JDE Peet’s has announces a restructuring that wants to save half a billion euros in costs over the next few years. The high coffee prices leave no other choice, its new CEO, Rafael Oliveira, stated.
Reinvestment in growth
The tea and coffee processor aims to simplify its product portfolio and organisational model, to work more efficiently and increase productivity. More than half of the 500 million euros should already be saved by the end of 2027.
Half of that enormous amount will be reinvested in growth segments. The company will focus on three pillars, which it calls its ‘Big Bets’: the expansion of Peet’s coffeehouses in the United States, its premium brand L’OR, and ten strategic local brands. The other half is expected to directly contribute to profit growth.
Oliveira, who took office in November, primarily wants to improve profit margins: they have been under pressure for some time due to sharply rising coffee prices. In February, the company indicated that no decrease in the purchase prices for green coffee is expected in the near future.
Price increases “inevitable”
JDE Peet’s has set ambitious financial targets for the period up to 2032: the company aims for an annual gross profit growth of 4 to 7 % and an increase in adjusted operating profit of 5 to 8 %.
The company also calls further price increases “inevitable”. “We see that private label coffee is rising in price just as much, sometimes even more. This shows that all coffee producers are affected by broader market trends”, the company stated.
