Coffee Holding Co., Inc. (“Coffee Holding” or the “Company”) (Nasdaq: JVA) announces the acquisition of substantially all of the assets of Steep N Brew Coffee Company (“Steep N Brew”) through Generations Coffee Company LLC, the Company’s specialty coffee joint venture in Ohio (“Generations”). Located in Madison Wisconsin, Steep N Brew is a highly recognizable regional roaster selling to most large retail channels in the upper Midwest area since 1979. Their brand portfolio includes the Steep N Brew brand, their Fair Trade Organic line, Café Fair and value line, Kendra. Revenues of Steep N Brew for the past fiscal year were approximately $7 million. The purchase price under the asset purchase agreement was comprised of (i) a cash payment of $1.6 million, (ii) a cash payment of $1.1 million for the payment for the inventory purchased under the asset purchase agreement and (iii) the issuance of a promissory note in the principal amount of $150,000. Generations intends to incorporate the infrastructure of Steep N Brew into the existing business model of Generations.
“This is an exciting transaction for Generations and our company. Through the acquisition of Steep N Brew, we have doubled our existing sales of our specialty division at Generations, acquired additional roasting capacity, increased our shelf presence, improved our distribution channels and efficiencies and added three proven coffee brands to our previously existing diverse portfolio of brands. We now have two highly efficient Specialty Coffee factories in the Midwest where we can produce all varieties, packs and sizes of specialty coffee retail and foodservice products. This acquisition increases our presence in the upper Midwest and Great Lakes regions for foodservice opportunities which traditionally have been the smaller part of our business. We believe this represents a good opportunity for sales growth and margin expansion, while achieving new efficiencies in terms of freight logistics, order size and increased distribution channels as many of Steep N Brew’s customer base will now become customers by default for many of Generations and Coffee Holding Company’s legacy brands. We also believe the same holds true for Steep N Brew brands at existing Generations customers. In addition, we believe that Coffee Holding/Generations will bring a number of cost saving efficiencies to this transaction, which we expect will have a positive impact on profitability of the acquired business. Steep N Brew currently operates profitably and we expect our upper level procedural changes to improve operating margins and sales volumes. This transaction is exactly the type we believe fits into our overall growth strategy of acquiring well run regional companies with a strong retail presence at a purchase price that should allow us to achieve a positive return on our investment,” stated Andrew Gordon, President and CEO of Coffee Holding.
About Coffee Holding
Coffee Holding Co., Inc. is a leading integrated wholesale coffee roaster and dealer in the United States and one of the few coffee companies that offers a broad array of coffee products across the entire spectrum of consumer tastes, preferences and price points. Coffee Holding has been a family-operated business for three generations and has remained profitable through varying cycles in the coffee industry and the economy. The Company’s private label and branded coffee products are sold throughout the United States, Canada and abroad to supermarkets, wholesalers, and individually owned and multi-unit retail customers.
Forward Looking Statements
Any statements that are not historical facts contained in this release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including the synergies and the impact of the acquisition. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. We have based these forward-looking statements upon information available to management as of the date of this release and management’s expectations and projections about certain future events. It is possible that the assumptions made by management for purposes of such statements may not materialize. Such statements may involve risks and uncertainties, including but not limited to those relating to product demand, pricing, market acceptance, hedging activities, the effect of economic conditions, intellectual property rights, the outcome of competitive products, risks in product development, the results of financing efforts, the ability to complete transactions, and other factors discussed from time to time in the Company’s Securities and Exchange Commission filings. The Company undertakes no obligation to update or revise any forward-looking statement for events or circumstances after the date on which such statement is made.
Coffee Holding Co., Inc.
2018 GlobeNewswire, Inc.