Blue Bottle plans to parlay its acquisition into opening new cafes, expanding its packaged product line and improving coffee growing technologies.EXPAND
Blue Bottle plans to parlay its acquisition into opening new cafes, expanding its packaged product line and improving coffee growing technologies.
Courtesy Blue Bottle Coffee

Nestle Just Bought Blue Bottle Coffee. Will that Help Nestle or Hurt Blue Bottle?

Nestlé has a history of controversy almost as expansive as its product list. Most recently, the bad press included allegations of fraudulent marketing and continued exploitation of California’s precious water supply.

A class action lawsuit filed against the company in August called its Poland Springs bottled water a “colossal fraud” for posing as spring water when it’s allegedly groundwater. The company also has come under fire from environmental groups over its long-standing practice of pumping millions of gallons of water a year out of the San Bernardino National Forest, even when the rest of the state was facing extreme drought. In 2015, the U.S. Forest Service was sued for allowing Nestlé to continue to siphon water for its Arrowhead brand even though the company’s permit was more than two decades expired. A permit, by the way, costs just $524 a year.

While the water-use controversy wages on, Nestlé announced two new acquisitions last month: Blue Bottle Coffee (in which Nestlé now has a 68 percent stake) and Sweet Earth Foods, both eco-conscious California-based brands. A company spokesperson said these purchases were financial investments and represent the direction in which Nestlé is headed — one that includes a focus on nutrition, health and wellness,” according to a statement from the company.

“The recent acquisitions are part of a strategic business transformation,” Edie Burge of corporate communications said in an email. “We are renovating our existing portfolio and incubating new brands.”

Burge emphatically stated that these new companies were not acquired to try to enhance Nestlé’s environmental image.

But at this point they probably couldn’t hurt it, either.

Nestlé owns more than 2,000 brands, many of which are mainstream supermarket standards such as Hot Pockets, Lean Cuisine and Dreyer’s Ice Cream. And now it has Bay Area–born Blue Bottle, which has 10 cafe locations in Los Angeles and has long branded itself as an artisan producer with an attention to quality and craft. That's a stark contrast to Nestlé’s current list of U.S. coffee-themed offerings, which include Nescafé, Nespresso and Coffee-Mate.

Each Blue Bottle coffee comes with an intimate backstory of its origins — from a farm in El Salvador to the untapped resource of Myanmar — and all the company’s beans are sourced from “stewards of sustainability,” according to a statement from the CEO. Blue Bottle uses 100 percent compostable cups, lids, straws and filters; raised funds for nonprofits that include the ACLU and the National Resources Defense Council; and established the charitable Blue Bottle Coffee Foundation. Blue Bottle also has been known to charge $16 for a cup of coffee.

Blue Bottle did not respond to the Weekly’s question about whether Nestlé’s controversial use of California’s water was a concern. But founder James Freeman said in an emailed statement that Nestlé leadership is "aligned with Blue Bottle's values" and that the corporation has “committed to fixing and improving all [general] practices.”

“Blue Bottle already has a good track record on sustainability, and we are constantly improving in this area,” Freeman said. “Nothing is going to change for us on that front. We remain as committed as ever to sustainability.”

As recently as April, a protest was held in the San Bernardino Mountains over Nestlé’s siphoning of water to supply its Arrowhead brand. Then just last month, Nestlé came under fire for its water practices outside the state of California, in a story from Bloomberg Businessweek titled, “Nestlé Makes Billions Bottling Water it Pays Nearly Nothing for.”

Nestlé declined to address inquiries related to its use of Southern California's water resources, but Alix Dunn, director of corporate communications at Nestlé Waters North America, said in an email that the “claims made in the [Poland Springs] lawsuit are without merit and an obvious attempt to manipulate the legal system for personal gain.”

Dunn also pointed to the company’s recent environmental and philanthropic efforts, which include operating a groundwater treatment project in Rancho Cucamonga, donating more than 1.3 million bottles of water to Hurricane Harvey victims and distributing 1.5 million bottles of water to those affected by the water crisis in Flint, Michigan.

Monterey County–based Sweet Earth, owned by husband-and-wife Brian and Kelly Swette before Nestlé acquired it, produces vegan and vegetarian foods available at supermarkets throughout the L.A. area.EXPAND
Monterey County–based Sweet Earth, owned by husband-and-wife Brian and Kelly Swette before Nestlé acquired it, produces vegan and vegetarian foods available at supermarkets throughout the L.A. area.
Courtesy Sweet Earth Foods

A few weeks before buying Blue Bottle, Nestle acquired Sweet Earth, a vegan and vegetarian food company. Owned by husband-and-wife team Kelly and Brian Swette and based out of Monterey County, Sweet Earth makes animal-friendly dishes such as Harmless Ham and the Benevolent Bacon, Egg & Cheddar sandwich. It touts products that are as “natural, organic and non-GMO as we can be,” and Sweet Earth’s website hosts a constantly ticking tally that keeps track of how many animals the company has saved (12,900 pigs, it claims) and resources it has conserved (20.8 million gallons of water) by manufacturing vegetable protein.

“Food and sustainability are really, really important to us," Brian Swette says. “We understand that everybody has their warts. [But] Nestlé was voted the most sustainable food company three years in a row."

Nestlé has, in fact, topped the Dow Jones Sustainability Index — which evaluates economic, environmental and social factors of the world's largest companies — in 2015, 2016 and 2017.

For Nestlé, Sweet Earth is a way into the plant-based food market, which is expected to become a $5 billion industry by 2020. Acquiring Sweet Earth also helps the global corporation expand its portfolio of “vegetarian and flexitarian choices, in line with modern health trends,” Nestlé's Burge said. In June, Nestlé also acquired a minority interest in Freshly, a subscription-based delivery service that provides “healthy prepared meals” with gluten-free, paleo and veggie options.

Swette says he's confident his company’s Earth-minded focus will remain intact under Nestlé.

“Corporations have learned that you don't want to break the new toy that you got," he says.

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