Peet’s is doubling down on so-called “third wave” coffee purveyors, having already acquired Portland-based Stumptown.
Still showing a hearty appetite after gobbling up Stumptown, Peet’s Coffee & Tea said Friday it is buying a controlling stake in Intelligentsia Coffee, also a prominent standard-bearer of hipster-coffee culture.
Peet’s, founded in Berkeley, Calif., by Dutch immigrant Alfred Peet, was key in introducing gourmet coffee in the 1960s to an America used to drinking low-quality canned coffee from the likes of Maxwell House. Peet helped beget local coffee giant Starbucks and mentored its founders.
But Starbucks soon surpassed its master, popularizing European-style dark roasts and becoming the pre-eminent coffee brand in the world. By the late 1990s, the Italianate descriptions it created to describe its espresso-based beverages were common parlance across the land.
In turn, a new generation of coffee roasters rebelled against Starbucks by offering even higher-quality coffee. This so-called “third wave” was best exemplified by Portland-based Stumptown and by Chicago-based Intelligentsia, which highlighted exotic brewing methods and ultraexpensive single-origin coffee.
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Now Peet’s is acquiring them to keep up with the millennials’ discerning taste in coffee (rival Starbucks is taking another route by upgrading its stores and building high-end hybrid retail-roastery locations).
“To capture more than our fair share of this market, it’s important that we offer differentiated, craft coffee brands with unique propositions and appeal,” said Dave Burwick, CEO of Peet’s, in a statement. “Peet’s and Intelligentsia, along with Stumptown, which we recently signed an agreement to acquire, are highly complementary brands and businesses that collectively satisfy the desires of the new coffee connoisseur.”
Peet’s move is similar to that of the titan Saturn in Roman mythology, who devoured his own children so they would not overthrow him. In Peet’s case, it’s the grandchildren who are trouble.
Intelligentsia was founded in 1995 by Doug Zell and Emily Mange. It has roasteries in Chicago, Los Angeles and San Francisco, and 10 locations in Chicago, L.A. and New York. Zell, Mange and co-owner Geoff Watts will still have a “significant stake” in the company and stay on board after the deal closes. The value of the transaction was not disclosed.
Peet’s is owned by European investment firm JAB Holding Co.