INTERNATIONAL - Nestle SA agreed
to acquire a majority stake in Blue Bottle Coffee as the Nespresso owner seeks
to bolster its
Nestle will pay about $425
million for a 68% 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
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.
“Despite the price, we are generally positive on the deal, as a demonstration of Nestle’s focus on one of its key growth categories,” said Andrew Wood, an analyst at Sanford C. Bernstein.
The shares fell 0.3% in early
Nestle Chief Executive Officer Mark Schneider has singled out coffee as one of the Swiss company’s biggest growth opportunities, as he steps up investments in niche brands like prepared food maker Freshly and vegetarian burrito maker Sweet Earth.
In coffee, he’s focusing on
expanding sales in the
“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
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.
Read also: Nestle targeted by Dan Loeb
Meehan and Schneider started
talking about a partnership during a February meeting in
“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.”