Wednesday, May 18, 2011

Café Pilon, Café Bustelo Sold for $360 million

Smucker buys Café Pilon, Café Bustelo for $360 million

The Miami-based owner of the popular Hispanic coffee brands Café Pilon and Café Bustelo has sold to J.M. Smucker Co., marking the end of an era for the homegrown Cuban company.
The $360 million all cash deal covers the acquisitions of the brands and business operations of Rowland Coffee Roasters, founded by Jose Angel “Pepe” Souto in 1961 as a door-to-door espresso sales effort in Miami after he immigrated from Cuba. Souto, who died in 2007, and his three sons eventually grew the business into the largest Hispanic coffee company in the U.S., with annual sales of more than $115 million last year.
The Souto family had not been looking to sell, but was approached with an offer by Smucker and spent about five months in negotiation, said Jose Enrique Souto, who ran the company with his brothers Jose Alberto Soto and Angel Soto.
The family’s history in the coffee business dates back to 1865 in Cuba. The Miami company had at one time employed three generations of family members.
“It’s the all-American dream to start a little business, sell it to a big company and then go enjoy life,” Jose Enrique Souto said. “The price was right and the buyer was right. The future of our brand is assured with this deal.”


Jose " Pepe" Angel Souto, posed with his sons Angel, Jose Alberto and Jose Enrique Souto, at the family coffee plant in Miami. The owners of Cafe Bustelo and Cafe Pilon have sold the brands to J.M. Smucker.
Jose " Pepe" Angel Souto, posed with his sons Angel, Jose Alberto and Jose Enrique Souto, at the family coffee plant in Miami. The owners of Cafe Bustelo and Cafe Pilon have sold the brands to J.M. Smucker.
Pedro Portal / EL Nuevo Herald

The sale will mean the eventual disappearance of the company’s Doral headquarters and production facilities, as well as the elimination of up to 150 Miami jobs. The company had a total of nearly 240 employees, located in South Florida and in the Northeast.
Smucker said it plans to close the Miami production facility within the next three years and relocate all production to a New Orleans plant that will be handling roasting and production for all its coffee brands, which include Folgers and Dunkin’ Donuts. The publicly-traded company also plans to consolidate distribution and marketing operations.
Some employees are expected to remain in Miami to service restaurants and other food-service operators, said company spokeswoman Maribeth Badertscher. Employees not offered continued employment will receive severance packages, ranging from 12 weeks to one year.
The Rowland Coffee acquisition gives Smucker an opportunity to target the fast-growing Hispanic market and use its national distribution network to grow the sales of Café Pilon, Café Bustelo and other brands that were part of the deal including El Pico, Café Oquendo and Medaglia d’Oro.
“We’re always looking for leading brands that fit a niche in our portfolio,” Badertscher said. “This acquisition allows us an opportunity to reach even more consumers. There is definitely strong consumer loyalty to these brands.”
This isn’t the first time the Souto family considered selling out to a national conglomerate. The family was in serious negotiations with Procter & Gamble in 2004 but couldn’t agree on terms, Jose Enrique Souto said.
Despite the recession, Rowland Coffee hit record sales and profit levels, although the majority of that business remains concentrated in Florida, New York and New Jersey.
“We felt that for our brand to really become a national brand we needed the finances of a big company,” Souto said. “Once you start getting out of the traditional areas where our name is not as familiar, it’s difficult with the stores. We really weren’t spending enough money on advertising.”
The three Souto brothers will stay on for up to six months during a transition period. But their seven children stopped working at the company immediately following the sale, which closed late Monday afternoon. Greenberg Traurig and Villa Padron & Diaz represented Rowland Coffee in the sale.

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