Nestlé Faces Challenge as Coffee Rivals Join Forces

Nestlé’s long-held dominance in the global coffee industry is about to face a serious challenge. In a move that could reshape the competitive landscape, the world’s second and third-largest coffee companies are joining forces to create a more focused competitor. This strategic merger aims to pool resources, expertise, and market share to take on the industry leader. For coffee professionals and enthusiasts alike, this development signals a potential shift in power within the $810 billion global coffee market.

Yes, Mondelez International and D.E Master Blenders 1753 B.V. are merging their coffee businesses to form Jacobs Douwe Egberts, a new company headquartered in the Netherlands with combined annual revenue of $7 billion. Mondelez will hold 49% and receive $5 billion, while the new entity will be 51% owned by D.E Master Blenders.

The Merger: Who’s Involved and What’s Changing

On May 7, Mondelez International announced it would spin off its coffee division and merge it with D.E Master Blenders 1753 B.V., a Dutch coffee company. The resulting firm, Jacobs Douwe Egberts (JDE), will be based in the Netherlands and is expected to have $7 billion in annual revenue. D.E Master Blenders will control 51% of the new company, while Mondelez retains 49% and gets a $5 billion cash payment. The deal is subject to regulatory approval and is expected to close in 2015.

Market Position: How the New Entity Stacks Up Against Nestlé

As of 2013, Nestlé was the clear leader in the global coffee market, with Mondelez and D.E Master Blenders ranking second and third. Mondelez reported $39 billion in coffee revenue, and D.E Master Blenders reported $34 billion. Together, their combined coffee operations would bring in $70 billion annually—still less than Nestlé’s dominant share, but the merger creates a stronger competitor capable of challenging Nestlé’s supremacy. A Mondelez China representative noted that while their combined market share remains below Nestlé’s, “we can compete with Nestlé now.”

What’s at Stake: Why This Merger Matters

The global coffee market is valued at approximately $810 billion. Nestlé has long been the market leader, but the merger between the number two and three players is designed to create a more pure-play coffee company. This could lead to increased innovation, marketing muscle, and global reach, particularly in key markets. For coffee drinkers, this could mean more choices, better quality, and intensified competition that may drive down prices or improve product offerings. The new JDE will be well-positioned to challenge Nestlé in both retail and specialty segments.

Frequently Asked Questions

Which companies are merging to form Jacobs Douwe Egberts?

Mondelez International (second in the coffee industry) and D.E Master Blenders 1753 B.V. (third) are merging their coffee businesses to create Jacobs Douwe Egberts. The new company is headquartered in the Netherlands.

How much revenue will the new coffee company generate?

The merged company, Jacobs Douwe Egberts, is expected to have annual revenue of $7 billion, combining Mondelez’s $39 billion coffee unit and D.E Master Blenders’ $34 billion.

What percentage of the new company does each partner own?

D.E Master Blenders 1753 B.V. will own 51% of Jacobs Douwe Egberts, while Mondelez International will retain 49% and receive $5 billion in compensation.

When is the merger expected to be completed?

The merger is expected to close in 2015, pending regulatory approvals.

How does the new company compare to Nestlé?

Even combined, the new company’s revenue is less than Nestlé’s, but it creates a larger, more focused competitor that can better challenge Nestlé’s dominance in the coffee market.

What coffee brands does Mondelez currently sell in China?

Mondelez’s main coffee brand in China is Maxwell House.

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