OldTown Berhad, a Malaysian halal coffee chain, was founded in 1999 and operates more than 237 coffee shops throughout Malaysia, Singapore, and China. It also manufactures and exports its instant hot beverage mixes and RTD coffee products to markets outside of Asia including the UK, Netherlands, the US, and Canada.
JAB has previously scooped up coffee brands like Peet’s Coffee, Caribou Coffee, and Keurig Green Mountain, a pattern that was forecasted by industry analysts to continue as the company looks to become the leading player in the global coffee market.
“It has been clear that Asia, and Southeast Asia in particular, has been a major area of interest for JDE for some time,” Euromonitor beverage analyst, Matthew Barry, told BeverageDaily.
The move to purchase OldTown is the privately-held investment company’s second major deal in Asia – last year, JDE bought Singapore’s Super Group for approximately $1bn.
Asia-Pacific presents ‘real opportunity’
Asia-Pacific will play a major role in the overall global coffee market growth as the region will account for the largest share of absolute growth in coffee compared to any other region in the coming years, according to Barry.
Barry points to growing incomes in Asia and the spread of coffee shops in the region creating a premium coffee culture in traditional tea-drinking market. The number of specialty coffee shops has grown from 54,000 locations in 2005 to more than 107,000 in 2015, according to Euromonitor.
“For a company like JDE, whose sales come primarily from mature markets in Europe, the growing markets of Southeast Asia present a real opportunity,” Barry said.
“JDE is also not the only foreign company that has been moving into Southeast Asia recently. Massimo Zanetti, through a local affiliate, purchased a majority stake of an Indonesian coffee roaster in September with the aim of expanding its presence in Southeast Asia as well.”
Indonesia is expected to be the fastest growing market worldwide with a projected 9.5% CAGR through 2020, Euromonitor projected.