December 21, 2023

Chobani’s acquisition of La Colombe shows that roasters can’t be complacent about RTD coffee


Acquisitions have been rampant in the coffee industry in recent years. From the likes of Nestlé and Blue Bottle, Peet’s Coffee & Tea and Stumptown Coffee, and Coca-Cola and Costa Coffee, market consolidation doesn’t appear to be slowing down.

One of the latest and most prominent acquisitions was in July 2023, when Keurig Dr Pepper purchased a US $300 million minority stake in La Colombe. As part of its 33% stake, KDP now sells and distributes La Colombe’s ready-to-drink (RTD) coffee beverages, and also manufactures, sells, and distributes La Colombe-branded K-Cup coffee pods under a licence agreement in North America.

More recently, however, iconic US Greek yoghurt brand Chobani bought La Colombe for US $900 million. The two companies have a close history, with Chobani CEO and founder Hamdi Ulukaya often publicly stating his interest in the pioneering coffee roaster.

So it’s clear that Chobani wants to expand even more into the RTD coffee segment, and La Colombe is determined to maintain its grip on the market. But what does the acquisition mean for the future of RTD coffee — and what does it say about the opportunities for smaller specialty coffee roasters?

To find out, I spoke to Tony Dreyfuss, co-founder and co-president of Metropolis Coffee Company.

You may also like our article on whether Keurig Dr Pepper’s minority stake in La Colombe is a sign that acquisition is inevitable in specialty coffee.

A customer sits outside a  La Colombe coffee shop in New York City.

Chobani & La Colombe: A history

Given how influential both brands are, the reasons for the recent acquisition are quite clear. But it’s also important to consider that the relationship between Chobani and La Colombe dates back some years.

Founded in 1994 by Todd Carmichael and JP Iberti, La Colombe was one of the first roasters to help establish third wave coffee culture in North America, with the vision “to make the world better through coffee”.

With this focus on craft and quality – alongside a commitment to supporting both local and coffee-growing communities and improving sustainable practices – La Colombe quickly became a pioneer in the industry.

Fast forward nine years and it had started manufacturing RTD cold coffee drinks, including cold brew and its innovative draft lattes. The latter include a valve mechanism at the base of the cans which injects the liquid with nitrous oxide – mimicking the creamy mouthfeel of steamed milk.

Around the same time, Chobani CEO and founder Hamdi Ulukaya expressed interest in investing in La Colombe. Between 2014 and 2015, Ulukaya has previously offered La Colombe US $60 million for a controlling stake in the company. And since then, the brands have collaborated several times – ranging from projects supporting refugees to cold brew creamer beverages.

It’s also easy to point to this as a natural partnership between the two brands. Chobani’s historic focus on alternative milks and La Colombe’s pioneering RTD beverages both align with where specialty coffee is going — making it a perfect match.

La Colombe coffee packaged in cans.

What does the acquisition mean for RTD & the wider coffee industry?

There’s no doubt that this acquisition will see La Colombe’s operations expand and continue to push sales for its wildly successful RTD draft lattes. Within 18 months of their launch, the draft lattes already comprised more than 1% of the total US RTD coffee market share.

Most notably, the acquisition shows just how important RTD really is for coffee roasters. This is a landmark, high-value acquisition in a segment that the industry has long since heralded as being fast-growing.

For roasters who are able to tackle RTD and diversify their beverage portfolio, this acquisition shows the sheer amount of potential in the segment. It’s also important to acknowledge that it reflects the direction of consumer behaviour.

Most modern specialty coffee consumers are interested first and foremost in factors like convenience and customisation rather than chasing down higher quality micro lots at any costs. In other words: RTD is a key segment for specialty coffee brands looking to diversify and reach a wider audience. This understandably presents a huge opportunity for brands who can access the market.

However, consolidation like this does inevitably mean that it can be challenging for smaller roasters to compete in this market — especially compared to distribution networks like Chobani’s and La Colombe’s.

Metropolis manufactures and sells canned cold brew, kegs, and concentrates in partnership with co-packers, so Tony has an in-depth understanding of the market.

“Distribution of RTD coffee products can be very complicated because it’s all cold chain,” he says. “Unless you’re backed by a big company which specialises in cold chain distribution, it’s difficult to have access to that kind of network.

“What’s more, most specialty coffee companies aren’t interested in shelf-stable RTD products because they tend to be lower quality, so they have to sell and distribute on a smaller, more local scale for a higher price,” he adds.

How can smaller brands keep up?

This acquisition is just another sign that the investment into RTD coffee is only continuing to grow. As we’ve said, it might not be easy, but for the companies who can reach this consumer base, there is an immense amount of potential.

Despite the focus on convenience and customisation, it is important to meet the quality standards that consumers have come to expect — especially as more and more players recognise how valuable this segment is.

“Sales of our RTD cold brew are more than five times the amount they were over three years ago – mostly through kegs and concentrate sales, as well as through food service distributors,” Tony says.

Ultimately, however, it’s about more than just using high-quality coffee and creating innovative RTD drinks.

“Marketing is essential,” Tony tells me. “Consumers don’t really know many of the smaller RTD coffee brands outside of their home market, so you need to invest a lot of money on marketing and branding.

“You need to consider a combination of factors, including manufacturing availability and costs and distribution issues,” he adds. “But there’s still a massive market for smaller players.”

Cans of La Colombe draft latte cans in a grocery store.

By delving deeper into the relationship between Chobani and La Colombe, the recent acquisition makes a lot of sense. But the industry definitely needs to keep an eye on how this strategic partnership influences the RTD coffee market in the coming months.

We can surely say that it will only drive RTD coffee quality even further – and specialty coffee roasters will need to stay ahead of the game if they want to keep up with the bigger brands.

Enjoyed this? Then read our article on why acquisitions are becoming more common in the coffee industry.

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