Nestle buys into high-end coffee buzz with Blue Bottle

Melia Robinson  Business Insider

Melia Robinson Business Insider

Nestle and Blue Bottle announced the acquisition - a majority stake for Nestle - on their respective websites Thursday. The companies did not disclose the purchase price, but The Financial Times reported that Nestlé paid about $500 million for 68% of the independent roaster, which is based in Oakland, Calif. Nestle Chief Executive Officer Mark Schneider has singled out coffee as one of the Swiss company's biggest growth opportunities. Nestle and its multinational peers are fighting slower emerging markets, competition from new brands and a shift in consumer tastes away from processed food.

Super-premium coffee maker Blue Bottle sells coffee within 48 hours of roasting it and has become a darling of the well-heeled Silicon Valley tech elite since it was started as a home delivery service by musician and self-declared "coffee lunatic" James Freeman in 2002.

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The sector has seen increasing consolidation, especially in North America. This market caters to mostly young, urban customers who have grown up on Starbucks (SBUX.O) but have progressed to more exotic drinks coaxed from hand-operated espresso machines or non-traditional brewers by expert baristas. There are now Blue Bottle stores in the Bay Area, Los Angeles, New York City, Washington, DC, and Tokyo. It expects to have 55 locations by the end of 2017, up from 29 a year ago. Other backers include Fidelity Management and Research, Instagram co-founder Kevin Systrom and Oscar-winning actor Jared Leto.

The Oakland, California-based company operates shops in the US and Japan and is expected to reach 55 stores by the end of 2017, up from 29 a year earlier, Nestle said in a statement Thursday.

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"Nestle wants to help us realize our dream of bringing Blue Bottle Coffee to more people", they said.

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