Blue Bottle Coffee, one of Silicon Valley’s favorite coffee programmes, is selling a majority stake to Nestle in a big semi-acquisition this morning that’s no doubt going to confirm a lot of interest in the health risks of coffee markets.
Nestle is acquiring a 68% stake in the company, and it t looks like the leading role of the company isn’t changing as part of this deal. The Financial Time is reporting that Nestle is paying up to $500 million at a valuation north of $700 million, which we understand is in the right ballpark.
The company has opened up stores in San Francisco, New York, and Tokyo among other cities, and the experience is kind of like walking into an Apple Store. The possibility there is that if Blue Bottle were to open up a store across from every Starbucks and acquire a customer with more value than one looking to get in and out of the shop as quickly as is practicable, it could potentially create a somewhat substantial coffee business — even if it captured merely a fraction of Starbucks’ market.
Coffee stores have been a favorite pet project of Silicon Valley investors, which have run a ton of fund following the implementation like Blue Bottle and Philz. This also isn’t Nestle’s first big exertion in coffee, as it owns the Nespresso one-shot coffee machine that’s a challenger to the Keurig, as well as the Nescafe brand. Blue Bottle has also been a prolific product producer( say that three times fast) by rolling out little cartons of its coffee and placing them in retail outlets, much like Starbucks does.
Ironically, we noted a little while back that Amazon should try picking up a coffee shop like Blue Bottle or Philz based on the market opportunity against a challenger like Starbucks and the opportunity to expand its Prime footprint. Nestle has plenty of coffee brands in its portfolio, but a deal of this scale simply shows that these coffee startups perhaps shouldn’t still be treated as experimentations — though they may require a well-capitalized parent( like Amazon or Nestle) to expand to the level of Starbucks.
Independently, Blue Bottle elevated more than $100 million, and we had actually heard some whispers that it might be checking into potential financing about a year ago — though, at the time, the company outright said this wasn’t happening and that it had not held any conversations with investors at any point about additional financing since the previous round. Either style, a year is quite a long time for a story like Blue Bottle to play out, which hopes to have opened 25 new cafes by the end of the year.
A representative from Blue Bottle said they would not comment on the specifics of the bargain or its evaluation of the company.