Nestle targets coffee as a key growth area

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Nestle announced its second small coffee acquisition in as many months on Friday, buying Texas-based Chameleon Cold-Brew as it seeks to bolster its world-leading coffee business. The maker of Nescafe and Nespresso said Chameleon is the No.1 organic cold-brew brand in the United States.

Nestle, which took a majority stake in Blue Bottle Coffee in September, is trying to reignite slowing sales by snapping up small independent brands that appeal to younger consumers. Packaged food rivals across the sector, from Campbell Soup to Unilever, are taking similar steps as health-conscious and brand-savvy shoppers shun traditional big brands while social media helps start-ups to grow faster.

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Nestle, owner of the world’s largest packaged coffee business, also faces a specific threat from JAB Holding, a private investment company that has grown fast through a string of coffee deals in recent years, from mainstream players such as Douwe Egberts and Keurig to higher-end artisanal brands Stumptown and Intelligentsia. Speculation that JAB could acquire Dunkin Brands resurfaced this week, sending shares of that coffee and doughnut chain operator to record highs. Following criticism for being too slow to react to consumers’ changing habits, Nestle is taking steps to improve its performance under new CEO Mark Schneider. It had identified coffee as a key growth area.

Nestle did not disclose the price it paid for Chameleon, which sells a range of refrigerated ready-to- drink bottled coffees as well as concentrated cold brews that can be diluted, cold-brew kits and whole bean coffee.

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