Late last year, a group called JAB Holding splashed out $13.9bn to add Keurig Green Mountain, the biggest group in the US single-serve coffee market, to its growing list of coffee investments.
The deal capped a three-year, $30bn acquisition spree, during which JAB bought up groups ranging from instant coffee specialists in Europe to hipster coffee chains in the US and prompted suggestions that a challenger to Nestlé’s dominant Nespresso brand could be emerging.
At the same time, the deal sparked another round of interest in the principal owners of JAB Holding: four members of Germany’s intensely private and immensely wealthy Reimann family: Wolfgang, Stefan, Renate and Matthias.
Through JAB, the family owns stakes in some of the world’s best-known brands. As well as its investments in the coffee sector, JAB’s burgeoning portfolio encompasses a 8 per cent stake in Reckitt Benckiser, the consumer goods conglomerate, and a 77.4 per cent stake in the US fragrance group Coty, which owns the Calvin Klein and David Beckham perfume brands. On top of this, the holding company also controls luxury marques Jimmy Choo, Bally and Belstaff.
Last year, Forbes put the combined wealth of JAB’s four principal owners at $16bn, which would make the clan one of Europe’s wealthiest business dynasties. Representatives of the family and JAB declined to comment for this article.
The Reimanns’ march to industrial prominence began in the early years of the 19th century. In 1823, Johann Adam Benckiser, whose initials are enshrined in JAB’s name, bought a chemicals business in Pforzheim, a small town in the south-western German province of Baden-Württemberg.
A few years later, Ludwig Reimann, the great-great-grandfather of the Reimanns who now own JAB, joined the company and married Benckiser’s daughter. After Benckiser’s death, Reimann took over the company, which had by now moved some 100km north to Ludwigshafen, paving the way for his descendants to etch the family’s name into the annals of German industry.
The last of the Reimanns to actively be involved in the day-to-day running of Benckiser was Albert junior, Ludwig’s great-grandson, who inherited the company in 1952 and pushed it in the direction of consumer goods. He died in 1984, leaving equal stakes to his nine adopted children.
Although all nine of Albert’s children had initially kept the 11.1 per cent stakes they inherited, by 2003, Wolfgang and Renate (who are siblings) and Matthias and Stefan (who are brothers) had bought out the other five.
In 1997, the family took Benckiser public and two years later engineered a merger with the British consumer goods group, Reckitt and Colman, to form Reckitt Benckiser.
Investing family wealth directly in companies is increasingly in vogue
The family members who sold out of the business then followed a well-trodden path by relying on a family office to manage their wealth. Subsequently they founded Deutsche Kontor Privatbank, a private bank based in Munich, to offer wealth management services to other non-family members.
Those who kept their stakes have put their fortune in the hands of a small group of trusted advisers who run JAB — currently Peter Harf, Bart Becht and Olivier Goudet. Harf started at Benckiser in 1981, while Becht joined in 1988. Goudet, a former Mars executive, joined in 2012. The family members play no role in the operative businesses. The trio of managers make suggestions to the family members on possible investments, which they then discuss, but that the family has the ultimate say.
The set-up has prompted comparisons with 3G, a private equity group run by three Brazilian tycoons, that has been buying up brands in the consumer goods sector. However the difference, according to Pablo Zuanic, an analyst at Susquehanna, is that at 3G the managers also provide the cash. “At JAB, the Reimann family provides the capital, but the driving force behind the day-to-day strategy is the three managers,” he says.
Investing family wealth directly in companies, rather than in a more traditional portfolio of different asset classes, is increasingly in vogue, according to bankers who deal with the super-rich.
“The stars are aligned behind this sort of approach because it gives families greater control over the entities they are invested in and often also higher returns as a result of investing their money for the long term,” says Philip Higson, vice-chairman of Swiss Bank UBS’s global family office group.
According to UBS, which has one of the world’s biggest wealth management business, between 40 and 50 per cent of all investments by family offices go into what it calls “illiquid investments”, which include assets such as property, but also direct stakes in companies.
Precisely what the Reimanns will do next is as little known as the family itself. But given the dynamics of the coffee industry, where the family and JAB have been making their most concerted play of late, analysts suspect that further direct investments could follow.
The Reimann’s newest asset, Keurig, co-operates with a number of third-party brands, whose coffee it sells along with its coffee-dispensing machines. This means it is potentially vulnerable to some of those brands walking away. The best way to deal with this, says Zuanic, would be for the family vehicle to buy up more brands of its own. “JAB has to have bigger plans in coffee for this deal to make sense,” he says.
James Shotter is the FT’s Frankfurt correspondent
