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Blue Bottle Has Sold the Majority of Its Company to Nestlé

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It’s definitely a chain now

A sign for Blue Bottle in Oakland Blue Bottle via Facebook

Blue Bottle Coffee has come a long way from its humble beginnings as a boutique roaster founded in 2002. It now boasts upwards of 40 stores in San Francisco, Los Angeles, New York, Washington, DC, and Tokyo, with plans to open 25 more within the year. It’s also entering a new era, as it reached an agreement to sell majority shares to Nestlé today. According to the Financial Times, the price of the acquisition is over $500 million dollars.

That means Blue Bottle management will retain 32 percent of the business, while continuing to operate independently. Founder James Freeman will stay on as chief product officer, and current CEO Bryan Meehan will stay on as well.

Freeman broke the news to his baristas in a call this morning, taking questions. “People want to know, are we going to lose control of the company, are we going to have to use Nestlé crunch bars in our mochas? The answer, of course is no,” Freeman told Eater.

It’s been a steady rise for the coffee company, which Freeman started in Oakland fifteen years ago as a home delivery operation, and selling coffee at the Old Oakland farmer’s market. In recent years, a big push for growth has included investment in the company by venture capitalists and celebrities, as well as a failed partnership with Liz Prueitt and Chad Robertson of Tartine Bakery.

Since then, a massive expansion plan for the East Coast has been enacted, including a multi-million dollar roastery in Brooklyn to service its cafes, which include forthcoming locations in Boston, Miami, and the World Trade Center. A statement from the company sets its projected growth at 70 percent.

According to the company, the Nestlé deal will give it the opportunity to open more cafes and roasteries, hire more people, expand consumer good likes cans of cold brew and pre-ground coffee, and sell it to millions more people around the world. It’s also likely a relief for its original investors, who saw losses early on. Meanwhile, Swiss-based Nestlé is a giant corporation with a portfolio of more than 2,000 brands ranging from Gerber baby food to Purina pet food to Lean Cuisine.

A once local darling in the Bay Area, Blue Bottle was recently blocked from opening a cafe in the Lower Haight on the grounds that it’s now a chain, given that it’s well past the formula retail threshold of 11 stores. Those have expanded as Blue Bottle left the wholesale coffee business, in 2015, despite the fact that wholesale accounted for a sizable percent of its overall sales.

That was a move that might have taken investors aback, but Freeman credits it with part of the company’s success. “All the ways we’ve said ‘no’ — leaving wholesale, not having a lot of distractions to our message and our mission, has made our company a very focused one. [Leaving wholesale] meant leaving behind 25 percent of our revenue, which is a very scary thing. But it meant an increased focus on what we thought was important, our retail environments,” Freeman says.

“The way we think about our coffee and our guests and our staff, that’s been much appreciated by the Nestlé company apparently.”

Stay tuned for more details on what the investment deal means for the company.