Deal focus: Jollibee circles as Coffee Bean booms in Asia

Californian businesses benefit from a global branding advantage when it comes to perceptions around sustainability, wellness, innovation and the most marketable aesthetics of contemporary cool. In the food and beverage (F&B) space, this has translated into an edge in the premiumization segment, where the highest-value products carry tags like craft, bespoke, and small-batch.

Los Angeles-founded The Coffee Bean & Teal Leaf oozes this vogue in its promotional materials and has managed to bring the lifestyle to Asia en masse. So far, the differentiator has been about going slightly more upscale than Starbucks, with only hand-roasted coffee beans and hand-blended teas. As of the end of 2018, there were 783 locations in Asia out of a global footprint of 1,189. Southeast Asia has 447 stores, while Korea and India have 292 and 27, respectively. 

Now the plan is to take things to the next level. Philippines F&B giant Jollibee Foods agreed this week to acquire the global Coffee Bean empire for $350 million and expand it further within the region. The deal will add 14% to Jollibee’s global system-wide sales and 26% to its total store network. It will also establish Coffee Bean as the company’s second-largest brand after its namesake fast-food business, which has about 3,000 locations in the Philippines. The deal facilitates an exit for Advent International, Mirae Asset Private Equity, and CDIB Capital.

“Coffee Bean is one of the few remaining independent iconic brands in this space with a global presence and scale. There’s been consolidation and a lot of activity in this space in general, so to some degree, there’s a scarcity value attached to a business like this,” says Hamilton Tang, a managing director at CDIB, noting that the cafe phenomenon has maintained momentum as it has shifted from West to East. “A lot of what happened in the 1990s is still alive and quite well in North Asia, China, and what we’ve seen in some of the ASEAN markets for Coffee Bean. It’s not an outdated trend.”

Having paid an undisclosed sum for Coffee Bean in 2013, Advent, Mirae and CDIB were keen to explore digital loyalty programs, mobile ordering, curated packaged product offerings and the rapidly growing appetite for upmarket cafe culture in China. The roadmap initially contemplated opening 700 new locations in the country, but the plan reportedly fizzled last year when the local franchise partner pulled out with only 17 stores established. Nevertheless, enthusiasm is high for Coffee Bean’s traction to date – as well as the coffee market’s eastward migration.

“If you look at the trajectory of the company, from the time we invested to now, a lot of progress has been made in Asia, so it’s really helping them to internationalize,” Tang says. “We’ve seen particularly robust growth here in Asia, not only in increasing consumption but how the coffee is consumed in terms of upgrades. We see it as an extension of the whole middle-class upgrade in consumption in different product categories across the spectrum.”

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• Topics
• Southeast Asia
• North America
• Trade sale
• Consumer
• USA
• Philippines
• Singapore
• Advent International
• CDIB Capital
• Mirae Asset Private Equity