May 18/Orrville, Ohio/Cleveland Plain Dealer-- The J.M. Smucker Co.'s acquisition of Cafe Bustelo and Cafe Pilon expands its coffee business into the espresso category and may widen its appeal to Hispanic coffee lovers.

Smucker, the company that makes Folgers Coffee in addition to its namesake jellies and jams, paid $360 million to buy the coffee brands and Miami operations of Rowland Coffee Roasters Inc.

Rowland Coffee Roasters, one of the nation's largest makers and distributors of Hispanic coffee, was founded in 1961 by Cuban immigrant Jose Angel "Pepe" Souto, whose three sons run the company, which last year sold more than $115 million worth of traditional Cuban-style espresso in the Northeastern U.S. and South Florida.

Richard Smucker, executive chairman, co-chief executive and one of the fourth-generation brothers to run the company, said in a statement that "the addition of the Cafe Bustelo and Cafe Pilon coffee brands, each with a rich heritage, provides us with a unique opportunity to establish a strong presence in coffee with Hispanic consumers in the U.S."

This is Smucker's first coffee purchase since acquiring the Folgers Coffee business from Procter & Gamble Co. in November 2008 for $3.7 billion.

Buying Folgers not only doubled Smucker's size and gave it two solid years of record sales and profits, it also made the peanut-butter-and-jelly company a major player in the coffee aisle.

Coffee now accounts for more than 42 percent of Smucker's net sales, more than double its sales from other products or food categories, according to its latest earnings report.

Sterling Smith, market analyst with Country Hedging Inc. in St. Paul, Minn., said Smucker is gaining a higher-end product than it has in Folgers, with the potential for bigger profits.

While the deal doesn't give Smucker any advantages with regard to soaring raw coffee prices, it does give the company broader reach in what has become an increasingly popular beverage in the U.S. and globally, he said.

Vince Byrd, Smucker's president and chief operating officer, said the purchase not only increases Smucker's coffee offerings, it enables the company to grow sales in other regions of the country with large Hispanic communities.

 

From the May 20, 2011, Prepared Foods' Daily News.