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Van Houtte looks to expand outside Quebec as Gerard Geoffrion becomes new CEO

Other Topics: Specialty Coffee, Single Cup Coffee Brewer

Van Houtte
July 21, 2008

Montreal, Canada -- Gourmet coffee distributor Van Houtte will focus on expanding its business in Canada and the United States after appointing a new CEO and creating a position devoted to growing the brand across North America.

"Our main objective is to deploy the Van Houtte brand much faster across North America and that's why we have chosen to add a top executive in the team," newly appointed chief executive Gerard Geoffrion, 55, said in an interview.

The 13-year veteran of the company succeeds Jean-Yves Monette, 63, who becomes chairman after five years as CEO, Van Houtte announced Monday.

In a related development, the company also said Sylvain Toutant, 45, is joining Van Houtte as president of retail. Responsibilities for the newly created position were previously shared by several executives.

Toutant was previously president of the Reno-Depot home hardware chain and the Quebec liquor commission. He will now oversee Van Houtte's sales to grocery stores, as well as the roasting and cafe bistro operations.

Van Houtte serves three million cups of coffee each day at some 80,000 offices in Canada and the United States. This accounts for two-thirds of its business. The remaining one-third is in grocery retail, primarily in its Quebec base and in Ontario.

Geoffrion said the company wanted to develop at a faster pace in Ontario and the rest of Canada, and hopes to expand its coffee services business in the U.S.

Montreal-based Van Houtte is the Canadian leader in the coffee services business, holding 50 per cent market share. In the highly fragmented U.S. market it trails Aramark as No. 2, with just three per cent market share.

While Van Houtte has completed several acquisitions over the last 10 to 15 years, there is a lot of room to add other companies in the United States, Geoffrion said.

Van Houtte also operates 65 coffee houses in Quebec. It has no immediate plans to expand this network and will concentrate on upgrading and renovating locations, Geoffrion said.

Michael Klein, a director of Van Houtte and president of Littlejohn & Co. LLC - the Connecticut fund which acquired the company last year - said the new owners are pleased with the continuity that comes with this management change, given Geoffrion's key role with the company for more than a decade.

"Gerard has excellent leadership capabilities and he has a complete command of Van Houtte's North American strategic growth and development strategy, which he played a central role in creating, and we are confident that he will be able to carry it out successfully," Klein stated.

"As a member of Van Houtte's senior leadership, Gerard led Van Houtte's expansion in the coffee service business, notably through the acquisition and integration of more than 200 businesses, and is largely responsible for Van Houtte's leading position in the North American coffee service industry."

Littlejohn paid $615 million last summer to acquire Van Houtte and made a number of commitments related to Van Houtte's management, operations, growth, employees and other operations to secure Industry Canada approval for the deal.

Littlejohn of Greenwich, Conn., agreed in May 2007 to pay $25 per share for Van Houtte and assume $58 million in net debt. The total transaction was $600 million plus $15 million in fees.

Not much has changed at Van Houtte since last year's purchase, although sales have increased five to 10 per cent to $400 million annually, said Geoffrion. Van Houtte has hired 100 more people, raising its workforce to 1,900.

The new owners are very supportive, he noted. They maintained the corporate head quarters in Montreal, kept the management team in place and approved of its business plan.

Van Houtte was founded in 1919 as an importer of specialty coffees from Europe. The Van Houtte family carried on the business after the founder died in 1944. It took on management partners in 1980 before going public in 1987.

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