- La Colombe, majority owned by Chobani yogurt founder Hamdi Ulukaya, is reportedly looking to sell a minority or majority stake in the premium coffee brand, according to Bloomberg.
- La Colombe, which runs a chain of cafes and sells its coffees in bottles and cans, would use the funding to fuel growth. It is seeking a valuation of more than $1 billion.
- In addition to a sale in part of the company, Bloomberg said the coffee brand could decide to take on outside investors.
If La Colombe’s pursuit of fundraising options to fuel growth is correct, it will heat up an already hot coffee space even more. In an attempt to stay nimble in a fast-changing market, food and beverage giants have been adding startups to broaden their portfolios and appeal to fickle yet sophisticated millennial consumers.
As consumers turn to better-for-you drinks, beverage companies have invested in water, teas, juices, sports drinks and coffees. Nestle last year purchased a 68% stake in Blue Bottle Coffee and Chameleon Cold-Brew, an organic, fair-trade manufacturer of ready-to-drink coffee and coffee concentrate products. J.M Smucker's Folgers brand, long known for its ground coffee in a metal container, is introducing a new, higher-end brand of 100% arabica coffee this month aimed at winning back millennials and other people who have switched to pods and gourmet brews.
For La Colombe, its 40% growth last year made it the fastest-growing ready-to-drink coffee brand in the U.S., according to IRI. This growth is facilitated by La Colombe’s deep footprint in the coffee space, with about 30 cafes in five cities, distribution to more than 3,500 restaurants, retailers and hotels, and an online store. The coffee brand is able to promote itself in both retail outlets and the cafes, an advantage that could prove lucrative for an investor and make it easier for it to gain customers. A shopper familiar with the coffee at the cafe might be more likely to buy it at the store over another product.
Despite a strong presence, La Colombe has some big competitors in the market place, a reason why it could be looking for this latest round of funding. Coca-Cola sells Dunkin Donuts and recently partnered with McDonald's to distribute a line of ready-to-drink McCafe Frappes in grocery stores. And PepsiCo has long partnered with Starbucks to sell the coffee chain's bottled products.
Younger coffee drinkers are demanding more cold-brew, ready-to-drink and gourmet coffee products, which has bumped up consumption figures. An estimated 64% of American adults drink a cup of coffee each day — up 2% from 2017 and the highest level since 2012, according to a survey from the National Coffee Association cited by Reuters. In addition, 48% of millennials said they had consumed a gourmet cup of coffee the previous day. Recent research surrounding coffee’s health benefits doesn’t hurt either.
With the ready-to-drink coffee market is expected to continue to grow, La Colombe could garner a much bigger piece of that market with some additional investments.