LISTED Jollibee Foods. Corp. (JFC) has acquired a majority stake in South Korean value coffee brand Compose Coffee for $340 million, or almost P20 billion, as part of strengthening the company’s coffee and tea business.
JFC’s wholly owned subsidiary, Jollibee Worldwide Pte. Ltd. (JWPL), bought 70% in Compose Coffee Co., Ltd. and its roasting facility JMCF Co. Ltd., collectively called Compose Coffee, the company said in a stock exchange disclosure on Tuesday.
Private equity firm Elevation Equity Partners Korea Ltd. will get a 25% stake while Titan Dining II LP (Titan Fund II) will have the remaining 5%.
JFC has a 90% participating interest in Titan Fund II through JWPL. The deal was finalized after the signing of definitive agreements.
“The business that Compose Coffee has built in the past ten years is impressive and we are excited to play a major role in its next phase of growth. We believe that Compose Coffee is a compelling strategic fit for JFC and is on track to becoming the largest, fastest-growing, and leading value coffee player in South Korea,” JFC Chairman Tony Tan Caktiong said.
“Together with Elevation and Titan Fund II, we look forward to working with the Compose Coffee’s accomplished management team to further accelerate the company’s growth in existing and new markets and capture the significant white space in South Korea’s value coffee market,” he added.
JFC has been recently strengthening its coffee and tea business. The company acquired a 10% stake in US-based beverage technology company Botrista, Inc. for $28 million in March.
Botrista holds more than 100 patents worldwide for its proprietary dispense technology, which provides automated solutions to serve cold specialty coffee and tea-based drinks with premium and all-natural ingredients.
With the acquisition of Compose Coffee, JFC expects a 2% increase in revenues, bringing the international business’ contribution to 41% of global revenues.
The company also projects a 12% increase in earnings before interest and taxes and a 34% surge in store count as Compose Coffee has over 2,600 additional stores in South Korea as of June, making it JFC’s biggest brand in terms of store count.
“It will bring JFC’s store network closer to 10,000 stores, more than 66% of which will be outside the Philippines,” the company said.
JFC said that Compose Coffee, founded in 2014, ranks first in the industry in terms of the growth rate in the number franchised stores and brand satisfaction among Korean coffee brands. The coffee brand operates the largest in-house coffee roasting plant in Korea.
“This acquisition is aligned with JFC’s commitment to coffee and tea segment and franchising initiatives. This strategic, rapid growth, financially lucrative investment serves as JFC’s gateway in unlocking the fast-growing international value coffee market in South Korea which ranks third globally in terms of coffee consumption per capita,” it said.
Compose Coffee’s menu boasts a huge variety of coffee and non-coffee options. Some of JFC’s other brands in the coffee and tea business include Coffee Bean & Tea Leaf, Common Man Coffee Roasters, and Highlands Coffee.
For the first quarter, JFC saw a 26.9% increase in its first-quarter attributable net income to P2.62 billion as system-wide sales grew by 10.4% to P86.83 billion.
The company hiked its store network by 5.3% to 6,886 stores as of end-March, consisting of 3,337 in the Philippines and 3,549 international branches.
JFC shares rose by 0.44% or P1, finishing at P226.20 per share on Tuesday. — Revin Mikhael D. Ochave
