By Beth Kowitt
September 14, 2017

Nestlé announced today that it has acquired a majority stake in high-end coffee roaster and retailer Blue Bottle.

Nestlé is already the world’s largest coffee producer with brands Nescafe and Nespresso, but the Blue Bottle deal gives the consumer goods giant an entry point into the fast-growth and trendy so-called “third wave” coffee market. Even Starbucks, the dominant coffeeshop player, has responded to the threat of the likes of Blue Bottle and Stumptown with more upscale stores.

Blue Bottle is not the first third-wave chain to join forces with a bigger industry player. Investment fund JAB Holdings has rolled up several coffee companies of late, including Peet’s, which in turn has purchased Stumptown Coffee and a stake in Intelligentsia.

The deal is also part of a broader move on the part of Nestle, whose brands include Kit Kat and Nesquik, to transform its portfolio as consumers increasingly eschew packaged and processed goods. The company announced a week ago that it had acquired Sweet Earth, which makes vegan meal and snacks from plant-based proteins.

Nestlé said in a release that Blue Bottle will operate as a standalone entity with its current management team, including CEO Bryan Meehan and founder and chief product officer James Freeman, remaining in place. Management will hold onto 32% of the business. Other terms of the deal were not disclosed.

Blue Bottle said in a release that the deal will let the company develop new coffee technology, open new locations domestically and internationally, and expand its product line in stores.

Blue Bottle is expected to reach 55 stores by the end of 2017, up from 29 at the end of last year. The brand also sells its bottled products online and in retail.

 

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