CFRR– Blue Bottle Coffee is typical for the third wave of coffee, perfect products, sustainable development goals and contributes to raising the enjoyment level for coffee lovers.
Blue Bottle Coffee, an American specialty coffee company that carries the familiar blue vase logo, has overcome many difficulties and barriers. However, with passion, perseverance, and distinctive characteristics, the goal of sustainable development is uppermost, Blue Bottle Coffee has not only created the perfect product but also brought value far beyond what can be measured by material.
Here is the maturation of Blue Bottle Coffee – “The giant” in this specialty coffee team.
Blue Bottle Coffee Portrait
The scale of the specialty coffee market in America
Coffee is the most consumed beverage in the non-alcoholic beverage market and is widely consumed around the world, especially in the US.
The U.S. coffee market scale is growing very well with a CAGR (Compounded Annual Growth Rate) expected to be 6.74% during the forecast period from 2020 to 2027.
In particular, it is impossible not to mention specialty coffee when its sales are increasing by 20% per year and accounting for nearly 8% of the coffee market costs about $18 billion.
According to a consumer survey conducted by the National Coffee Association of America, 48% of America’s cups of coffee are specialty coffee (2015 statistics). That shows that specialty coffee is increasingly winning the hearts of coffee enthusiasts.
The “extended arms of the giant”- Blue Bottle Coffee
One of the “big guys” in the specialty coffee market is Blue Bottle Coffee. This is a specialty coffee roaster and retailer headquartered in Oakland, California (USA), known for its clear origin, and precise roasting that creates great flavor in each coffee cup. Blue Bottle Coffee’s estimated annual sales are now $221.2 million. According to 2015 statistics, Blue Bottle Coffee has 645 employees.
The company quickly expanded to regions inside and outside the U.S. The first Blue Bottle Coffee opened some cafes in locations around San Francisco. Currently, the company has more than 100 stores, with 75 in the US, 21 in Japan, 8 in Korea, 3 in Hong Kong, and 1 in China.
Homeland of high-quality coffee
At Blue Bottle Coffee, the main products are created from indigenous, southern Ethiopian arabica coffee, with a distinct flavor that is unlike coffee grown anywhere else. This wild land has the perfect conditions for coffee growth: high mountains, cool climate, and shady forest canopies. In Ethiopia, the territory of coffee’s origin, the arabica plants still grow wild, with many spontaneous genetic mutations. Even the smallest farms can have multiple strains.
Blue Bottle Coffee focuses on purchasing directly from estates or growers; not only because of their sense of fairness but also for their seeding of the best quality coffee and strict control of the quality.
From passion to branding
Blue Bottle Coffee was born
W.James Freeman founded Blue Bottle Coffee in 2002 in Oakland’s Temescal District (USA). Freeman borrowed the name from one of Europe’s first coffee shops, The Blue Bottle Coffee House. He intended to roast coffee in small batches, about 2.7kg per roast, to sell within 24 hours, initially opening a home delivery service. After that, Blue Bottle Coffee soon stopped delivering and opened as a traditional coffee shop.
James Freeman – From passion to branding
James Freeman grew up in rural Humboldt, California (USA), he was impressed with the strong aroma of coffee along with the gurgling sound of the coffee machine that his parents used every night.
Originally a professional clarinetist, his symphonies resounded throughout Northern California, for eight years. He often had to drive hundreds of miles to get to the venue, and always had coffee with him to fuel the long road trip. He then joined an Internet start-up enterprise about digital music and lost his job when that business was sold. Tired and depressed, in August 2002, James Freeman decided to invest $20,000 to turn his coffee roasting hobby into a business. He roasted coffee at home and experimented with different beans and techniques to create a truly captivating coffee flavor. In the name of a genuine business, Freeman declares: “I only sell coffee that has been roasted less than 48 hours to customers, so that they can taste the coffee in the best way. I only use the best, the tastiest, and the most secure.”
Startup with an espresso trolley. After sixteen years, Blue Bottle Coffee has grown to 40 locations across the United States and Japan.
Blue Bottle Coffee’s mission is to worldwide connect with delicious coffee. From the planted beans to the freshly brewed cup, careful hand-crafted steps are emphasized at each stage. Besides, the company always tries to build a better future by investing in sustainable development for people and our planet as well.
At Blue Bottle Coffee, where people are constantly learning, the company offers useful programs such as Barista training; career development support for those who want to open their shop, and the trip back to the source which is a reward for elite employees who visit one of the company’s coffee growing regions; organize seminars, regularly provide information about coffee for employees which aimed at improving the value and knowledge capital for company members.
Step by step ascending
The road to success always has many difficulties waiting, with a great passion for coffee and along with humanistic purposes, Blue Bottle Coffee has overcome obstacles and achieved certain successes.
Starting with selling freshly roasted beans for no more than 48 hours at the Berkeley Farmers Market, over the next 10 years the company grew from a market stall to a kiosk and café, eventually establishing a network of coffee shops in the Bay Area.
- In 2010, Blue Bottle Coffee opened stores in San Francisco and in the San Francisco Bay Area and later opened its first New York location in Williamsburg, Brooklyn.
- In 2012, received $20 million in venture capital.
- In January 2014, $25.75 million was raised in a new funding round.
- By 2015, it had completed a venture capital round, which raised $70 million from investors led by Fidelity.
- In September 2017, Nestle’s acquired a majority stake in Blue Bottle Coffee for approximately $425 million
- In May 2019, opened its first Korean location in Seoul.
- In April 2020, opened the first Hong Kong location. In COVID-19, the café was opening for takeaway only, from 8 a.m to 5 p.m daily.
- In February 2022, opened its first location in China, which is Yutong Café, located in a historic building by the Tô Châu creek in downtown Shanghai
Blue Bottle Coffee turned a coffee shop into a $700 million e-commerce enterprise but not in an instant. The company has leveraged innovative strategies, gradually attracting and retaining customers in the following ways:
- E-commerce subscription: Blue Bottle Coffee has launched Blue Bottle at Home, an online service that delivers coffee to customers’ homes.
- Content marketing: providing guidance information so that customers who have never been to the shop can still become coffee connoisseurs. Thereby, the company creates in-depth brewing tutorials, educational videos, and courses on buying, storing, and brewing delicious coffee. Therefore, Blue Bottle Coffee was able to go beyond the usual way of selling coffee and keep the high prices reasonable.
This wise strategy has helped Blue Bottle Coffee not only to pull new customers to the top of its sales funnel but also to retain existing customers by continuing training to turn coffee drinkers into true coffee loyal followers.
Everyone visit Blue Bottle Coffee’s website not only to know about good coffee but also to get everything they need for home brewing. Nowadays, Blue Bottle Coffee has grown into a brand that provides in-depth information on how to make the right coffee as well as the necessary tools. In addition, the company also uses email automation. The content in it is welcome emails for new subscribers and sale transaction emails.
In particular, based on the application of an online business type to help predict periodic revenue, the company can make reasonable adjustments in the upcoming business strategy.
In addition, by establishing strategic partnerships with dairy producer Clover and Fort Point Beer Company, Blue Bottle Coffee has found a way to supply their stores with freshly roasted coffee beans faster shipping from the closest location to customers, helping to ensure quality intact products to consumers.
Acquiring Blue Bottle Coffee, what does Nestle’s get?
Nestle’ is a multinational food and beverage processing corporation headquartered in Vevey, Vaud (Switzerland). It is the largest food company in the world.
Big companies are good at many fields but not everything. That’s exactly a reason why, over the past few years, many big brands have been racing to buy small, high-end companies with widely recognized images and credibility. Some multinational corporations admit that they cannot create their nature as such.
Nestle acquired Blue Bottle Coffee in 2017 when having more than 50 stores. According to the report, this world’s largest packaged food producer paid about $425 million for a 68% stake in Blue Bottle Coffee, with a valuation of more than $700 million.
Why did they spend so much on a small coffee chain instead of trying to build a new supply chain with much less money possibly? Because Nestle’ knew that wouldn’t most likely work out, Nick Setyan – a food and beverage analyst at Wedbush Securities in downtown Los Angeles, said that.
Taylor Palmer, an analyst at research firm IBISWorld, said the crux of the deal is that by buying Blue Bottle Coffee, Nestle’ is buying a company whose customers were interested in all the little things Blue Bottle Coffee was doing; and consumers are more likely to stick with a craft brand acquired by a larger company than its new brand.
Differentiation – the key to success
Products of a high standard
All of Blue Bottle Coffee’s coffees are of a very high standard. Specialty coffee must score 80 or higher on a 100-point scale, and the company only buys specialty coffees that score 84 or higher.
The majority coffee of Blue Bottle Coffee is certified organic. Products have a high level of traceability, usually from a select group of manufacturers with whom the company has worked for an average of 5 years or more.
The company is willing to pay a high price for quality coffee, which has the same price as the price of Fair Trade. And in most cases, they will generally pay a much higher price.
At the same time, each member of the group that sources coffee for the company is granted a Q certificate, the highest certificate of a professional coffee taster. They are all trained to evaluate specialty coffee at source as well as in testing laboratories
That shows that Blue Bottle Coffee’s products are perfect from the beginning to the strict testing in processing to give the final product that is the highest quality cup of coffee.
Keep the style consistent in-store design
Blue Bottle’s cafes always have the same design style regardless of whether in the world. Besides the typical “blue bottle”, their stores always have a modern, airy, spacious, and luxurious space.
Blue Bottle Coffee believes that suitable color enhances coffee taste, increases the customers’ taste, and helps them feel the full flavor of the coffee.
Therefore, to serve that goal, Blue Bottle’s cafes focus on three main elements: blue, the brand’s identity color; The foggy gray of the surrounding walls creates a peaceful and relaxing feeling, and the wooden interior makes it warm.
Recruiting and training excellent staff
With a network of cafes present in many countries around the world, Blue Bottle Coffee prides itself on its very good customer service.
To create this value, training qualified employees is a core element that ensures a great experience for anyone entering the coffee world of Blue Bottle.
A report from PwC found that more than 30% of customers would leave their favorite brand after just one bad experience, and nearly three-quarters said customer service influenced their purchasing decisions.
That’s why Blue Bottle Coffee invests in strong staff training, not only around customer service but also in product knowledge and product processing. The main areas that they focus on in employee training and development that set them apart are:
- Hiring employees who fit its mission: Instead of looking for experienced candidates, Blue Bottle Coffee focuses more on recruiting the right people with the right qualities. “We know we can train how to make coffee, but we can’t train personalities,” said Selena Viguera, head of Blue Bottle coffee shop.
- Prioritize hospitality in employee training: For most people, the act of grabbing a cup of coffee represents a small moment of self-care, a ritual to start their day. That’s why every aspect of the Blue Bottle Coffee experience speaks for itself.
- Understand and serve customers thoughtfully from the first door moment until they leave, and create a consistent customer experience: Across all locations, each coffee shop is designed according to specifications and detailed techniques. This creates a simple tutorial template and helps new team members get trained faster
- Empowering staff training and development with the right technology: Having technology integrated across all ordering touch points that the purchasing process for both customers and bartenders. But the real magic lies in how easy it is for employees to manage, from making deals quickly to learning customer preferences… The simplicity of the system improves employee interaction with technology.
Setting criteria for sustainable development
Blue Bottle’s sustainable commitments derive from the company’s earliest day when founder James Freeman aimed to process coffee with an interest in quality and environmental health. Along with focusing on organic ingredients, James doesn’t even resort to single-use cups.
Since their first espresso was served, James Freeman free charges organic milk. Committed to avoiding plastic and other petroleum-based products, he is the first one doing mix in stainless steel stockpiles instead of plastic tubs and sold them in kraft paper bags.
“I wanted to treat sustainability as a constraint that could make our coffee perhaps even more delicious. That constraint was the skeleton I built the company around, and it built in a lot of creativity.”James Freeman
In 2010, Blue Bottle’s Webster Street Roastery achieved CCOF organic certification.
In 2011, at the Ferry Building café, Blue Bottle started using coffee grounds for composting.
Interested in forest conservation and energy conservation, Blue Bottle sells their unbleached wood pulp filters for kenaf filters, which are made from Hibiscus cannabinus, a fast-growing shrub that is highly productive compared to wood and requires less energy to process into paper.
This specialty coffee company has now become one of the first larger-scale businesses to switch from plastic-lined paper cups and plastic lids to plant-derived PLA-lined kraft paper cups with PLA lids.
After years of research and development, in 2016 the company released its exclusive new filter and drip filter. The drip tool is made of thin porcelain and same as a cup, which is not only designed to eliminate the use of excess energy and raw material, but also its mosaic ridges radiate heat throughout the body to maintain a uniform phase temperature and achieve optimal extraction levels.
In 2019, the widespread use of biodegradable fiber straws began; in 2020 the year Blue Bottle’s first Japanese café and roaster in Asia began purchasing renewable electricity for 100% of the facility’s operations.
As indigo’s first carbon advocate, Blue Bottle is helping to achieve long-term impacts on climate. Through the purchase of the first high-quality, certified agricultural carbon credit created on a large scale, Blue Bottle is directly supporting farmers in adopting sustainable methods that eliminate and reduce carbon from the atmosphere and contribute toward a more profitable agricultural system.
At the same time, Blue Bottle is committed to carbon neutrality by 2024, begins to seriously reduce emissions with the purchase of renewable energy, opens pilot cafes that default to oat milk, and expands zero waste operations to all cafés in the United States.
Not only serving the world the best quality coffee cups, but this “giant” representing the third wave of coffee also affirms its value when always aiming for good goals. Along with a wise commercial strategy and creative imprints, Blue Bottle Coffee will continue to have great success in the future.