Nestlé takes ma­jor­ity stake in ar­ti­sanal cof­fee maker

The Globe and Mail (BC Edition) - - REPORT ON BUSINESS - MICHAEL J. DE LA MERCED OLIVER STRAND

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.

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