Nestlé Expands Into Coffee Market, Acquires Blue Bottle

California coffee chain Blue Bottle has just been slurped up by Nestlé, the world’s largest food and drinks company, based in Switzerland. The Blue Bottle café and roastery chain has a value of more than $700 million, according to a report by Financial Times. Nestlé paid $500 million for a 68 percent majority stake.

The Swiss food and drink giant is staking out more territory in the U.S. by adding Blue Bottle to its holdings, a robust portfolio including the Nespresso coffee capsule and Nescafé brands. Nestlé is the largest seller of instant coffee in the U.S. but trails Keurig when it comes to coffee pods and Starbucks for fresh beans.

Meanwhile, Blue Bottle, founded in the early 2000s, is currently expanding in California, New York, Washington, Miami and Tokyo, bringing its total retail presence to more than 50 locations by the end of the year. It is known as a chain of minimalist, hipster-style cafés targeting millennials with brews made using only the freshest, locally roasted coffee beans.

Despite Nestlé’s majority stake, Blue Bottle will retain autonomy within the enterprise. CEO Bryan Meehan and founder James Freeman aren’t going anywhere, and Nestlé plans to bolster the company on its growth trajectory rather than taking it over. Nestlé may have the option to buy the remaining stake in Blue Bottle if certain performance criteria are met.

Meehan said he was confident Blue Bottle could maintain its trademark quality and artisanal appeal. He did not have plans to change any of the products to increase profit margins.

“Blue Bottle does it the hard way because making delicious coffee is not easy, especially at scale,” Meehan told Financial Times.

Through the partnership, Blue Bottle hopes to expand further into Asia, especially China and South Korea. Nestlé is not losing sight of its other U.S. goals, however, which include the vision to open 53 Nespresso shops by the end of the year.