Nestle Acquires U.S. Coffee Brand Chameleon Cold-Brew

By Saabira Chaudhuri Features Dow Jones Newswires

Nestle SA has acquired its second niche American coffee brand in recent weeks, as the packaged foods giant makes good on its promise to push into higher-growth coffee segments.

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Nestle on Friday said it has acquired Chameleon Cold-Brew, a craft coffee brand based in Austin, Texas, that makes multi-serve concentrates and single-serve ready-to-drink products, two segments Nestle says account for 18% of the $2.5 billion in-home coffee category.

"The Chameleon brand is perfectly positioned to support Nestle's strategy for coffee, which is to have a variety of offerings in terms of format, taste and price points," said Nestle's U.S. head Paul Grimwood.

Chameleon also sells kegs, cold-brew kits and whole-bean coffee. Its coffee is sold at U.S. chains such as Whole Foods, Target, Safeway, Albertson's and Bed, Bath & Beyond.

The deal comes after Nestle in September said it was buying a majority share in specialty coffee roaster and retailer Blue Bottle Coffee.

The coffee industry has been marked by consolidation in recent years as large players such as Nestle and European investment firm JAB Holding Co. see an opportunity in more premium drinks. Last year a JAB-led investor group completed its acquisition of Keurig Green Mountain Inc. for about $14 billion. In 2015, JAB paid roughly $5 billion for control of Mondelez Inc.'s coffee business. It also owns Peet's Coffee & Tea, and Danish coffee-bar chain Baresso Coffee A/S.

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The U.S. coffee category climbed 30% by value to $13.3 billion last year from $10.2 billion in 2011 according to Euromonitor. Nestle has highlighted its interest in developing both out-of-home offerings and cold coffee, two areas it says are seeing strong growth.

Nestle Chief Executive Mark Schneider has promised to shuffle about 10% of the company's portfolio, saying that he plans to focus investments on coffee and other core areas. In September he told investors that Nestle sees an opportunity to take cold-coffee brands, already popular in the U.S., to emerging markets with hot climates.

"This whole notion of serving something that's ready-to-drink right away and that's chilled is going to be very important to us and we're pursuing it aggressively," he said. "As we approach the coffee business on a global basis, we're not going to be Eurocentric."

Blue Bottle, which has 43 cafes in the U.S. and one in Tokyo, offers a ready-to-drink cold coffee variety that Mr. Schneider said Nestle intends to "build on aggressively."

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

(END) Dow Jones Newswires

November 03, 2017 14:03 ET (18:03 GMT)