WATERBURY, Vt. -- Green Mountain Coffee here has acquired Frontier Organic Coffee from Frontier Natural Products Co-op, Norway, Iowa, for approximately $2.7 million in cash, both companies said this month.
les last year were over $3.5 million for its bulk and packaged coffee.
"Frontier Organic Coffee will be a great addition to the Green Mountain Coffee family," Robert P. Stiller, president and CEO of Green Mountain Coffee, said in a statement. "Frontier's leadership in social responsibility and high-quality certified organic coffees will enhance our position in these areas of strategic importance to us. The acquisition of Frontier provides us with new opportunities to expand our presence in the rapidly growing natural foods market segment."
The acquisition's effect on Green Mountain Coffee's financial results for the fiscal year is expected to be neutral, but in the future it should enhance Green Mountain's efforts "to meet our goals for growing both our top line and, particularly in view of our ability to finance this deal at current viable interest rates of approximately 5%, our bottom line," said Robert D. Britt, chief financial officer, in the same statement.
The majority of Green Mountain Coffee's revenue is derived from its wholesale operation that serves supermarkets, convenience stores, offices and other locations where specialty coffees are sold.
For the past eight years, Frontier has contributed extensive time and resources to study organic coffee-growing methods in various regions, and has shared this knowledge with growers. By introducing organic coffee into certain coffee-growing areas, Frontier has been able to help create better livelihoods and environmental working conditions for many growers and their families.
This past March, Frontier Natural Products Co-op helped bring electricity to the 1,000 people of Tamborapa Pueblo in the Tabaconas Valley, a remote coffee-growing region in northern Peru. It contributed more than $50,000 from the sales of Frontier Organic Coffee to the five-year Tamborapa Pueblo Hydroelectric Project, and then donated two laptop computers to the local school.
Frontier's CEO, Steve Hughes, said the company shares Green Mountain's commitment to the environment and to the health and well-being of the people in coffee-growing communities where it has done business. He added that the decision to sell the coffee business was made in order to focus more attention on its core business, which is natural remedies, packaged culinary herbs and spices, bulk herbs and spices, and 100%-pure-essential-oil aromatherapy products.
Through a distribution agreement with Green Mountain Coffee, Frontier will continue to sell Frontier organic coffees and Green Mountain Coffee Roasters' Fair Trade coffees to its customers.
Green Mountain Coffee is a leader in the specialty coffee industry, and has been recognized by Forbes Magazine as one of the "200 Best Small Companies in America." The company roasts high-quality Arabica coffees and offers more than 60 varieties, including single-origin, estate, certified organic, Fair Trade, signature blends and flavored coffees that it sells under the Green Mountain Coffee Roasters brand.