Nestle SA agreed to acquire a majority stake in Blue Bottle Coffee as the Nespresso owner seeks to bolster its US presence amid increasing demand for upscale blends of java.
Nestle is to pay about US$425 million for a 68 percent stake in the Oakland, California-based company, said a person familiar with the matter who asked not to be identified because the details have not been made public.
Blue Bottle sells coffee directly to customers online and operates 40 shops in the US and Japan.
Photo: Reuters
This number is expected to grow to 55 by the end of this year, up from 29 a year earlier, Nestle said on Thursday.
Nestle chief executive officer Mark Schneider has singled out coffee as one of the Swiss company’s biggest growth opportunities, as he steps up investments in niche brands like prepared food maker Freshly and vegetarian burrito maker Sweet Earth.
In coffee, he is focusing on expanding sales in the US, the world’s largest market.
Nestle sells Nespresso machines in the US, but still trails Keurig in that category.
“This move underlines Nestle’s focus on investing in high-growth categories and acting on consumer trends,” Schneider said in a statement.
Blue Bottle produces a ready-to-drink cold brew product that is sold in some Whole Foods stores and is working to get its packaged coffee into the upscale organic grocery chain, which was recently acquired by Amazon.com Inc.
Blue Bottle is working to maintain its freshness standards as it seeks to expand its retail presence and could be available nationwide at Whole Foods stores next year, chief executive officer Bryan Meehan said.
“They invested because they think we’re onto something,” he said in an interview following the announcement.
The deal is structured to keep the coffee start-up as a stand-alone entity and Meehan said he was not concerned that selling a majority stake to a global food giant would erode the buzz his brand has created.
“When people see this happening they feel like things are going to get worse,” Meehan said. “I’m not going to allow that to happen.”
In addition, the deal means that Blue Bottle is insulated from the pressure that surrounds prominent venture-backed start-ups with lofty valuations — not to mention public companies.
“The public markets are a distraction,” he said. “I don’t want to be part of that conversation. Companies like Blue Bottle should never go public.”
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