Sara Lee Completes Coffee Sale to Smucker

Published in CSP Daily News

Buys ultra-premium tea company Tea Forte

DOWNERS GROVE, Ill. -- Sara Lee Corp. said it has completed the sale--announced in October 2011--of the majority of its North American Foodservice coffee and tea operations to The J.M. Smucker Co. in an all-cash transaction. The two companies have also entered into a long-term innovation partnership to collaborate on liquid coffee technology for the foodservice market. Sara Lee has also announced that it has acquired Tea Forte, a leader in the ultra-premium tea category, for an undisclosed sum.

In January 2011, Sara Lee announced that it will divide the company into two pure-play publicly traded companies, one focused on the international coffee and tea market and the other on North American meats.

(See Related Content below for previous CSP Daily News coverage.)

The acquisition by Smucker includes Sara Lee's market-leading liquid coffee concentrate business sold under the licensed Douwe Egberts brand, along with a variety of roast and ground coffee, cappuccino, tea and cocoa products, sold through foodservice channels in North America.

"The sale of a major part of our North American coffee business to Smucker is the latest example of CoffeeCo's focus on creating the strongest possible pure-play company," said Jan Bennink, executive chairman of the board, Sara Lee Corp. "We look forward to working with Smucker and to the promising future of our new independent coffee and tea company."

CEO Richard Smucker said, "The transaction further strengthens our position as a leading North American coffee company, provides new coffee technologies and adds significant scale to our foodservice business. We are excited to welcome the nearly 475 new employees into the Smucker family."

Orrville, Ohio-based Smucker is a leading marketer and manufacturer of fruit spreads, retail packaged coffee, peanut butter, shortening and oils, ice cream toppings, sweetened condensed milk and health and natural foods beverages in North America. Its family of brands includes Smucker's, Folgers, Dunkin' Donuts, Jif, Crisco, Pillsbury, Eagle Brand, R.W. Knudsen Family, Hungry Jack, Cafe Bustelo, Cafe Pilon, White Lily and Martha White in the United States, along with Robin Hood, Five Roses, Carnation and Bick's in Canada.

With the Tea Forte deal, Sara Lee strengthens its expertise and presence in the fast-growing segment of luxury teas.

Concord, Mass.-based Tea Forte posted revenues of $12 million in 2011. Founded in 2003 by former Museum of Modern Art designer Peter Hewitt, the company is now present at leading hotels, restaurants and luxury retailers in 35 countries. Its teas are available in loose format and in the company's signature pyramid infuser.

"Acquiring Tea Forte fits perfectly into our strategy to spin off CoffeeTeaCo as a pure-play coffee and tea company poised for strong growth," said Jan Bennink, executive chairman of the Sara Lee board.

CoffeeTeaCo will retain the current management team of Tea Forte to run the business independently before integrating it into its international coffee and tea operations.

"Tea Forte's expertise in ultra-premium teas complements our existing business with leading brands across Europe and boosts our innovation capabilities in the tea category," said Michiel Herkemij, CEO of Sara Lee International Beverage.

Downers Grove, Ill.-based Sara Lee and its leading portfolio of food and beverage brands, including Ball Park, Douwe Egberts, Hillshire Farm, Jimmy Dean, Pickwick Teas, Sara Lee and Senseo, generate nearly $9 billion in annual net sales from continuing operations.