Luckin Coffee considers bidding for Nestle’s Blue Bottle: sources

[HONG KONG] China’s Luckin Coffee is considering making a bid for Nestle’s Blue Bottle Coffee to boost its brand profile and expand in the premium coffee segment, according to people familiar with the situation.

China’s biggest coffee chain and its backer Centurium Capital have also been evaluating other acquisition targets, including the operator of % Arabica coffee stores in China, which counts private equity firm PAG as an investor, the people said, asking not to be identified discussing private information.

Luckin and Centurium had been considering Coca-Cola’s Costa Coffee as well, though they aren’t likely to proceed on that, the people said.

Deliberations are at an early stage and may not lead to a bid, the people said. Representatives for Nestle, PAG and Coca-Cola declined to comment, while Centurium, Luckin and % Arabica did not immediately respond to requests seeking comment.

Founded in 2017, Luckin has expanded with thousands of stores offering low-cost coffee and other customised drinks such as coconut or cheese latte. The growth has been rapid, enabling it to sweep past Starbucks in store numbers in China, where the US coffee chain has decided to sell a majority stake in its local business to Boyu Capital.

Luckin’s fortunes have improved since it was delisted from the Nasdaq in 2020 due to an accounting scandal. Net revenue was US$2.1 billion in the quarter through September, a 50 per cent increase from a year earlier, and net income was about US$180 million. It opened a net 3,008 new stores in the quarter, including five in Singapore, 21 in Malaysia and three in the US, taking its total worldwide to 29,214.

SEE ALSO

Costa Coffee attracts takeover interest from backer of China’s Luckin

Chinese milk tea brands are offering a playbook for South-east Asia’s next consumer wave

Luckin Coffee shareholders vote to remove chairman, report says

Luckin Coffee, Haidilao and other China chains may be suffering indigestion from regional expansion

Luckin Coffee to buy US$2.5 billion worth of Brazilian coffee

More

Nestle has been working with Morgan Stanley to review options for Blue Bottle, Reuters reported this month.

Blue Bottle was founded in California in 2002, and Nestle invested in the company 15 years later, paying about US$425 million for a 68 per cent stake, Bloomberg News reported at the time. In addition to the US, Blue Bottle has outlets in China, Hong Kong, Japan, Singapore and South Korea. BLOOMBERG