Nestle Buys Majority Stake in Coffee Chain Blue Bottle for $500 Million

Nestle did not provide financial details in announcing the deal, but The Financial Times reported that the company is paying up to $500 million for two-thirds of the company, valuing it at about $700 million. It’s also a chance for Nestle to expand its presence in North America, building on its Nescafe and Nespresso coffee brands.

“This move underlines NestlĂ©’s focus on investing in high-growth categories and acting on consumer trends”, Nestle CEO Mark Schneider said in a statement. “Their path to scale is clearly defined and benefits from increasing consumer appreciation for delicious and sustainable coffee”. Current management and employees will retain a minority stake.

Blue Bottle will still continue to operate out of its Oakland headquarters, though, and CEO Bryan Meehan and founder James Freeman are staying on. I’m excited to work with NestlĂ© to take a long-term approach to becoming a global leader in specialty coffee. “We felt a real kinship with the team and knew it was the right move for us”.

The deal gives the Swiss beverage and foods giant a boost in the premium coffee business, where Blue Bottle’s reputation and cachet have generated a loyal base of customers willing to pay extra for its products.

Over its 15 years in business, Blue Bottle has already spread beyond its Bay Area beginnings with cafes in New York, Los Angeles, and Tokyo. It expects to have 55 locations by the end of 2017, up from 29 at the end of a year ago.

Nestle’s No. 1 position in the packaged coffee market has been challenged by JAB Holding Co., the investment company of Austria’s billionaire Reimann family, as it’s spent more than $30 billion expanding its coffee empire with acquisitions including Keurig Green Mountain and Peet’s.

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