JAB expands its food and beverage empire with Pret a Manger while Nestlé sheds U.S. candy brands.

What happened

  • JAB Holding Company, which owns food and beverage brands including Peet’s Coffee & Tea, Panera Bread Co., Keurig Green Mountain and Krispy Kreme, will add Pret a Manger to its long list of acquisitions. Back in January 2018, JAB raised eyebrows with its acquisition of Dr Pepper Snapple, and has also expanded its distribution deals with Starbucks and Dunkin’ Donuts while breathing new life into once struggling companies like Peet’s.
  • Meanwhile, Nestlé, the biggest food company in the world, ceded approximately 20 of its U.S. candy brands—Butterfinger, Nerds and SweeTarts—to The Ferrero Group, the Italian company that owns Nutella, Ferrero Rocher and Tic Tacs. Nestlé exercises command over the coffee industry with brands like Nespresso and Nescafé, and also owns brands like KitKat, San Pellegrino and baby products.

Why it matters

  • JAB’s expansion is noteworthy for its focus on changing trends, particularly in the coffee world where ready-to-drink beverages have attracted younger consumers. Meanwhile, other food and beverage companies are struggling to keep up. With Pret, JAB eyed another opportunity: JAB can invest its understanding of the coffee sector into Pret, while also gaining more clout from a cafe that sells healthier fast food and boasts some vegetarian storefronts.
  • JAB’s growth poses threats to Nestlé, which saw exceptionally slow growth between 2016 and 2017 at only 0.4%. To maintain dominance over the sector, Nestlé decided to let go some of the candy brands that it believed were holding the company back and only amounted to 3% of sales. This is just one of Nestlé’s attempts to keep up with shifting consumer interests—it also acquired Blue Bottle Coffee and Chameleon Cold-Brew to compete with JAB in 2017. In May 2018, the company merged its two R&D sectors into one in order to accelerate product development and also reduced the amount of sugar, salt and saturated fats in its products. It recently bought the rights to distribute Starbucks products at grocery and retail stores—a deal that came with a $7 billion price tag.
  • For Ferrero, the newly acquired U.S. candy brands will win the Italian company access to a larger share of the American market. Though it’s risky to alter a well-known brand like Butterfinger, Ferrero plans to roast its own peanuts and update the packaging on the candy to improve freshness. This aligns with rising health consciousness among U.S. consumers, which is even persuading Hershey to orient itself away from its legacy as America’s chocolate company to focus more on snacks.