Timothy’s Sale Sparks Fears Of Brewing War

13Nov2009 Filed under: Coffee Business, Coffee Companies Author: About Coffee[s] Staff

Another single-serve coffee brewing system is muscling into the Canadian market through the acquisition of coffee retailer Green Mountain Coffee Roasters, Inc. purchased Timothy’s Coffees of the World, Inc. from the private equity firm Sun Capital Partners for $165 million today. Green Mountain, which specializes in organic, fair trade, and specialty coffee, is set to open a roastery in Toronto.

The cash deal will also vastly broaden distribution for the U.S. company’s single-serve Keurig coffee machines and its disposable single-serve K-Cup beverage pods at retail outlets throughout Canada. Timothy’s is a licensed roaster of Keurig, which was acquired by Green Mountain in 2006.

“Single cup is a very fast growing segment of the coffee business,” said Scott McCreary, chief operating officer of Green Mountain’s specialty coffee business unit. With the Timothy’s brand as part of the family of brands it gives us an opportunity to develop in the Canadian marketplace.” Keurig coffee machines are sold at Costco and Home Outfitters in Canada and Green Mountain plans to extend the reach of its K-Cups into grocery stores.

While the overall brewed-at home coffee segment is still 50 times larger, single-serve coffee has surged in Canada recently, with the on-demand segment consisting of single and double-serve pods growing sales 81% in 2008 to $12.5-million as cost-wary consumers decided to brew more lattes at home. Timothy’s has no retail outlets but its brand of single-serve K-cup portion packs is sold at 17,900 retail locations. “It is good for the [retail brand in Canada],” said Mr. McCreary. “People who love Timothy’s coffee don’t always have the opportunity to go to a retail store.” Timothy’s wholesale coffee business distributes to retailers, offices, hotels, grocery stores and restaurants.

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