Nestlé Buying Majority Stake in Blue Bottle

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Blue Bottle Coffee is selling a majority stake in the company to Swiss food giant Nestlé. Under the terms of the deal, Nestlé will pay up to $500 million for 68 percent of Blue Bottle. Neither side would confirm further details of the financial terms. The sale was announced Thursday.

Blue Bottle, started in 2002, is one of the best-known purveyors of artisanal coffee. The company made its mark by emphasizing the aesthetics and experience of a well-prepared cup of coffee. The approach has drawn fans, particularly among younger hipster types. Blue Bottle was also instrumental in driving trends like cold-brew iced coffee.

Blue Bottle founder James Freeman said of the deal, “One of the biggest food companies in the world has really voted in favor of very delicious coffee.” Having Nestlé as a majority owner will help Blue Bottle realize its expansion plans. The investment will bolster the Swiss company’s presence in North America. Nestlé has struggled in the region in recent years.

Blue Bottle has previously announced expansion plans that include opening new outlets across North America and Asia. The coffee company expects to nearly double its store count from 29 outlets to 55 this year. Most of the company’s existing stores are in the United States. It also runs six stores in Japan.

The company also wants to sell more of its products in retail stores. Blue Bottle already produces a ready-to-drink cold brew product that is sold in some Whole Foods stores. Those drinks could be available nationwide at Whole Foods stores next year.

Blue Bottle has also developed an online subscription business for its roasted beans. The company said it expected a 70 percent increase in sales this year. In recent years, the company has raised more than $100 million from investors.

Nestle’s No. 1 position in the global packaged coffee market has been challenged by JAB Holding Co. Nestlé owns the Nescafé and Nespresso lines of coffee products. Nestlé has not previously had a presence in the high-end coffee market.

Specialty coffee has become a hot business, accounting for 15 to 20 percent of coffee consumed in the United States. It’s a highly sought after business because it commands higher prices and generates bigger profit margins. In recent months, Starbucks has released an upscale Reserve brand and JAB Holdings now owns Stumptown Coffee Roasters, a high-end mainstay.

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