Blue Bottle for $500M?

  • September 15, 2017
  • Scott
  • 0 Comments

Well, if Coffee is good for your health, apparently selling coffee is good for your wallet!

Blue Bottle just announced their majority stake sale to Nestle for $500M, and according to TechCrunch it is for a valuation north of $700M.

A couple years ago they were raising $70M – which seemed crazy for the size business Blue Bottle was running.  But I said at the time, that I would have invested alongside it if I could – because they have a great product and a great experience, and the upper limit on expansion is nowhere in sight.

And now that $70M looks like a pretty good investment.  More on the acquisition:

The company has opened up shops in San Francisco, New York, and Tokyo among other cities, and the experience is kind of like walking into an Apple Store. The opportunity there is that if Blue Bottle were to open up a store across from every Starbucks and acquire a customer with more value than one looking to get in and out of the shop as quickly as possible, it could potentially create a pretty substantial coffee business — even if it captured only a fraction of Starbucks’ market.

Blue Bottle Coffee is the biggest brand in specialty coffee in America and Japan today,” Index Ventures partner Mike Volpi said in a statement. “Their success is a testament to James and Bryan’ genius and ability to create a unique sense of value that’s translated into a large, loyal following. It’s the power of the Blue Bottle brand that attracted us to invest early on, and it’s been incredibly gratifying to watch them build an enduring company.”

You know, with a brick-and-mortar like Starbucks, you’d expect the disruption to come from technology – home coffee machines like Nespresso or Keurig – or Aeropress.  Or from someone with massive tech scale like Amazon.  Surprisingly for such a massive operation, Starbucks has been on its A game when it comes to incorporating tech to improve their business and loyalty.

It looks like the disruptive threat may instead be a well-funded upstart with an amazing customer experience.  And now the challenge for Blue Bottle remains: can you preserve or even improve on your customer experience and product under the umbrella of a well-heeled behemoth like Nestle?  There is some reason to think so, given how well Nestle has managed the Nespresso brand.  But many Blue Bottle fans will feel it is “selling out.”

I love our Austin coffee shops but I will look forward to sampling a local Blue Bottle store here when one opens!

 

 

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