Blue Bottle Coffee Shedding Wholesale Business as Retail Expands

Blue Bottle Coffee logo on cup. Photo by Christopher Michel.

Blue Bottle Coffee is shedding its wholesale business as it prepares to ramp up its own retail and in-home division operations.

Founder James Freeman made the announcement on the company’s blog yesterday, saying the decision is difficult in that ends some long-running partnerships with loyal wholesale clients, and counterintuitive in that it cuts out a significant revenue stream. However, Freeman said a reality of any wholesale supply business — the ceding of some level of brand- and quality-control — has been “eating away” at him for a while.

He shared an anecdote in which he visited a well-regarded Los Angeles cafe, had an excellent coffee, and later noticed a sign down the street outside a gelateria that boasted serving that company’s roasted coffees. The coffee company’s name was spelled wrong.

“To me, it is symbolic of the difficulties that are inherent in selling coffee wholesale,” Freeman wrote. “I get nervous when we can’t control the contexts, methods, and outcomes that are part of the experience of drinking our coffee.”

Tightening control over its name and brand seems a logical step for Blue Bottle, which closed on a $70 million funding round led by Fidelity Investments earlier this month, its third major funding round in as many years.

Without going into specifics, Freeman wrote that “many” of the people in the Blue Bottle wholesale department will stay on to strengthen the company’s retail program, expand the company’s packaged New Orleans cold coffee drink distribution, and assist with the company’s digital channel efforts.

“In the upcoming months we will wind down the wholesale division and will be concentrating our efforts on Blue Bottle retail cafés and Blue Bottle at Home,” Freeman wrote. “I’ve had good luck in the past following counterintuitive notions and hope that this one will also prove to be the right choice for our guests and all of us at Blue Bottle.”