Nestlé Targets High-End Coffee by Taking Majority Stake in Blue Bottle

That has drawn the interest of big business. Starbucks has introduced its upscale Reserve brand of coffee bars to fight off upstarts, and JAB Holdings, a family-owned European conglomerate, has been busy assembling a coffee empire that now includes the mainstream Jacob Douwe Egberts and Peet’s brands to Stumptown Coffee Roasters, a high-end mainstay.

Photo

James Freeman, the Blue Bottle founder. “It sounds very basic,” he said, “but people really like delicious coffee.”

Credit
Peter Prato for The New York Times

Taking a majority stake in Blue Bottle will help Nestlé expand an existing foothold in the coffee sector built around the Nescafé and Nespresso line of products to a flourishing new industry with a highly dedicated consumer base (read: millennials.)

The investment is also meant to shore up the Swiss conglomerate’s presence in North America, a region where it has struggled.

For Blue Bottle, the deal not only brings in a major new backer whose products include Kit Kat chocolate bars and Stouffer’s frozen pizzas. Having Nestlé as a majority owner will also help Blue Bottle buttress its expansion plans, which run from opening new outlets across North America and Asia to selling roasted beans and New Orleans-style cold brew drinks in stores.

“Their commitment to us was, ‘We love what you do, we want to help you grow,’” Mr. Freeman said in a telephone interview on Wednesday. “One of the biggest food companies in the world has really voted in favor of very delicious coffee.”

Under the terms of the deal, Nestlé is acquiring 68 percent of Blue Bottle. The coffee company’s management and employees will own the rest. Neither side would disclose financial terms.

Although Blue Bottle is one of the most important players in the third-wave coffee sector, it has set itself apart from its rivals in significant ways. The company has spurned many of the hallmarks of high-end shops — barista competitions, lengthy travelogues about journeys to find the perfect small coffee farm — while emphasizing the aesthetics and experience of a well-prepared cup.

Perhaps that is a reflection of its founder, a soft-spoken, classically trained musician who began roasting coffee as a hobby while on the road with traveling orchestras. Mr. Freeman’s approach has less of the rebellious rock ‘n’ roll attitude displayed by competitors like Stumptown, and more of the quiet calm one might associate with a slowly but well-brewed cup of coffee.

“It sounds very basic,” he said, “but people really like delicious coffee.”

Continue reading the main story