TreeHouse Foods is acquiring Farmer Brothers Co.’s Northlake, Texas, coffee facility and its non-direct store delivery coffee business (direct ship) for about $100 million, subject to customary purchase price adjustments, the Oak Brook, Illinois-based company said.
The facility, built in 2017, brings roasting, grinding, flavoring and blending capabilities to the TreeHouse Foods portfolio to complement its existing single-serve pod and ready-to-drink coffee businesses, the private label food and beverage manufacturer said.
The acquisition enables TreeHouse Foods to deliver greater category depth in an end-to-end private label coffee offering for its customers, TreeHouse Foods said.
“The state-of-the-art Northlake facility strengthens TreeHouse Foods’ category depth in coffee as a focused, private label leader and is consistent with our strategy to pursue opportunities that drive category growth and deliver attractive financial returns,” said Steve Oakland, CEO and president of TreeHouse Foods.
As TreeHouse Foods works on its long-term growth initiatives, it’s also adding new capabilities, particularly in roasting and grinding, to be a more vertically integrated coffee manufacturer “able to further penetrate this high-growth, high-margin category,” Oakland said.
Farmer Brothers has historically been a bulk ground coffee supplier to TreeHouse Foods for its single-serve pods and ready-to-drink beverages. The acquisition is expected to increase profit in the supply chain, said TreeHouse Foods, which will also assume select customer relationships and retain about 180 team members from Farmer Brothers to support operations at the facility.
Farmer Brothers leaving the direct ship space will allow it to focus almost exclusively on direct-store delivery (DSD), its most profitable and highest growth potential business, the company said.
It also will assure “our valued direct-ship customers are well-served by a national leader,” said Farmer Brothers President and CEO Deverl Maserang. “With a sole focus on DSD, we will be able to realize even greater internal efficiencies and cost savings while also better serving our largest, most profitable customer base.”
The transaction is expected to close in the next 60 days.
Founded in 1912, Farmer Brothers is a national coffee roaster, wholesaler, equipment servicer and distributor of coffee, tea and culinary products. The company's product lines include organic, direct trade and sustainably produced coffee. Farmer Brothers generated net sales of $469.2 million in fiscal 2022.
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