Nestlé takes majority stake in artisanal coffee maker
In 2002, James Freeman gave up on being a professional clarinetist and began pursuing his other passion, roasting coffee.
Mr. Freeman started out in a 183-square-foot potting shed in Oakland, Calif., and named his newborn business Blue Bottle Coffee Co., after a storied Viennese coffee house. Fifteen years later, Blue Bottle has grown beyond a one-man coffee shop. It is now one of the best-known purveyors of artisanal coffee that, in Mr. Freeman’s words, doesn’t taste like “flea shampoo.”
And it now has a huge new owner: Nestlé SA, the Swiss food giant.
Blue Bottle announced on Thursday that it had sold a majority stake in itself to Nestlé, one of the surest signs yet of how third-wave specialty coffee – the kind that inspires almost monastic devotion to pour-over brews and perfectly steeped drinks – has become a hot business.
The niche accounts for less than 10 per cent of the overall coffee industry.
But it is growing rapidly and, perhaps more important, it commands higher prices and bigger profit margins.
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, it 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.
Under the terms of the deal, Nestlé is acquiring 68 per cent of Blue Bottle. The coffee company’s management and employees will own the rest. Neither side would disclose financial terms.