Oakland-based Blue Bottle Coffee, fresh off a $25.75 million dollar venture capital funding infusion, is acquiring Los Angeles coffee roastery and cafe Handsome Coffee Roasters as well as LA-based Tonx, an innovative subscription-only coffee roaster. This move marks a major new chapter in the company's expansion plans, which include a recently announced roasting and retail expansion to Tokyo, and a new chapter for LA's very fast-moving specialty coffee scene, which has seen recent expansions from Stumptown and roasting and retail plans announced by Santa Cruz's Verve Coffee.
In a press release announcing the move, Blue Bottle explains:
Handsome Coffee was founded in 2012 by Mike Phillips, Tyler Wells, and Chris Owens. The high-design, enthusiastically branded company did much to help expand the burgeoning quality Los Angeles coffee scene, which up to that point had been dominated by out-of-town transplants like Intelligentsia Coffee. Their Arts District cafe and roasting space, widely noted for its beautiful design, was one of the first wave of new businesses moving into the revitalized downtown, which has since seen roasteries from Stumptown and will soon welcome Verve. Recently, two of the three original founders, Tyler Wells and Chris Owens had left Handsome to pursue other projects.
Blue Bottle says that all current Handsome employees have been offered opportunities with Blue Bottle, and that Mike Phillips will be joining Blue Bottle in a “development role based in LA.” Blue Bottle had already signed leases for LA expansion cafes in Venice Beach and Culver City previous to their acquisition of Handsome, and rumors had swirled as to their roasting plans, which at one point included rumors that they, too, would build a roasting facility in the Downtown Arts district. Instead, Handsome's retail/roasting facility at 582 Mateo St “will transition into Blue Bottle’s first Los Angeles café and production space this summer”.
Tonx Coffee was founded by industry veteran Tony Konecny (formally of Seattle's Victrola Coffee and Intelligentsia LA, as well as the Internet) and Foodzie.com co-founder Nik Bauman. The company, a coffee-subscription-based service, has a staff of eight, including green buyer Ryan Brown (formally of Ritual Coffee and Stumptown) and roaster Wolfgang Klinker (former head roaster at Stumptown in Seattle).
According to Blue Bottle, the Tonx acquisition is proceeding, after co-founder Nik Bauman approached Blue Bottle about acquisition “because we knew the [Blue Bottle] team was as ambitious about spreading great coffee to a retail audience as we are to distributing coffee through the web exclusively.” The Tonx team will transition over to Blue Bottle over the next three months, “creating a new department entirely dedicated to software and technology,” that will be instrumental in expanding Blue Bottle's direct to consumer online sales. Blue Bottle is famous for their focus on their own retail over pursuing extensive wholesaling operations, with bags for sale in their own stores currently being the main way that their beans are made available to customers.
Blue Bottle’s expansion plans reflect a new reality for the specialty end of the coffee industry: increasingly, investors of all stripes are seeing business potential in high-end coffee, whether that is Blue Bottle’s (third) funding round, startups like Perfect Coffee, non-coffee brands like Toms adding coffee to their offerings, or a new generation of serious food and drink establishments investing in serious coffee programs as well. As more money and new players flow into the industry and competition increases, acquisitions like these are sure to become more prevalent.
As for Blue Bottle, with new cafes open in the Bay Area and NYC, a Tokyo expansion slated for the next 12-18 months, and now transitioning Handsome this summer, they’ve certainly set themselves up an ambitious expansion plan, that if successful, could lead to them being one of the largest and most influential specialty coffee brands on the planet.