China’s Luckin Coffee (LKNCY) is reportedly interested in buying Nestlé’s (NSRGY) (NSRGF) stake in Blue Bottle Coffee, according to sources cited by Bloomberg.
The coffee chain is reportedly exploring additional acquisitions as part of a broader push to expand its global footprint, including Coca-Cola’s (KO) Costa Coffee brand and the Chinese operator of % Arabica cafés.
Founded in 2002 in Oakland, California with coffee shops located in the U.S., Japan, China, South Korea, Hong Kong and Singapore, as well as an online marketplace, Blue Bottle sold a 68% stake in the company in 2017 to Nestlé (NSRGY) (NSRGF) for ~$700M as the Swiss conglomerate sought to expand its high-end coffee portfolio.
In 2022, in what can be seen as Nestlé’s influence, Blue Bottle launched a premium instant coffee, drawing on the company’s 20 years of product development to make “Craft Instant Espresso.”
However, despite ~$420M in annual revenue, Nestlé is looking to unload Blue Bottle amid an effort to streamline its portfolio and divest from niche coffee shops that require heavy investment, leaving it free to focus on more scalable brands like Nescafé and Nespresso.
Shares of Nestlé (NSRGY) (NSRGF) and Luckin (LKNCY) are both trading lower on the U.S. stock exchange.