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Peet’s Buys Majority Stake in Another Coffee Chain

peetsPeet’s Coffee & Tea is expanding its reach in the third wave premium coffee sector with its majority stake purchase in Intelligentsia Coffee, announced both chains on Friday.

This deal for Peet’s is its second of the month. Peet’s is nearing the closing of its deal to purchase Stumptown Coffee Roasters from TSG Consumer Partners a private equity company.

The transaction with Intelligentsia is scheduled to close before the end of 2015, said Dave Burwick the CEO of Peet’s.

No terms of either deal were disclosed by any of the parties involved.

Intelligentsia Coffee, based in Chicago, will continue independent operations. Emily Mange and Doug Zell the co-founders of Intelligentsia along with Geoff Watts the co-owner will maintain a large stake in the company and remain involved actively in its operation.

The group of 18 to 34-year olds are driving the demand for higher quality coffee, craft beer and other types of artisan products along with seeking a number of experiences, said Burwick.

He called that group the future coffee connoisseurs and to be relevant we must provide the types of experiences they are seeking.

This tie up with Chicago-based Intelligentsia adds muscle, in particular when it relates to selling packaged coffee in specialty food and grocery stores, said an industry analyst.

Peet’s Stumptown and Intelligentsia will all continue using traditional espresso machines with every drink made by hand, said executives.

Starbucks Corp a number of years ago switched from using the traditional espresso machine to the automated units as a way to lower on the job injuries and to speed up overall service.

Peet’s based in Emeryville, California is majority owned by holding company JAB Holdings controlled by the Reimann family a billionaire family from Germany. JAB is also the owner of Caribou Coffee.

Others in this category in the U.S. include Philz Coffee in San Francisco and Blue Bottle Coffee in Oakland, California, which has reportedly raised over $70 billion this year.

Blue Bottle has taken over Handsome Coffee Roaster from Los Angeles and Tonx a subscription service for coffee.

Last year, Starbucks spent over $20 million to open its reserve coffee roaster that includes a tasting room located in Seattle.

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