June 20, 2017 / 8:06 PM / a year ago

JDE bets on Brazil as it chases Nestle in global coffee retail

SAO PAULO, June 20 (Reuters) - Global coffee retailer Jacobs Douwe Egberts BV said on Tuesday it is eyeing new acquisitions in Brazil, where it is seeking double-digit growth as it chases Nestle in the international coffee retail business.

JDE executives said during a presentation of new products in Sao Paulo that the company was banking on higher quality products in the world’s second largest coffee market to increase revenues and market share.

JDE has bought up a string of coffee and tea firms, establishing its position as a key player in the global retail business. It was created in 2015 when its controlling holding company, JAB Holdings BV, bought Mondelez International Inc’s coffee operations in a cash and stock deal.

The company has since acquired some of the best-known brands in Brazil, such as Café do Ponto, Pilão and Café Pelé.

“We want to be a leader in Brazil. We continue to look for opportunities,” Lara Barns, head of JDE local unit, told reporters after presenting a new set of products aimed at the premium coffee market in Brazil, as the firm bets on higher value-added items to boost revenues.

JDE has around 20 percent of the local coffee retail market, behind leader Três Corações, a 50-50 joint venture between Israeli holding company Strauss Group Ltd and Brazilian family-owned firm São Miguel. Três Corações has 24 percent of share.

Brazil accounts for 20 percent of JDE global sales volumes, but only 10 percent of total revenues of 5 billion euros in 2016, said Barns, pointing to lower prices. That is thanks to abundant supply in Brazil, the world’s largest producer, but is also due to a profusion of lower quality brands which make up most of the market, Barns said.

“But the premium coffee segment is the one that grows the most in Brazil. That is our bet,” she added.

According to Euromonitor, Nestle has 22 percent of the global coffee retail market. JDE has 9.5 percent, a share that could go up to 12 percent considering businesses from U.S.-based Keurig Green Mountain, acquired by JAB Holdings two years ago in a deal valued at $13.9 billion. (Reporting by Marcelo Teixeira; Editing by Sandra Maler)

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