(NYTimes) - Is coffee a better business than fashion?
The Reimann family, the reclusive German consumer goods billionaires who control JAB Holding, seems to think so.
On Monday, the luxury shoe brand Jimmy Choo, in which JAB owns a 67.6 percent stake, announced that it was putting itself up for sale. JAB acquired the brand in 2011 for £540 million, or US$800 million at the time, and took it public in 2014.
JAB is also undertaking what it called a strategic review of the Swiss leather goods brand Bally, "including a possible sale of the company", A review of Belstaff, the British motocross-inspired brand acquired in 2008, is expected to follow.
The possible sell-off of the luxury brands comes as JAB Holdings - which since 2012 has built a coffee and food empire in the United States by acquiring US coffee brands including Peet's Coffee & Tea, Caribou Coffee and Keurig Green Mountain - agreed this month to buy the sandwich chain Panera for US$7.5 billion, including debt.
According to documents seen by The New York Times, "JAB has, however, made significant investments in coffee and related areas in recent years, and as a result, now considers its investment in luxury as noncore".
JAB, which has its headquarters in Luxembourg, wants to focus on its investments in Coty, in which it has a 36.84 percent stake, and the numerous high-end coffee businesses, which also include Stumptown Coffee Roasters and Intelligentsia Coffee & Tea.
Shedding its investments in the three leather-goods companies would take JAB out of the fashion industry, ending an eight-year effort to build a viable luxury group to compete with the Big Three - LVMH Moet Hennessy Louis Vuitton, Richemont and Kering - and possibly signalling further consolidation in an industry already wrestling with slowing growth and changing consumer tastes. The strategy shift also speaks to the increasing desire of consumers to spend money on experience - including on morning drinks of choice - instead of, say, handbags.
JAB entered the luxury market with fanfare in 2007 and soon snatched up brands such as US-based designer Derek Lam; Italian handbag label Zagliani (then known for using Botox in its exotic-skin totes and purses to keep them supple); British jeweller Solange Azagury-Partridge; and leather-goods names like Jimmy Choo, Bally and Belstaff, all under a new division called Labelux.
Only four years later, however, it sold its stakes in the Lam and Azagury-Partridge businesses to the brands' founders, and in 2014 decided to refocus on leather goods, bringing the remaining brands directly under the control of JAB Holding (it closed Zagliani in 2015).
Though Jimmy Choo became the first footwear brand to list on a public market, riding a wave of accessories successes, Bally struggled to define itself in a crowded market, taking tentative steps in apparel without much impact. Belstaff, too, despite a much-heralded campaign with David Beckham, found it difficult to break through.
Now, that grand experiment is apparently at an end.
According to the JAB announcement, there have not been any bids so far for Jimmy Choo, but the industry is bound to be watching closely for declarations of intent. This is especially the case given that footwear is something of a buzzing industry at the moment, with department stores seemingly competing over who can open the largest shoe floor (a title now held by the Level Shoe District in Dubai, at 96,000 square feet).
Indeed, since the news broke, the price of Jimmy Choo shares has climbed more than 9 percent.