- Nestle USA announced Friday it will purchase Chameleon Cold-Brew, an organic, fair-trade manufacturer of ready-to-drink coffee and coffee concentrate products. Terms were not disclosed.
- Chameleon is the top organic cold brew brand in the country, and one of the top three refrigerated cold brew brands in the U.S., according to Nestle. It makes multi-serve concentrates and single-serve RTD products, two segments that account for 18% of the $2.5 billion in-home coffee category.
- Chris Campbell, Chameleon CEO, told Bloomberg the smaller company will remain independent from the Swiss giant by handling many administrative duties from Austin, Texas, where it was founded in 2010. "Our intent here is to come out of this as the case study for how a big company can successfully acquire, integrate and both add and collect value from this kind of situation. It’ll take us awhile to see if it’s true or not, but we’re working on it," he said.
Nestle's purchase of Chameleon further increases its presence in the U.S. coffee market by this move following its September decision to purchase a 68% share of Blue Bottle Coffee, a fast-growing coffee brand known for high-quality artisan coffees brewed on site, for $425 million. These acquisitions better position the Swiss company to compete with coffee giants Starbucks and JAB Holdings, which owns Keurig Green Mountain, Peet's Coffee and Stumptown Coffee Roasters, as well as J.M. Smucker's Folgers and Kraft Heinz's Maxwell House.
“We believe 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 Paul Grimwood, chairman and CEO of Nestle USA. “We believe this relationship will benefit both of us as we expand our access to the emerging cold brew category while helping Chameleon grow so that more people can enjoy its delicious, premium crafted coffee.”
Chameleon is another regional startup success, launching in Texas in 2010 and quickly expanding through arrangements with vendors and retailers. Within two years, the company was in 225 retail outlets in 18 states in part because of its ability to manufacture high-quality products that are organic and fair-trade sourced. In 2014, Chameleon got the Best Coffee of the Year award from BevNet.
Two years later, it sold more than four million bottles and has reportedly exceeded that number this year. Retailers carrying Chameleon products include Whole Foods, Target, Safeway, Albertson’s and Bed, Bath and Beyond.
Other corporate investors are snapping up so-called "third wave" coffee companies that started small and grew. The reason: there's a lot of potential profit. U.S. coffee consumption grew nearly 8% during 2015-2016. An online survey in 2013 by the National Coffee Association said about 83% of American adults drink coffee, about three cups per day, or 587 million cups, USA Today reported.
Coffee's popularity shows no signs of slowing down — especially RTD, grab-and-go bottled brands offering a handy jolt for busy millennials and other people who appreciate high-quality, organic products. Chameleon also produces convenient cold-brew kits, an on-trend product popular with members of the do-it-yourself crowd who like to brew up their own supply.
It's worth noting that this is the fifth deal made so far this year by Nestle CEO Ulf Mark Schneider, a former health-care executive trying to shore up lagging sales targets, sell the company's U.S. confectionery business, and fend off pressure from activist investor Third Point. More strategically positioning the company in the profitable U.S. coffee market may be as close to a sure thing as he could get.