Nestlé is dropping up to $500 million to take a majority stake in the hip coffee brand Blue Bottle Coffee.
The Swiss company is taking a 68% stake in Blue Bottle, the Financial Times reported Thursday. The deal values the coffee chain and roastery at more than $700 million.
Blue Bottle, which now has more than 50 locations, has spent the past 15 years winning over coffee snobs since being founded in Oakland, California, in the early 2000s. The chain is known for its freshly roasted beans and coffee shops, which have become a Silicon Valley favorite.
The deal lends Nestlé Blue Bottle's hip, coffee-snob-approved reputation. And, it gives the small chain access to huge amounts of cash from the largest food company in the world.
"My goal as CEO has been to secure a sustainable future for Blue Bottle Coffee that would enable it to flourish for many years to come," Blue Bottle Coffee CEO Bryan Meehan said in a statement. "I'm excited to work with Nestlé to take a long-term approach to becoming a global leader in specialty coffee."
(Melia Robinson/Business Insider)
Blue Bottle said in a joint statement with Nestlé that it planned to open 55 stores by the end of this year, compared with just 29 at the end of 2016. There are Blue Bottle stores in the Bay Area, Los Angeles, New York City, Tokyo, and Washington, DC.
Blue Bottle has raised $120 million over the past 15 years from investors including Morgan Stanley, Fidelity Management and Research, and True Ventures as well as celebrities including Bono, Jared Leto, and Tony Hawk.
Starbucks executives have said independent, trendy coffee shops are the biggest threat to their business. With Blue Bottle backed by a company with billions of dollars in annual revenue, the trendy chain has the potential to become a major threat to the coffee giant.
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