The high-end coffee chain has given over a 68% stake to the Swiss food giant and customers devoted to its bespoke brews are uncertain about its future
“They sold out to the man,” said Ben Christiansen, outside the Blue Bottle coffee shop on West 15th St in Manhattan on Friday. “But I don’t know if I’ll stop coming here just yet.”
When Nestlé announced it had acquired a 68% stake in Blue Bottle Coffee Co earlier this week, the news jolted the highly caffeinated devotees of the chain’s specialist, single-origin coffee.
In the realm of coffees with precisely-calibrated water temperatures and pour-over brew times, customers said the change of ownership is a potential disruption to its loyal but easily spooked customer base.
Steven Plunkett, a fellow customer, recalled how Starbucks,the world’s biggest coffee chain, purchased the California bakery La Boulange for $100m in 2012 and soon closed it down, explaining that blueberry scones and iced lemon pound cakes could not sustain the stores for long-term growth.
Plunkett said that as long as Blue Bottle’s coffee remained up to standard, he’ll “remain a customer. Probably.”
But others had already concluded it could be time to move. Nestlé, they recalled, had been involved in selling controversial powdered baby formula in developing countries in the 1970s. That distant association, they said, was enough to put them off Blue Bottle.
“Nestlé is not an ethical company,” offered Philipa Kerckerinck, a Philadelphia-based instructor with Roots Tribe Yoga. Where one buys coffee, Kerckerinck said, is part of a larger expression of values.
“Where you buy anything right now – especially now – is part of a large point of view around how conscious you want to be about your impact on the world.”
According to reports, Nestlé, the world’s biggest maker of packaged food, paid about $425m for its stake in Blue Bottle, one of a series of deals it has made with specialist food and beverage operations to counter shifting consumer sentiments against big brands.
Under the leadership of veteran healthcare executive Mark Schneider, the Swiss food giant has adopted a new strategic goal to turn itself into a “nutrition, health and wellness” company. Two months after Schneider was installed as CEO in January, he put Nestlé’s US confectionery business, which includes brands like Baby Ruth and Butterfinger, on the block.
For Nestlé, the acquisition of Blue Bottle adds to its multi-billion coffee holdings that includes Nestle and Nespresso and comes during a period of consolidation in the specialist coffee market.
In 2015, Stumptown Coffee Roasters was sold to JAB Holdings, while La Colombe received investment from Chobani yogurt pioneer Hamdi Ulukaya. Starbucks has sought a place in the market and is looking to add “reserve” brands to existing stores and develop standalone, specialist coffee outlets.
Blue Bottle was founded in an Oakland garage in 2002 by former professional clarinet player James Freeman, who was reportedly “washed out” of playing the instrument in local symphonies.
He began serving his first cups of slow coffee at a farmers’ market, relying on a small batch roaster for his beans, and taking the name for his new enterprise from a Viennese folk hero Jerzy Franciszek Kulczycki who, having helped fend off Ottoman invaders in the 17th century, opened a coffee shop called ‘House under the Blue Bottle’.
“One day, I looked up and there were 15 people in line,” Freeman told the Wall Street Journal in 2012. “It’s been like that ever since.”
In Manhattan, Blue Bottle managers were primed to ease customer anxieties over the deal with Nestlé. Pedro Mata said the three central values of the brand – deliciousness, hospitality and sustainability – would not be lost.
“Nestle are endorsing the way we do business and they want us to grow in an organic way. That’s how it it today – a kind of endorsement – but will know in five or 10 years if that changes.” Other employees said Nestlé was an “interesting choice” of investor.
Comparable efforts have not often worked out. In 2001, McDonald’s paid $50m for a 33% stake in the British sandwich maker Pret a Manger that it divested seven years later. The Body Shop was acquired by L’Oreal in 2006 before being sold off earlier this year.
But Ben & Jerry’s, acquired by Unilever in 2000, managed to grow and expand its socially consciousness message under new ownership.
Blue Bottle customers in Manhattan said they hoped their favorite coffee-maker would not be adversely affected.
“They say that nothing is going to change but I don’t know,” offered Christina Schnabel. “Mass production and capitalism are inherently violent.”
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