Douwe Egberts Acquisition

Kennon-Green & Co. Fiduciary Financial Advisor, Wealth Management, Global Value Investing

I’ve watched in fascination over the past couple of years as German conglomerate Joh. A Benckiser has been quietly buying up the world’s leading coffee brands, acquiring Caribou Coffee for $340 million, Peet’s Coffee & Tea for $974 million, and my personal obsession, Douwe Egberts for $9.8 billion, among others.  The firm is the personal holding company of one of the richest and most secretive families in Europe, the Reimanns.  They still have a ways to go – Starbucks, J.M. Smucker’s (Folgers), McDonald’s, and Nestlé are giants – but the mass consolidation is curious.

These folks have huge stakes in a lot of the biggest brands in the world, including a major ownership position in publicly traded Reckitt Benckiser, which makes Lysol, French’s Mustard, Woolite, Durex, Dr. Scholl’s, and a host of other brands found in homes across the world. 

Douwe Egberts Acquisition

Their capital allocation record appears impressive – back in the early 1990’s, they paid Pfizer $440 million to buy Coty, which they rebranded and grew into one of the world’s premier fragrance companies, manufacturing scents for a cadre of the world’s top fashion houses and A-List celebrities.  They also own makeup giant Philosophy, which cost them around $1 billion.

[mainbodyad]The Reimanns are interesting because they have managed to keep most of their money a secret; no small feat when your fortune goes back 160+ years.  They are constantly popping up in the most unexpected places, going largely unnoticed by the public, as yet another member of the family crosses the billion-dollar mark from their shares of the family’s conglomerate.

If you’re a fan of hidden empires, you might want to add these folks to your case study files.  It’s a rare thing for a single fortune to survive this long.  Normally, heirs do something stupid along the way, or it is largely lost to taxes or donated through charitable gifts.  I’m not sure it’s a good thing, to be honest.  The older I get, the more I become convinced that any inheritance beyond the fourth generation is immoral, which would require a far greater explanation and justification than I’m willing to provide at the moment.  I’m finishing Lost World, which I read today after completing its predecessor, Jurassic Park, yesterday.  After that, I have a few things left to cross off my agenda before I call it a night.