China’s Luckin Coffee Inc is reportedly exploring a bid for Nestlé SA’s Blue Bottle Coffee as part of its effort to strengthen its brand and expand in the premium coffee segment, according to sources familiar with the matter.
Luckin, China’s largest coffee chain, along with its backer Centurium Capital, has also been looking at other potential acquisitions, including the operator of % Arabica coffee stores in China, which is partly backed by private equity firm PAG. The sources said Luckin and Centurium had considered Coca-Cola Co’s Costa Coffee as well, but are unlikely to pursue that option.
The talks are still in early stages and may not result in a formal bid, the sources added. Representatives for Nestlé, PAG, and Coca-Cola declined to comment, while Centurium, Luckin, and % Arabica did not immediately respond to requests for comment.
Founded in 2017, Luckin has grown rapidly, offering low-cost coffee and specialty drinks such as coconut or cheese lattes. This expansion has helped it surpass Starbucks Corp in store numbers in China, where Starbucks has decided to sell a majority stake in its local business to Boyu Capital.
Luckin’s performance has rebounded since its 2020 Nasdaq delisting following an accounting scandal. In the quarter ending September, the company reported net revenue of US$2.1 billion (RM8.59 billion), up 50% year-on-year, and net income of around US$180 million. During the same period, it opened 3,008 new stores globally, including five in Singapore, 21 in Malaysia, and three in the US, bringing its total store count to 29,214.
Nestlé has been working with Morgan Stanley to review strategic options for Blue Bottle, according to Reuters. Blue Bottle, founded in California in 2002, saw Nestlé acquire a 68% stake in 2017 for about US$425 million, Bloomberg reported. The brand now has outlets in the US, China, Hong Kong, Japan, Singapore, and South Korea.
% Arabica, founded in 2013, operates mainly in mainland China with over 80 outlets, and also has stores across Asia, the Middle East, Europe, and the Americas.
