With fresh, top-quality beans, Blue Bottle is succeeding at a moment when all things artisanal and authentic are in vogue. The trick now? Scaling while retaining what makes the brand special.
More than a decade ago, James Freeman served the first cup of Blue Bottle coffee in a Berkeley Farmer’s Market tent he shared with Caitlyn Freeman, now his wife and Blue Bottle’s head pastry chef. It was there that Freeman turned work into a form of self-expression, and his passion has proven a key differentiator to investors. By 2008, Kohlberg Ventures decided to invest, and by 2012 Blue Bottle had raised $20 million. That same year Bryan Meehan, the man who brought organic supermarkets to the UK, purchased a controlling stake in Blue Bottle for $19.6 million and now serves as executive chairman. Meehan’s co-investors* include VC firms like Google Ventures and individuals such as skateboarding legend Tony Hawk, Twitter co-founder Evan Williams, Bono of U2, and actor Jared Leto.
Sizable funding for boutique coffee suggests big plans for the future. In June 2015, the company closed a $70 million Series C round, bringing total funds raised to nearly $116 million. Blue Bottle recently closed its wholesale division. Gone are the blue-and-white coffee cartons once found at your local grocer. Today, there are two ways to get your Blue Bottle. The first is to visit one of their 20 cafes in the Bay Area, Los Angeles, New York City, or Tokyo; the second is through the Blue Bottle At Home subscription service.
As well as opening new stores, the subscription model looks to represent one of the ways Blue Bottle is investing all that capital. With the purchase of coffee-subscription service Tonx in 2014, Blue Bottle made a play for growth beyond brick and mortar stores by focusing on technology. Tonx was a good culture fit with great software and has provided a glimpse into one of the ways the company hopes to scale, but it’s still about the coffee. The acquisition of Perfect Coffee, a startup focused on coffee preserving and grinding technologies, makes the strategy that much clearer.
*NewCo CEO John Battelle and NewCo investor Tony Conrad are both minority investors in Blue Bottle.