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Comment by dotBen | Hacker News Reader

As an aside, I'm very confident Starbucks will acquire Blue Bottle Coffee in the next 18 months-2 years.

By raising venture funding they are signaling they are looking for some kind of shareholder return/exit. The quality of the coffee, plus the "no-laptops" approach to their official cafes would make a great "luxury"/"high-end" marque and differentiator for Starbucks in markets where they are already saturated or want to attract greater wallet spend (SF, NY, etc).

Look at what they did with Seattle's Best but the opposite end.

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Why would Starbucks buy Blue Bottle?

SBUX is already a luxury brand. Just because their coffee is not particularly good compared to Blue Bottle's, don't forget that SBUX is still charging $3-$4 for a typical cup.

SBUX can't scale Blue Bottle across their distribution channel, which is enormous. So anything they did to introduce the Blue Bottle brand would dilute their own brand.

Meanwhile, a cup of coffee at Blue Bottle might not even be perceptibly more expensive than a cup at SBUX.

Finally, Blue Bottle has minimal brand penetration across the US. You know about them if you live in Williamsburg in NYC, but lots of people in our Manhattan office had never been to Blue Bottle last time I was in town. They're obviously nowhere in Chicago. Are they even in Los Angeles? They're not in Seattle, or Austin, or Atlanta, or Mpls.

An SBUX acquisition of Blue Bottle seems like a mostly-downside, lose-lose proposition.

(I'm only arguing because it's an interesting question, not because I'm sure I'm right).

(Interestingly, Intelligentsia in Chicago has higher revenues and apparently higher year-over-year growth than Blue Bottle, the same number of locations, and no external funding. Maybe SBUX will buy them! Intelligentsia also ran Clover machines before Starbucks' ill-fated takeover).

(Finally: Ritual, in the Mission, is really good; I think better than Blue Bottle.)

Intelligentsia is all over the place. In addition to their retail presence in LA and Chicago, they run barista training labs in their NYC and Atlanta sales offices. In NYC, you can readily find their coffee in grocery stores and coffee shops. Their 2009 acquisition, Ecco Caffe, co-branded their beans with a popular eight location chain in Manhattan, and now is being absorbed into the main brand. Everything I see points to them having a solid but cautious national strategy.

If I were SBUX I would be drooling over the prospect of buying Intelligentsia, even if just to leverage their reputation for award winning baristas or gain intelligence on their wholesale customers. I'm just not sure that Intelligentsia is particularly inclined to sell at a reasonable price.

If SBUX just wanted to acquire a quality craft roaster, there are a myriad of options to choose from-- Ritual, to be sure, or any of a number of worthy candidates we've probably barely heard of.

> SBUX is already a luxury brand

Not for an SF, LA and NY market (+ other worldwide destinations). In the same way that BMW is a luxury brand, except to those who want to buy Ferrari and Bently. These people have even more money to spend and are not receptive to Starbucks.

> SBUX can't scale Blue Bottle across their distribution channel, which is enormous.

Wouldn't be all stores, would be separate stores for select markets. They could definitely scale - Blue Bottle just raised $22m in funding - what do you think they intend to do with it if not scale in some way?

> So anything they did to introduce the Blue Bottle brand would dilute their own brand.

Well in addition to above, I wouldn't put it past a company like Starbucks to perform an acquisiton which horribly dilutes said brand. Such as La Boulange, speaking of which...

> Finally, Blue Bottle has minimal brand penetration across the US. You know about them if you live in Williamsburg in NYC, but lots of people in our Manhattan office had never been to Blue Bottle last time I was in town. They're obviously nowhere in Chicago. Are they even in Los Angeles? They're not in Seattle, or Austin, or Atlanta, or Mpls.

Neither is La Boulange, really. Very small footprint outside of California. Yet Starbucks purchased them for $100m this year, mainly to use the brand to brand their baked goods.

> (Interestingly, Intelligentsia in Chicago has higher revenues and

That's not what Starbucks are looking to acquire in the same way they're going to shut down La Boulange (in the way we currently know it)

> In the same way that BMW is a luxury brand, except to those who want to buy Ferrari and Bently. These people have even more money to spend and are not receptive to Starbucks.

Starbucks / Blue Bottle makes even more sense considering that BMW is already a driver's car. The driving experience is at best marginally better by going to Ferrari. Whereas Starbucks is anything but a coffee drinker's coffee. People go there more for a caffeinated treat vs being into coffee per se. If Starbucks started producing the lighter roasts and more subtle flavors that coffee drinkers value, it wouldn't work with the heavy cream and sugar. So the whole Blue Bottle philosophy dovetails nicely. That said, they'd need to keep the association under wraps to avoid frightening away the coffee snobs.

SBUX actually costs more than Blue Bottle in NY. And, sorry to say, most wealthy consumers in New York and LA and, for that matter, Blue Bottle's home turf in SF are plenty receptive to SBUX.

La Boulange is a bakery, not a coffee chain, just like Clover is a product, not a retail chain.

The issue isn't that Blue Bottle can't scale at all, it's that SBUX would need them to be operating at an untenable scale almost immediately. $20MM? SBUX blows through almost $2bn per quarter.

Their premise is that they source hard-to-find high-quality beans. Which creates natural limits to scale. Farmers who sold you 10,000 lbs of coffee beans last year cannot sell you 10,000,000 lbs this year just because you have more capital.

I think Blue Bottle has more ambitious plans. Have you been to any of the coffee shops in SF (maybe more in the Outerlands) that serve Blue Bottle? They usually have it decal'ed into their front window and the brand displayed prominently. With their precise brewing process and recognizable brand, I think they want to franchise "store-within-a-store"s and get people selling their coffee sourced from their beans made with their equipment without having to pay rents or any of the costs of operating locations.

There's too much dissonance between the two brands and their models for sourcing, roasting, and preparing coffee are entirely different. It's hard to see the synergy from such an acquisition. The only thing Starbucks could possibly offer Blue Bottle would be distribution channels for bottled iced coffee (New Orleans or Kyoto style), and I suppose that's nothing to sneeze at.

As an aside, the fact that you're making such a claim speaks volumes to how well Blue Bottle markets itself. They seem much bigger than they actually are, due to high profile locations and a loyal fan base. In actuality, they have less than 12 cafe locations in 2 major cities. Those, combined with all their wholesale accounts probably still doesn't come close to the number of Starbucks in Manhattan alone.

I did some quick googling, but didn't pick anything obvious up:

Blue Bottle Coffee has 'high-end' coffee shops that disallow laptops?

If so, any reasoning behind this?

There are Blue Bottle franchises and Blue Bottle cafes - notably Mint Plaza (off 5th), Ferry Building, and Linden Ally (also Emeryville @ their roast plant).

Mint Plaza, their flagship cafe, is modeled very up-scale and is about the enjoyment of coffee. The tables are not laptop friendly (narrow), no power, and just like all their other cafes, offer no wifi.

I heard one of the owners/managers explain it was because drinking at a Blue Bottle coffeeshop is about enjoying the coffee and the experience, not an alternative for an office

Strong cut-to-the-chase possibilities: increasing customer turnover (important for retail hospitality businesses), minimizing overhead.

Richer people all have 3g iphones and ipads. ;-)

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