Luckin Coffee weighs potential bid for Nestlé’s Blue Bottle to expand premium coffee footprint 

USA – China’s Luckin Coffee is weighing a potential bid for Nestlé-owned Blue Bottle Coffee as it looks to elevate its brand positioning and expand deeper into the premium coffee segment, according to people familiar with the matter. 

The discussions involve Luckin and its backer, Centurium Capital, which have also been assessing other acquisition opportunities, including the China operations of % Arabica, the specialty coffee brand backed by private equity firm PAG, the people told Bloomberg. The deliberations are at a preliminary stage and may not result in a formal offer. 

The sources added that Luckin and Centurium had previously considered Coca-Cola-owned Costa Coffee, although a transaction involving that business is now considered unlikely. 

Founded in 2017, Luckin Coffee has built one of the world’s largest coffee retail networks through rapid store expansion and a value-driven model offering low-cost beverages and customised drinks such as coconut and cheese lattes.  

The company has overtaken Starbucks by store count in China, where the US coffee chain recently moved to sell a majority stake in its local business to Boyu Capital. 

Luckin’s financial position has strengthened markedly since it was delisted from Nasdaq in 2020 following an accounting scandal. In the quarter ended September, the company reported net revenue of US$2.1 billion, representing a 50 per cent year-on-year increase, while net income reached about US$180 million.  

During the same period, Luckin added a net 3,008 new outlets, including stores in Singapore, Malaysia and the United States, bringing its footprint to 29,214 locations. 

Nestlé, meanwhile, is working with Morgan Stanley to evaluate strategic options for Blue Bottle Coffee. Founded in California in 2002, Blue Bottle built a reputation around premium specialty coffee before Nestlé acquired a 68 per cent stake in 2017 for about US$425 million.  

The brand now operates cafés across the United States and Asia, including China, Japan, South Korea, Singapore and Hong Kong. 

The review of Blue Bottle forms part of a broader portfolio streamlining effort under Nestlé’s chief executive, Philipp Navratil. The strategy is aimed at reducing exposure to operating physical coffee shops while refocusing resources on core packaged coffee and retail businesses. 

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