P&G announced plans to separate its coffee business and create an independent company named The Folgers Coffee Company. The coffee business had sales of approximately $1.6 billion and operating income of about $350 million in fiscal 2007. The new company will employ approximately 1,250 employees at four sites in the U.S., and will be headquartered in Cincinnati, Ohio.
P&G believes the transaction will be good for the coffee business as the business will get greater priority and attention as a standalone company. Folgers is the leading retail coffee brand in North America, has attractive operating profit margins and is a strong cash generator.
In anticipation of the transaction, P&G has named Mr. Jamie Egasti to serve as Chief Executive Officer of The Folgers Coffee Company. Mr. Egasti currently serves P&G as President, Coffee and Global Snacks.
P&G's announcement that Folgers will become a stand-alone company follows a long period of speculation in the financial world that P&G would spin off Folgers, Duracell and Pringles (August 2007, January 2008). No announcements were made related to the future of Duracell and Pringles.
This announcement is likely to fuel further speculation on the future of Duracell and Pringles.
