Diedrich Coffee announces that it has sold Gloria Jean’s domestic operations and Tully’s finalizes their sales agreement with Vermont-based Green Mountain.

California-based Diedrich Coffee announced Friday that it will sell domestic franchise operations of its Gloria Jean’s Coffee to Praise International North America, Inc. The move is part of Diedrich’s effort to capitalize on the popularity the wholesale specialty coffee market.

With the sale, Praise International North America will gain 102 franchise and company-operated stores in 24 states. The stores are said to have been purchased for just over $3 million and terms of the transaction include a five-year roasting agreement and the right to use the Gloria Jean’s name in conjunction with wholesale products and the Keurig K-cups that carry the brand’s name.

The move is somewhat of an in-house sale: Diedrich Coffee roasts and packages coffee under the label Gloria Jean’s and Coffee People while Praise International North America is the US master franchisee of Gloria Jean’s Coffees International. An Australian company, Gloria Jean’s operates more than 1000 coffee shops worldwide. Retail locations sell specialty coffee as well as brewed coffee and espresso beverages.

“In late 2006, Diedrich Coffee announced the sale of certain company-operated Diedrich Coffee and Coffee People retail stores as part of our plan to expand our wholesale business and focus the retail side of our business on our Gloria Jean’s franchise operations. With the transaction announced today, we will take that strategy one step further and focus primarily on the sale of specialty coffees in our wholesale business channels,” J. Russell Phillips, president and chief executive officer of the company, said Friday.

Vermont comes to Seattle

In more coffee business news, Tully’s Coffee has completed the sale of its wholesale arm to Green Mountain Coffee Roasters of Vermont for more than $40 million.

The sale agreement was put in place back in September and was approved by shareholders last week. Tully’s wholesale business distributes roasted coffee to supermarkets and office coffee providers.

Tully’s will pay Green Mountain $1 per year to continue using the Tully’s name at its 150 US retail locations as well as those abroad. Green Mountain now also employs the roughly70 people who work for Tully’s wholesale plant in Seattle.

Tully’s plans to use cash from the sale to pay down $26 million in debt the company incurred over the last few years as business began to slow. They also plan to recharge their retail operations and make a cash distribution to their shareholders.

The Seattle Times reported in September that the Tully’s is approximately $88 million in debt.

No Comments »