JDE Peet’s upgraded to BBB by Fitch as the future prospect seen positive

JDE Peet’s upgraded to BBB by Fitch as the future prospect seen positive

April 13 - 2023

Coffee Geography Magazine

JDE Peet’s (JDEP), the world’s leading pure-play coffee and tea company by revenue, announced that Fitch Ratings has upgraded the company’s credit rating from ‘BBB-‘ to ‘BBB’ with a stable outlook. This upgrade underscores the company’s operating strength, strong financial structure and financial discipline. 

In its release, Fitch noted: “The upgrade reflects the company’s recent de-leveraging and Fitch’s confidence that management will continue to meet its conservative net debt/EBITDA target of about 2.5x. The rating reflects JDEP’s strong market position in the global coffee industry with strong and broadly stable profitability, supported by the sector’s low price elasticity and the potential for further premiumisation of the company’s products. This combines with low capex requirements and dividend distributions to allow for consistently high free cash flow, providing good financial flexibility. Good diversification by pricing points, product and channel mix mitigate risks related to concentration on a single coffee category.”

JDE Peet's is an American-Dutch company that owns beverage brands, mostly of coffee, tea and hot chocolate. It was formed in 2015 following the merger of the coffee division of Mondelez International with Douwe Egberts as Jacobs Douwe Egberts. The stock of JDE Peet's is listed on the Euronext Amsterdam stock exchange. 

The company has its origins in De Witte Os, a general grocery shop that Egbert Douwes established in 1753 in Joure, Frisia, the Netherlands. In 1780, the company was transferred to his eldest son Douwe Egberts. It developed into a company dealing in coffee, tea, and tobacco. By 1925 it had changed its name to Douwe Egberts (as in Douwe, the son of Egbert), and had introduced the red seal as its logo.

In 1948, the company began to sell its products in Belgium, followed by France, Spain and Denmark. Jacobs Douwe Egberts merged with Peet's Coffee, another coffee business owned by JAB Holding, to form JDE Peet's which would own the Peet's chain, as well as brands including: Jacobs Coffee, Douwe Egberts, Moccona, Super Coffee, Owl Coffee, OldTown White Coffee, Kenco and Pickwick, and brewing systems including Senseo and Tassimo.