Food and beverage producer Nestlé agreed yesterday to acquire a majority stake in Blue Bottle Coffee, the coffee roaster and retailer backed by internet technology group Alphabet.
Nestlé declined to provide details of the deal, but the Financial Times reported it is set to pay up to $500m for a 68% stake in the company. The new York Times confirmed the stake size, but a source told Bloomberg the price was $425m.
Founded in 2002, Blue Bottle has built a premium coffee brand with a presence in the US and Japan. It intends to expand its outlets from 29 at the start of 2017 to 55 by the end of the year, and also sells roasted, ground and ready-to-drink coffee online and in stores.
Although details of exits have not been confirmed, Nestlé said in a press release that the company’s management and employees will retain a minority share, implying that its external investors did exit through the deal.
Blue Bottle had raised approximately $116m in funding, with Alphabet initially investing in the company in a $20m round in 2012 through its GV subsidiary, alongside venture capital firms True Ventures and Index Ventures as well as various angel investors.
GV returned for a $25.8m series B round in 2014 led by Morgan Stanley Investment Management, part of investment banking firm Morgan Stanley, that was also backed by True Ventures, Index Ventures and various angels.
Blue Bottle subsequently secured another $70m in a mid-2015 series C round led by Fidelity Management and Research that included GV, Index Ventures, True Ventures and hedge fund Tetragon Financial Group.
In addition to the corporate and institutional investors, Blue Bottle’s angel backers reportedly included U2 frontman Bono, skateboarder Tony Hawk and actor Jared Leto.
Mark Schneider, chief executive of Nestlé, said: “This move underlines Nestlé’s focus on investing in high-growth categories and acting on consumer trends.
“Blue Bottle Coffee’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.”
– Photo courtesy of Blue Bottle Coffee Inc.