Longtime coffee roaster and distributor Farmer Brothers Co. is selling its direct ship business—including its facility in Northlake—to TreeHouse Foods Inc. for roughly $100 million.
While Farmer Brothers will keep its more profitable direct store delivery business and move it to Oregon, it said the company’s corporate headquarters will remain in Northlake, where it will continue to lease office space at its current location near the Texas Motor Speedway.
President and CEO Deveri Maserang [Courtesy photo]
“Exiting the direct ship space will allow us to focus almost exclusively on [direct store delivery], which is our most profitable and highest growth potential business, while also assuring our valued direct ship customers are well-served by a national leader,” Farmer Brothers President and CEO Deverl Maserang said in a statement.
With a “sole focus” on store delivery, the CEO expects to benefit from internal efficiencies and cost savings, while better serving its “largest, most profitable customer base.”
Farmer Brothers said the sale will increase its balance sheet flexibility and allow it to focus on execution, improving margins, and driving strategic growth in DSD and key account sales channels.
Brewing success as a leading roaster, wholesaler, servicer, and distributor of coffee, tea, and more
Farmer Brothers is a leading roaster, wholesaler, equipment servicer and distributor of coffee, tea, and other allied products. Dallas Innovates took you on a tour of its Northlake facility when it opened in 2018.
The company said it expects to use the proceeds from the sale to pay down outstanding debt associated with its asset-based lending (ABL) and retire its term loan.
Subject to customary conditions, the sale is expected to close within the next 60 days and it will include the transition of roughly 180 Farmer Brothers team members to TreeHouse Foods as TreeHouse Foods begins operations in Northlake.
Proceeds will help company ‘explore additional growth opportunities’
Farmer Brothers, founded in 1912, will move all of its DSD production operations to its Portland, Oregon, roasting and production facility and will continue existing relationships with third-party roasters for additional capacity. Farmer Brothers’ DSD business sells coffee, tea, spices and breakfast/brunch products through a wholly owned national network of 80 independent branches, five distribution centers, and nearly 240 routes, reaching 45,000 delivery points a year.
Following the sale of its Northlake facilities, Farmer Brothers expects its annual revenue will be roughly $350 million with vastly improved product margins.
“Our shift to a DSD-focused organization will allow us to further increase internal efficiency, decrease our operational cost and allow us to enjoy higher margins,” Farmer Brothers CFO Scott Drake said in a statement. “In addition, proceeds from the sale will allow us to solidify our financial position by recapitalizing the company, which gives us flexibility to explore additional growth opportunities.”
The company’s primary brands include Farmer Brothers, Artisan Collection by Farmer Brother, Superior, Metropolitan, China Mist, and Boyd’s.
TreeHouse will use Northlake facility to ‘add capabilities, strengthen category depth’
Based in Oak Brook, Illinois, TreeHouse Foods is a private label food and beverage manufacturer in North America.
“The state-of-the-art Northlake facility strengthens TreeHouse Foods’ category depth in coffee as a focused, private label leader and is consistent with our strategy to pursue opportunities that drive category growth and deliver attractive financial returns,” Steve Oakland, CEO and President of TreeHouse Foods, said in a statement.
“As we continue to execute our long-term growth initiatives, we’re pleased to add new capabilities, particularly in roasting and grinding, which make us a more vertically integrated coffee manufacturer able to further penetrate this high growth, high margin category,” Oakland added.
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