Reflecting on the coffee industry in 2024, one prevailing trend stands out: the wave of acquisitions that has reshaped the landscape of green coffee trading and specialty coffee brands alike.
Economic challenges, evolving consumer demands, and the pursuit of innovation have propelled larger entities to absorb smaller players, fundamentally altering dynamics in green coffee sourcing, roasting, and equipment manufacturing.
As we enter 2025, market consolidation is likely to continue – and possibly increase at pace in the wake of climbing coffee futures.
To learn more, I spoke to Benjamin Hohlmann, founder of Kaffeemacher, Bram de Hoog, founder of Paso Paso Coffee, and Andreas Idl, CEO and co-founder of Cropster.
You may also likeour article on how acquisition helped De’Longhi capitalise on La Marzocco’s branding.
Acquisitions have become a strategic tool for coffee brands
Market consolidation is not a new phenomenon in specialty coffee. Investors, multinationals, and large coffee brands have long capitalised on the burgeoning market by acquiring established specialty coffee roasters to expand their presence in all quality segments. Companies like JAB Holdings and Nestlé purchased majority stakes in pioneering third wave roasters, including Stumptown, Blue Bottle, and Intelligentsia, in the late 2010s when specialty coffee consumption experienced a rapid increase.
As the industry has become more competitive and saturated over the last few years, acquisitions have become even more strategic. In July 2023, Keurig Dr Pepper (KDP) purchased a minority stake in La Colombe for US $300 million. This enabled the company to sell and distribute La Colombe’s ready-to-drink coffee and K-Cup pods – two of the fastest-growing market segments – in North America, expanding KDP’s premium offerings at a fraction of the expenditure required to develop new products.
“There are many reasons for the trend of acquisitions in specialty coffee, including higher interest rates and costs for labour and goods,” says Andreas Idl, CEO and co-founder of café and roasting software company Cropster. “These pressures put less profitable businesses under significant strain, especially during growth phases.
“Another reason is that specialty coffee has matured, and it was only a matter of time until investors recognised this.”
In another significant move, De’Longhi acquired a 41% stake in La Marzocco, marking a pivotal moment for the coffee equipment market. This acquisition underscored how crucial the at-home and prosumer markets have become for coffee equipment brands. De’Longhi, which manufactures lower-price point coffee brewers, can now offer premium options through La Marzocco to capture a bigger market share.
Consolidation has supported a green coffee trading sector in crisis
Over the last couple of years, rising interest rates and shrinking profit margins have driven the trend of consolidation in the green coffee trading sector. As smaller companies have struggled with increasing debts and stricter lending terms from banks, larger traders have stepped in to capitalise on the changing landscape.
Major players like Sucafina and Neumann Kaffee Gruppe (NKG) acquired smaller traders to expand their specialty-focused operations. Trading giants like Hartree Partners and StoneX purchased established traders to set up their own specialty divisions for minimal investment.
The financial struggles that various traders have been faced with, exacerbated by high interest rates and post-pandemic logistics challenges, forced many small to medium-sized companies to sell or merge with financially stronger partners. Consequently, there is a growing risk of diminished competition and innovation in the green coffee sector as larger entities gain more foothold in the market.
Market consolidation is reshaping the coffee industry
As evidenced by De’Longhi’s recent acquisition of a sizeable stake in La Marzocco, as well as its existing ownership of super-automatic coffee machine brand Eversys, the emergence of powerhouse equipment brands has profound implications for the coffee industry.
Such consolidation not only enables these brands to pool their resources and expertise in producing professional-grade coffee equipment but also allows them to streamline their offerings across multiple market segments.
With robust financial backing, companies can accelerate innovation and expand their reach into both commercial and domestic markets. For instance, La Marzocco’s reputation for high-quality espresso machines can now be leveraged alongside De’Longhi’s more accessible models, catering to a broader consumer base while maintaining distinct brand identities.
“I doubt that these acquisitions are the end of De’Longhi’s expansion strategy,” says Benjamin Hohlmann, founder of Kaffeemacher, which operates a coffee farm, roastery, training academy, and cafés. “Rumours in the industry suggest potential silent investments in other espresso machine manufacturers and a search for a grinder company to integrate into their portfolio.”
Helping or hindering innovation?
While consolidation can lead to enhanced offerings and improved access to high-quality equipment for home brewers and coffee shops alike, there are questions about retaining brand identity and autonomy.
With the focus shifting towards efficiency and standardised production processes, questions arise about the future of craftsmanship and the personalised service that specialty brands have historically provided. The rapid consolidation trend certainly raises concerns about its potential to stifle or gatekeep innovation within the coffee sector.
As larger entities absorb smaller brands, the risk of hindering genuine advancements in products and practices can increase. A focus on cost control may overshadow the need for innovative solutions, thereby dampening the creative spirit that traditionally drove many specialty roasters and equipment manufacturers.
Ben, however, offers a counterpoint, noting: “So far, La Marzocco continues to maintain its approachable and industry-connected ethos. I found myself in direct communication with their R&D team via a simple text message.”
The company recently collaborated with prestigious German car manufacturer Porsche in a partnership that underscores both brands’ commitment to developing premium, long-lasting products. The collaboration was received positively by the specialty coffee community – indicating that La Marzocco’s acquisition has done little to damage its esteemed reputation.
We can expect more changes in the green coffee sector
The ongoing consolidation of the green coffee trading sector may inadvertently shape a more homogenised market where only the most profitable coffees prevail.
While specialty roasters may find it easier to secure larger volumes, they must navigate a riskier landscape where the variety of unique coffees is increasingly restricted. Despite the growing demand for premium coffee, the diversity of sourcing options diminishes as specialty divisions are swallowed up by larger players seeking to scale.
“Consolidation brings opportunities, but I question how innovative some small roasters have truly been in recent years,” Ben tells me. “When I visit cafés around the world and find the same coffees from well-known producers repeatedly, it suggests the industry may need a wake-up call.”
In this evolving landscape, the risk is that the rich tapestry of specialty coffee could diminish, leaving only a handful of dominant players in the market.
“Consolidation can significantly impact the diversity of specialty green coffee available in the market,” says Bram de Hoog, founder of the farmer-owned importer and roaster Paso Paso Coffee. He explains that as importers merge, their sourcing programmes often overlap, leading to the inevitable cancellation of certain projects in favour of others that align more closely with the new entity’s goals.
This can create a “winner takes all” dynamic, where fewer producers are favoured, potentially sidelining unique offerings from smaller growers and narrowing the selection for specialty roasters.
“The ramifications of such acquisitions may ultimately transform the image of specialty coffee, making it less ‘premium’ and more accessible as these brands ascend in the market,” Bram adds.
Why coffee acquisitions are unlikely to stop in 2025
As the coffee industry continues to evolve, the trend of acquisitions shows no sign of slowing down this year. Companies are strategically positioning themselves to capitalise on new market opportunities and consumer demands, particularly within the burgeoning specialty coffee segment.
Entering new market segments has become increasingly streamlined for larger companies through strategic acquisitions. One such example is the Nero Group, which recently acquired 200 Degrees and FCB Coffee to expand its footprint in the travel sector.
By adding established brands with a pre-existing customer base, Nero Group can leverage their resources and relationships to penetrate this market with relative ease.
Such acquisitions not only provide instant visibility and brand recognition but also allow companies to tap into new revenue streams without the lengthy and costly processes of launching a brand from scratch.
The travel sector, especially post-pandemic, is experiencing a resurgence as consumers seek enriching experiences. Companies that position themselves to meet this demand through strategic acquisitions can benefit from heightened visibility and stronger market presence.
By targeting niches that align with their operational strengths, larger players can continue to diversify their portfolios while minimising the risks typically associated with entering new markets. They can bolster their market share while gaining access to unique products and high-quality beans that differentiate their offerings in an increasingly competitive landscape.
“Without naming specific companies, I’m confident we’ll see more acquisitions in the coffee industry over the next year – some of which may already be finalised but remain unannounced to avoid stirring up further waves,” Ben says.
Specialty coffee is ripe for market consolidation
As demand for specialty coffee continues to grow, specialty roasters and traders increasingly find themselves as prime targets for acquisitions.
Larger companies recognise that acquiring established brands allows them to bolster their market share while gaining access to unique products and high-quality beans that differentiate their offerings in an increasingly competitive landscape.
With the rising interest in artisanal and ethically sourced coffee, larger corporations are inclined to capitalise on this trend by acquiring well-regarded specialty brands.
At the same time, specialty coffee roasters and traders can benefit from scaling their operations through these acquisitions, easing the financial burdens of growth while ensuring their unique offerings remain prominent in the marketplace – especially while coffee futures remain high.
Striking a balance
“For roasters, consolidation enables some companies to merge into larger entities, streamlining functions and improving margins. Many roasting businesses we’ve spoken to have shared positive feedback about these changes,” Andreas says. “Some consolidation makes sense and creates stronger players, which can positively impact the supply chains they are part of. But if the process goes too far, we may see fewer players and reduced options. However, we are not at that point yet.”
Specialty coffee consumers often prioritise authenticity, craftsmanship, and ethical sourcing; hence, acquisitions could compromise these core values if not managed carefully.
What’s more, while larger corporations capture more market share, smaller roasters and specialty brands may find themselves unable to compete in an industry dominated by efficiency and profitability.
The result could be an industry more resistant to innovative ideas that challenge the status quo, thereby diluting the rich narrative that specialty coffee relies upon.
The recent wave of acquisitions promises growth and innovation but also raises concerns about the essence of craft and culture in specialty coffee.
One key question lingers: can larger entities successfully balance efficiency and scale with the authenticity and artistry that small roasters bring, or will we see the erosion of diversity that enriches the coffee experience?
Enjoyed this? Then readour article on why Chobani’s acquisition of La Colombe shows roasters can’t be complacent about RTD coffee.
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The post The year in review: Why coffee acquisitions will continue in 2025 appeared first on Perfect Daily Grind.
