Nestle said to pay up to $500m to buy Blue Bottle Coffee

Ulf Mark Schneider, chief executive officer of Nestle SA, speaks during the company's annual shareholders meeting at the Nestle headquarters in Vevey, Switzerland, on Thursday, April 6, 2017. Photographer: Michele Limina/Bloomberg

Nestle SA agreed to acquire a majority stake in coffee brand Blue Bottle Coffee as the Nespresso owner seeks to bolster its U.S. presence amid increasing demand for upscale blends.

Nestle will pay up to $500 million for a 68 percent stake in the Oakland, California-based company, according to a person familiar with the matter who asked not to be identified because the details haven’t been made public. Blue Bottle sells coffee directly to customers online and operates 40 shops in the U.S. and Japan. This number is expected to grow to 55 by the end of 2017, up from 29 a year earlier, Nestle said Thursday.

Nestle’s No. 1 position in the global packaged coffee market has been challenged by JAB Holding Co., the investment company of Europe’s billionaire Reimann family, which has spent more than $30 billion expanding its coffee empire with acquisitions including Keurig Green Mountain and Peet’s.

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Nestle Chief Executive Officer Mark Schneider has singled out java as one of the Swiss company’s biggest growth opportunities, with a focus on expanding sales in the U.S., which is the world’s largest coffee market. Nestle sells Nespresso machines in the U.S., but still trails Keurig in that category.

“This move underlines Nestle’s focus on investing in high-growth categories and acting on consumer trends,” Schneider said in a statement.

The food and beverage giant is also eager to expand its presence in U.S. retail stores. Blue Bottle produces a ready-to-drink cold brew product that is sold in some Whole Foods stores and is working to get its packaged coffee into the upscale organic grocery chain, which was recently acquired by Amazon.com Inc.

The company is working to maintain its freshness standards as it seeks to expand its retail presence and could be available nationwide at Whole Foods stores next year, according to CEO Bryan Meehan.

“They invested because they think we’re onto something,” he said in an interview following the announcement.

Meehan and Schneider started talking about a partnership during a February meeting in Brooklyn, where Blue Bottle had just opened a massive cafe and production facility. The deal is structured to keep the coffee startup as a stand-alone entity, and Meehan said he’s not concerned that selling a majority stake to a global food giant will erode the buzz his band has created.

“When people see this happening they feel like things are going to get worse,” Meehan said. “I’m not going to allow that to happen.”

In addition, the deal means that Blue Bottle is insulated from the pressure that surrounds prominent venture-backed startups with lofty valuations — not to mention public companies.

“The public markets are a distraction,” he said. “I don’t want to be part of that conversation — companies like Blue Bottle should never go public.”

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Bloomberg

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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