Dusseldorf Coffee from Jacobs and Senseo, soft drinks from Dr Pepper, café chains such as Pret-A-Manger or Espresso House – the Reimann family is involved in all of these brands. She is one of the richest industrial heirs in Germany. The descendants of the Ludwigshafen chemical dynasty JA Benckiser have been bundling their assets in JAB Holding for eleven years.
So far, the holding company has mainly invested in everyday goods and services. In times of inflation, they are more robust than many other sectors – but still have to struggle with it. The value of investments managed by JAB Holding fell from $51.7 billion to $49.5 billion in 2022. This emerges from the current annual report.
The Reimann family holds around 90 percent of JAB Holding, based in Luxembourg. Other shares belong to 13 partners, including CEO Olivier Goudet, Chairman Peter Harf and Vice-Chairman Joachim Creus. Chief strategist Harf started 2012 with a capital of nine billion dollars. Since then, JAB has built up a broad network of company holdings, with a focus on North America. At the end of 2022, JAB Holding itself owned investments worth $32.4 billion.
The JAB partners don’t just manage the family’s assets. Since 2014, family offices and institutional investors have been investing in JAB holdings in parallel via the JAB Consumer Partners fund – the current figure is around 17 billion dollars. “The fund gives us much more clout,” Creus once told the Handelsblatt. “This allows us to make important acquisitions and build up large companies – without the Reimann family having to get into excessive debt.” Because JAB usually acts according to the following principle: companies in a sector are bought together with co-investors, merged, built up and floated on the stock exchange.
Animal health as a lucrative future market
Recently, JAB has shifted its holdings significantly – from coffee and beverages to a completely new business area: animal health. “Owning pets is increasing, they are being cared for more and more like people,” said CEO Olivier Goudet, explaining the new strategy. “Pets are one of the strongest consumer trends in the coming decades worldwide.”
JAB has only been active in the growth market of pets since 2019. With the entry into the veterinary clinics NVA and Compassion First, a leading veterinary platform was created in Anglo-Saxon countries. According to the annual report, their sales have almost tripled in the meantime. In 2022 alone, JAB invested $1.8 billion in animal health such as the Sage and Ethos emergency vet clinics.
Another 1.5 billion flowed into animal insurance, such as the takeover of the German market leader for pet insurance Agila and Crum & Foster. Both acquisitions still have to be approved by the antitrust authorities. In September, JAB also bought British VGP, a leading laboratory for animal diagnostics.
As a result of the multi-billion acquisitions, the share of animal health in the JAB portfolio has increased significantly, from 15 to 23 percent in the second half of 2022 alone. In contrast, $1.3 billion was withdrawn from the beverage division. The proportion of Keurig Dr Pepper (coffee and soft drinks) in the portfolio fell at the same time from 35 to 19 percent.
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The listed US beverage company, in which JAB currently holds just under a third, is struggling in times of inflation. Although sales grew by eleven percent to 14 billion dollars. Profits shrank but because of higher costs by ten percent to 2.6 billion dollars. The share price remained stable.
The second largest holding of JAB is the coffee group JDE Peet’s. The global number two behind Nestlé makes up a fifth of the portfolio. JAB holds 57 percent of the company, which is made up of brands such as Jacobs, Senseo, Tassimo and Peet’s and was successfully floated on the Amsterdam Stock Exchange in 2020.
Although sales rose by 16.4 percent last year, adjusted EBIT shrank by almost six percent. Sales in Europe fell due to difficult price negotiations with retailers. JDE temporarily suspended its coffee deliveries to Rewe. Here, too, the share price proved to be robust.
Planned IPO of Panera Brands postponed
The US donut chain Krispy Kreme was brought to the Nasdaq by JAB 2021. After a deep dip at the end of the year, the share is now trading at the issue price again. The next Panera Brands IPO with coffee shop chains like Caribou Coffee and Einstein Bagel was supposed to follow in 2022. However, it was postponed for the time being in the summer in the poor market environment given the lull in inflation. The rating agency Moody’s, however, expects the step onto the trading floor as soon as the stock market climate improves.
The business of the fragrance and beauty group Coty, long the “problem child” of the JAB family, as Creus put it, has recovered. The turnaround was successful under the new CEO Sue Nabi. Net debt was reduced by an additional $1.4 billion in 2022.
Moody’s upgraded JAB’s rating in November. The improved financial strength and a more diverse industry portfolio towards animal health were recognized. Net debt was last at $6.3 billion. Even before the major increases in interest rates, JAB had sealed several bonds with maturities of ten to 30 years. Moody’s also rates the liquidity of around seven billion dollars as solid. It enables new acquisitions for the Reimann family at any time.
More: How the Reimann family more than tripled their fortune in ten years.