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How a holding company that sold pool chemicals pivoted into a $20B coffee empire
Chances are, you haven’t heard of JAB Holding Company, but you’ve probably consumed their coffee products.
Fifty years ago, the privately held German conglomerate was selling chemicals for pools, resigned to a life of irrelevance. Today, they own Keurig, Peet’s Coffee, and the Dr Pepper Snapple Group -- a $20B trove that has a hand in “every form and venue” of the coffee game.
How’d they get there?
JAB began in the 1820s when Johann Adam Benckiser purchased a chemical laboratory and handed the reins over to a chemist named Ludwig Reimann.
Over the next century, the lab became the world’s largest citric acid producer (one of the chemicals used to clean swimming pools and merchant ships). Then, in the 1970s, they began to morph into an investment firm...
And, starting in 2012, JAB went all-in on coffee
In recent years, JAB has quietly plunked down majority stakes in some of the biggest coffee brands in the world, including Keurig ($13.9B), Peet’s Coffee ($974m), Stumptown, Intelligentsia, and the Caribou Coffee Company.
As a result, JAB now plays a role in the entire arc of an average coffee consumer’s day: Keurig K-Cups for the home, chains like Peet’s for those on the go, and cold brews from Stumptown at the grocery store.
But they’re particularly focused on one coffee trend
Ready-to-drink coffee -- products sold pre-bottled, or in cans -- has experienced an explosive 200% growth since 2012, compared to the 65% growth coffee chains have seen.
As millennials age, industry analysts find that the new class of coffee consumers place a premium on efficiency and convenience.
JAB has capitalized on this as they set their sights on becoming the world’s largest coffee powerhouse. And in the coming years, they just may get there: the current industry leader, Nestlé, has been through the grinder lately, reporting its “slowest sales growth in decades” last year.
The merchants of buzz
Everybody’s gettin’ together: Cigna buys Express Scripts for $52B
In the latest in the wave of healthcare consolidations, health insurance provider Cigna announced that it will purchase the largest pharmacy benefits manager (PBM), Express Scripts, for $52B in cash and stock.
Both companies are on the rebound: Antitrust regulators blocked Cigna’s attempt to buy Anthem for $48B last year, and Anthem dumped Express Scripts as a partner last October in favor of launching their own pharmacy business.
Everyone’s sweating the new kids on the block
Back in February, Jeff Bezos (Amazon), Warren Buffett (Berkshire Hathaway), and Jamie Dimon (JPMorgan Chase) announced their mission to launch a healthcare company, so this deal could be a way for Cigna and Express Scripts to avoid being swallowed by the wave o’ Bezos.
The mega-deal would mark yet another PBM teaming up with a major insurer to cut expenses, but the splurge in mergers has regulators poring over deals.
A spoonful of savings makes the merger go down
Cigna and Express Scripts say the acquisition would allow them to lower drug costs by connecting patients’ medical and pharmacy histories -- but the ball’s in the US government’s court to determine whether this will save consumers money, not just the providers.
Out with the heels, in with the comfort: High heel sales are down
Times are changing. Workplaces are getting more casual, Vans are cool to wear at dinner, and people, whether working at home or an office, are increasingly more aware of their movement -- because fitness trackers.
As a result, high heels got shoved to the back of the closet last year: Sales dropped 12%, with one-third of the pointy products marked down by an average 47%.
In the early 2000’s, heels were at their highest, literally
Oddly enough, an IBM analysis from a few years ago found that, during economic downturns, heel sizes typically spike.
In 2009 (the height of the economic crisis), the median height of women’s heels peaked at 7 inches, and by 2011 it had dropped to 2.
The theory is that, the worse off the market, the more stressed people are, and the greater their desire to buy and wear exotic shoes with higher heels as a means of escape.
Does this mean the economy’s about to go through the roof??
Remains to be seen. But, there’s no question that the rise in high-end “athleisure” clothes has more people opting for practicality and comfort.
Women’s sneaker sales rose nearly 37% last year, with “sport leisure” shoes leading the charge, raking in $9.6B from US consumers.
Nice genes, wanna date? This new dating app uses your DNA to find matches
Pheramor, a Houston Texas-based dating startup, says it can find you the perfect match for $19.99 plus a $10/month subscription -- and it’s all in your DNA.
Described as a hybrid between Tinder and 23andMe, Pheramor requests a swab from your cheek via mail, analyzes your DNA, then finds compatible mates in your area.
It puts the DNA in the mail
Pheramor’s business model is based around the concept that, like many animals, human attraction can be decoded through everyone’s favorite love spice: pheromones.
But experts aren’t sold on the mystical love stink: Many believe it’s all just a data grab. Self-dubbed “the world’s first smart dating app,” Pheramor disagrees.
The company’s product was released in Houston last month, and soon will have a new feature called Second Date, designed to track user locations to see if their subscribers meet up with one of their matches.
The jury’s still out on human pheromones
As in, they may not really exist. According to Oxford zoologist Tristram Wyatt, it’s all a bunch of sexy pseudoscience started by corporations.
Dr. Richard Doty, the director of the Smell and Taste Center at the University of Pennsylvania medical center, dismisses pheromones as “total nonsense.”
“If human pheromones actually elicited the kinds of behaviors we see in other mammals,” he told Wired, “the subways of New York City would be in a constant state of mayhem with people hopping all over each other.”