Nestle buys Blue Bottle Coffee.
OAKLAND » Blue Bottle Coffee, the Oakland-based coffee roaster and retailer that gained fame in the Bay Area and well beyond for its high- end specialty coffee, is now part of Swiss food giant Nestlé.
Nestlé and Blue Bottle announced the acquisition — a majority stake for Nestlé — on their respective websites Thursday.
Blue Bottle Coffee will operate as a stand- alone entity, Nestlé said, and the current management and employees will keep a minority stake — 32 percent
— and continue to run the business, including founder James Freeman as chief product officer and Bryan Meehan remaining in his current post as CEO.
For Nestlé, the deal marks an entry into the world of so- called thirdwave coffee, driven by independent, specialty roasters and fueled by dedicated coffee- lovers. It’s also a chance for Nestlé to expand its presence in North America, building on its Nescafe and Nespresso coffee brands.
“This move underlines Nestlé’s focus on investing in high- growth categories and acting on consumer trends,” said Nestlé CEO Mark Schneider in a statement on the company’s website. “Blue Bottle Coffee’s passion for quality coffee and mission-based outlook make for a highly successful brand. Their path to scale is clearly defined and benefits from increasing consumer appreciation for delicious and sustainable coffee.”
Blue Bottle’s Meehan and Freeman wrote on a company blog post of their decision to sell to Nestlé, calling it a “complex” one, “involving many discussions, considerations, questions.”
“Nestlé wants to help us realize our dream of bringing Blue Bottle Coffee to more people,” they wrote. “Sure, it’s a business deal. But more importantly, to us, this deal brings with it an attendant recognition and belief in our accomplishments.”
Blue Bottle, which recently celebrated its 15year anniversary, currently has 41 cafes across several cities, including Oakland, Berkeley, San Francisco, Palo Alto, New York, Los Angeles, Washington, D.C., and Tokyo, with more planned for Boston and Miami. It has raised millions in funding from investment firms and celebrities over the years.
According to Nestlé, the total number of Blue Bottle cafes is expected to reach 55 by the end of the year — up from 29 at the end of last year. The company’s roast and ground coffee, as well as its ready-to- drink products — such as its cartons of cold brew and New Orleans-style iced coffee — are sold in grocery stores.
It’s a far cry from its early days, when founder Freeman would roast coffee in a rented 183- square-foot potting shed on the patio of Oakland restaurant Dona Tomas, as he recollected in a recent company blog post. He would drive the coffee around town, to friends and friends- of-friends, hopeful of repeat orders, until it eventually gained a spot at farmers markets, and then small shops.
Fans of Blue Bottle, especially those who appreciated the local brand for its artisan style, expressed disappointment on social media.
“As someone who has loved your coffee before there were crazy lines, I’m glad you get the credit for great coffee. However, usually when this happens quality goes down considerably, and I’m hoping that won’t happen,” wrote one commenter on a Facebook post by Blue Bottle that announced the deal.
Other commenters were less understanding.
“Whoa. And with that, I’m no longer a Blue Bottle fan. Nestlé is a brutal, inhumane company. Congrats on selling your soul,” wrote a former Blue Bottle customer.
The acquisition by Nestlé is not the first time Blue Bottle has had an ownership change. Current CEO Meehan led a group of investors in 2012 that purchased a controlling stake in the company, but Nestlé — which bought another Oakland company in its purchase of Dreyer’s more than a decade ago — has been dogged by controversy over its operations over the years that has given it a reputation as an uncaring mega- corporation.
“Brands live or die on trust and can decapitate and debilitate fast by undermining a trusted relationship with consumers,” said Eric Schiffer, CEO of private equity firm Patriarch Organization, which also provides consulting in reputation and brand management. “People don’t want their coffee diluted — just like they don’t want their brands diluted, unless there’s alignment (among company values).”
Still, Schiffer said, with the infusion of capital from Nestlé, the damage to Blue Bottle’s reputation as a high-end, artisan company probably won’t be devastating. And for Nestlé, the deal is a way in to the upscale, artisanal coffee sector the company has wanted to be in, he explained.
Blue Bottle’s Meehan and Freeman insist that the deal is a positive one that will allow the company to scale.
Customers will likely see more shops, they said in the blog post, and the company’s coffee “will only get better, as it has every year since we opened.”
Local retailer Blue Bottle currently has 41 cafes across several cities. According to Nestlé, the total number of Blue Bottle cafes is expected to reach 55 by the end of the year.