens and is seeking to turn around the business. Shares in Dr. Martens rose 4% on the news. Footwear News

  • Luxury firm Richemont purchased a majority stake in Italian footwear brand Gianvito Rossi for an undisclosed sum. The brand generated €100m in revenue last year and a core profit of €23m. The founder, Gianvito Rossi, is the son of legendary designer Sergio Rossi. Reuters

Fundraising

  • Consumer-focused private equity firm Bansk Group announced the close of its $800m fund. The fund, which was founded by Bart Becht, a former CEO of Reckitt and former Partner at JAB, has acquired majority stakes in Amika, Eva NYC, Ethique, Red’s All Natural, and others. PR Newswire

What’s New 🤩

Apparel, Cosmetics, and Wellness

  • Adidas signed a $1.1B agreement to remain the uniform sponsor of football club Manchester United for the next 10 years. This is the richest uniform deal in Premier League history. Reuters

  • Natural skincare brand Haeckels collaborated with PANGAIA and C16 Biosciences to launch a new soap block that uses Palmless — a rainforest-friendly alternative to palm oil developed by C16 Biosciences — as a core ingredient. Great-looking product. PANGAIA 

  • Beauty brand Lottie London released a gorgeous new bronzing serum — Hot Glaze Bronzing Serum Drops. Lottie London

  • A former buyer at Cult Beauty, Stacia Prince, is launching a new luxury candle brand called Control & Chaos. Beauty Independent

Food, Beverage, and Alcohol

  • Sustainable snack brand LesserEvil collaborated with Disney on a line of Toy Story-inspired puff snacks. The line will be available later this month at H-E-B, Walmart, and Whole Foods. Trend Hunter

  • Patagonia Provisions acquired Moonshot Snacks earlier this year and they just killed off the Moonshot brand. The climate-friendly crackers that Moonshot pioneered will live on under the Patagonia Provisions brand, however. Twitter

  • Colombian rum brand Dictador partnered with French glassmaker Lalique to release a limited edition rum. Just 300 bottles are available at a very accessible price point of €25,000. Formes de Luxe

Data 🖥️

  • Hermes knocked it out of the park in the first half of 2023. Revenue jumped 25% to nearly €6.7B and net income hit $2.2B. Watch sales rose 24% while Beauty & Fragrance sales increased 10%. Hypebeast

Distribution News 🚚

  • Bachan’s launched their new Miso Barbecue Sauce at Sprouts Farmers Market.

  • Italian wine brand When in Rome launched their paper bottles at Sainsbury’s in the UK.

  • Men’s grooming brand MANSCAPED launched at Boots in the UK and Ireland.