The founders of Baratza, Kyra Kennedy and Kyle Anderson have sold their business to Breville Group, the Australian coffee equipment company that clearly has growth plans.<\/p>\n\n\n\n
For those of you which subscribe to our newsletter, we mentioned the likelihood of consolidation in the broader industry and cited Breville in particular as a company we think is well positioned for dramatic growth as more people work from home and want an easy to use coffee-making experience.<\/p>\n\n\n\n
The question is whether the acquisition will result in the Baratza models disappearing, or if Breville will invest in growing the brand.<\/p>\n\n\n\n
Breville has capable conical burr grinders already that are designed for the home user. I’m not convinced it makes sense to run two product lines aimed at a similar demographic.<\/p>\n\n\n\n
Consider also that a likely reason for this acquisition would be to allow them to up their game and credibility among serious coffee enthusiasts.<\/p>\n\n\n\n
There are ‘defensive’ or ‘consolidation’ plays as well, which can explain the rationale behind the acquisition. The strategy here is to reduce the competition, eventually allowing the dominant company to push up prices. <\/p>\n\n\n\n
Most acquisitions make sense when you rationalise costs \u2014 i.e. make a number of redundancies where roles overlap. Assuming all else remains equal, profits immediately increase.<\/p>\n\n\n\n
The founders of Baratza may well have sought assurances, and perhaps have received them, but it’s likely there will be some job losses. The founders, however, rightly deserve their payday \u2014 they built an amazing company, and we wish them the best of luck.<\/p>\n\n\n\n
Kyra Kennedy and Kyle Anderson founded Baratza 21 years ago. We’re delighted for them to realise a lovely retirement package and to leave Baratza in a pretty decent pair of hands. We imagine there will be some ‘golden handcuffs’ that keep them on board during a transition period – typically 1-2 years and then we’ll see the brand get assimilated.<\/p>\n\n\n\n