Douwe Egberts and Mondelez will join forces on the coffee front to create an enterprise with a 5 billion euro turnover and start the battle against Nestlé, though bizarrely not including Mondelez' French activities.
Mondelez was bigger, but Douwe Egberts will lead merger
The new company will have its main office in the Netherlands and will be called Jacobs Douwe Egberts, with Pierre Laubies (Douwe Egberts' French CEO) as its leader. Dutch Bart Becht will be the president of the board. German investment firm Joh. A Benckiser, which took Master Blenders off the stock exchange last year for 7.5 billion euro, will own 51 % of the new fusion company and Mondelez will get the remainder. Mondelez will also get a cash payment of 5 billion dollars (3.6 billion euro) from Joh. A Benckiser.
Douwe Egberts has several brands, like Douwe Egberts, Maison du Café, Senseo, Pilao and tea brand Pickwick, and had 2.5 billion euro in sales in 2013. It is coffee market leader in the Netherlands, Belgium, Denmark, Hungary and Brazil, and dominates the tea market in the Netherlands, Denmark, Hungary and the Czech Republic.
Mondelez' coffee activities (known from Jacobs, Velours Noir, Tassimo Carte Noir) are slightly bigger, with a 2013 turnover of 2.9 billion euro. That means 17 % of the group's total turnover comes from coffee. After its split from Kraft Foods, Mondelez could focus on its snacks department with brands like Cadbury and Oreo.
Further growth targeted
The new joint venture is market leader in more than 25 markets and has a strong position in the emerging markets and there should be plenty of synergy between both groups, but the staff should not worry as the management mainly sees growth opportunities.
The new company wants to compete with Nestlé, which has Nescafé and Nespresso as two dominant brands. The competitor has a worldwide 22.5 % market share, while Mondelez and Douwe Egberts respectively have 11 and 5.5 %. The fusion should be finalized in 2015.