Nestle reinforces interest in coffee, backs café operator Blue Bottle

Nestlé is acquiring a majority stake in Blue Bottle Coffee, a U.S. manufacturer of coffee roast, for an undisclosed amount. The investment is intended to help the target open new cafes, roasteries, and grow its coffee technologies.

Founded by James Freeman, Blue Bottle began in 2002 as a home delivery business serving roasted coffee and now operates a network of cafes. The Oakland, California-based target operates stores in Los Angeles, New York, and Tokyo. With the new investment, Blue Bottle plans to build a digital program serving international guests in more countries, expand the product line of consumer packaged goods, and provide better benefits for its employees. The target is slated to grow by 25 new cafes by the end of 2017, from the current 29, and enter three new markets including Boston, Miami and Washington, D.C.

“This move underlines Nestlé’s focus on investing in high-growth categories and acting on consumer trends,” states Nestlé CEO Mark Schneider. “Blue Bottle’s passion for quality coffee and mission-based outlook make for a highly successful brand. Their path to scale is clearly defined and benefits from increasing consumer appreciation for delicious and sustainable coffee.”

Nestle S.A is a Swiss consumer products giant focused on food and beverages. The Vevey, Switzerland company operates in 191 countries with more than 2000 brands across its portfolio of varying products. Nestlé and its subsidiaries such as Nestlé USA has most recently been driven by its nutrition, health and wellness strategy.

Other middle-market beverage deals include: The Lavazza Group’s backing of organic coffee maker Kicking Horse Coffee Ltd for $215 million; Cott Corp.’s (NYSE: COT) purchase of S&D Coffee Inc. and coffee machine provider Eden Springs; Monster Beverage Corp.’s acquisition of American Fruits & Flavors for nearly $690 million; Dr Pepper Snapple Group Inc.’s (NYSE: DPS) buying all of Bai Brands LLC; General Atlantic’s minority investment in Joe & the Juice, a chain of urban juice and coffee bars; and Falconhead Capital LLC’s purchase of soda maker Multi-Flow Industries LLC. J.P. Morgan Securities LLC (NYSE: JPM) is acting as financial adviser to Blue Bottle, while Koenig, Oelsner, Taylor, Schoenfeld & Gaddis PC is serving as legal counsel.