In December of last year, we reported that Nestle was considering selling Blue Bottle Coffee, said to be part of a larger strategic shift by the corporation away from brick-and-mortar businesses. Shortly thereafter news came out that China’s fast growing Luckin Coffee was emerging as a potential partner in the deal.
And now it appears that deal has been finalized. According to Yahoo Finance, Luckin Coffee has acquired Blue Bottle from Nestle.
Luckin has been on an aggressive growth trajectory. The once maligned but now resurgent fast coffee chain backed by Chinese private equity firm Centurium Capital recently opened its 30,000th location, the Origin Flagship in Shenzhen—think of it like Luckin’s version of a Reserve Roastery—and are looking to add another 1,000 stores by the end of the year. They have also expanded their footprint with their first cafe in the United States, in New York City. And to all this they now add over 100 Blue Bottle locations across the globe.
Per Fast Company, the deal is reported to be worth $400 million, significantly under Blue Bottle’s $700 million valuation. With the acquisition, Luckin has a ready-to-roll high-end coffee brand to complement their fast-service cafes. In other words, Luckin can still be Luckin, ie fast and cheap coffee, and can now break into the specialty cafe world without diluting the original brand.
Already Luckin is looking to capitalize. Per Fast Company, Centurium is in talks with shopping malls in China where Starbucks Reserve stores have closed for potential new Blue Bottle locations.
Nestle hasn’t completely divested from Blue Bottle. They retain the entire grocery side of the Blue Bottle portfolio, effectively offloading the physical locations, which Fast Company describes as “unprofitable”, while keeping the various ready-to-drink cold brew options.
Zac Cadwalader is the managing editor at Sprudge Media Network and a staff writer based in Dallas. Read more Zac Cadwalader on Sprudge.
