Nestle SA has agreed to acquire a majority stake in U.S. cafe operator Blue Bottle Coffee as the Nespresso owner seeks to bolster its lead in the java market amid increasing demand for upscale blends.
The Oakland, California-based company operates shops in the U.S. and Japan and is expected to reach 55 stores by the end of 2017, up from 29 a year earlier, Nestle said in a statement Thursday. It didn’t disclose financial details.
Challengers
Nestle’s No. 1 position in the packaged coffee market has been challenged by JAB Holding Co., the investment company of Austria’s billionaire Reimann family, as it’s spent more than $30 billion expanding its coffee empire with acquisitions including Keurig Green Mountain and Peet’s. Nestle Chief Executive Officer Mark Schneider has singled out coffee as one of the Swiss company’s biggest growth opportunities.
“This move underlines Nestle’s focus on investing in high-growth categories and acting on consumer trends,” Schneider said in the statement.
New Opportunities
Blue Bottle, which sells coffee within 48 hours of roasting it, gives Nestle a bigger bite of the U.S. market -- the world’s largest. It also offers opportunities for Nestle to grow in ready-to-drink and roast and ground coffee, especially through online subscription.
The sector has seen increasing consolidation, especially in North America. Italy’s Lavazza agreed to buy Kicking Horse Coffee, a Canadian maker of organic coffee, in May.
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