Nestlé Pays $500 Million For 68% Of Blue Bottle Coffee

Image courtesy of corrine brown

There’s a very big difference between a cup of lukewarm Nescafé instant coffee and a cup of freshly roasted pour-over coffee, yet the same parent company will be able to bring give you both. Nestlé has reportedly paid around $500 million for 68% of the roastery Blue Bottle.

Acquiring millennials, er, coffee brands

Nestlé will have the option to acquire the remaining 32% of the company if Blue Bottle reaches certain unspecified goals, and says that the brand will be allowed to function independently. The company’s founder, a former professional clarinet player who turned his coffee-roasting hobby into a worldwide business, will stay on, as will the current CEO.

In an interview with the Financial Times, which broke the story, Nestlé marketing director Patrice Bula was pretty honest about why it acquired the company: It wants expertise in what’s currently considered premium coffee, and it wants to be part of a market that’s actually growing among millennial customers.

“We’re a brand-building company and we’re going to help [the Blue Bottle] team build the strongest possible brand for the millennials in the U.S.,” he told the FT.

No pods here (yet)

Blue Bottle is one of many third-wave coffee businesses, or “coffee for people who think that Starbucks is swill.” Even Starbucks itself is part of the boom, with its longtime CEO and founder Howard Schultz stepping back from running the company in part to help build its high-end Starbucks Reserve “roastery” shops.

Blue Bottle isn’t the first recent acquisition of a well-known third-wave coffee roasting business by a European conglomerate, either. JAB Holding Company, which also owns Keurig Green Mountain, Caribou Coffee, Krispy Kreme, and Panera Bread, got the prominent third-wave roasters Stumptown and Intelligentsia as part of its acquisition of the coffee chain Peet’s.

These transactions echo a trend in the beer industry, with large breweries scooping up craft beer companies across the country. Big Food is simply following its customers, buying up high-end coffee roasteries as Americans, or at least Americans with a lot of disposable income, become less interested in processed food.

Does this mean you’ll see Stumptown K-Cups doing battle with Blue Bottle Nespresso pods in your local supermarket coffee aisle? Probably not, if the brands are allowed to function independently within the company, and if they don’t want to alienate customers who prize coffee for its flavor and freshness.