From becoming one of the first boutique coffee shops to successfully scale internationally, to courting significant corporate investment and committing to an ambitious carbon neutrality goal, Blue Bottle Coffee is a business that frequently pushes the envelope of quality and experience.
 
A quintessential 5th Wave coffee shop group, Blue Bottle has grown from a single California store in 2002 to a 103-store specialty coffee powerhouse with locations across the US, Japan, South Korea, mainland China and Hong Kong.
 
Yet, that growth has never come at the expense of quality for Blue Bottle. In fact, according to the business’ CEO, Karl Strovink, the opposite is true.
 
“By the measure of the quality scores of the coffee we source, the sophistication of our green buying and roasting teams, and all the training we put in, the quality of our coffee and culinary products is increasing,” he says.
 
To explain how Blue Bottle has achieved this feat, Strovink highlights the creative background of the brand’s founder, James Freeman. Originally a professional clarinet player, Freeman imparted an unflinching artisanal approach when he first began experimenting with coffee roasting in the early 2000s.
 
That dedication to perfecting his craft remains imbued in Blue Bottle Coffee to this day and has locked in a trajectory of excellence as the business has grown.  
“James transitioned from being a musician to a composer of coffee experiences. Over the years the dimensionality of our culture has been kept in check through humility, curiosity, and attention to detail,” says Strovink.
 
A hospitality experience can only be as good as the team’s execution, and Blue Bottle is no exception. To this end, Strovink highlights the business’ weeks-long in-house training programme as a crucial element of the company’s culture and one which enables it to cultivate new voices in the specialty coffee world.
 
“We attract the best and brightest innovators that naturally want to work with Blue Bottle because they understand our value system. You can legislate quality so far but at some point, it has to become part of the fabric of the culture. We do not move forward unless something is absolutely passing, if not surpassing, our guidelines.”
 
When Karl Strovink joined Blue Bottle Coffee as CEO in late 2019, he could not have anticipated the baptism of fire he was about to receive as Covid-19 hit just a few months later.
 
Like hospitality brands all over the world navigating the extraordinary challenges of the pandemic, Blue Bottle tapped into e-commerce and digital engagement to offset disruption to its brick-and-mortar business.
 
One of Strovink’s first tasks was to ensure that digital interaction became a prominent aspect of the Blue Bottle experience. Whether launching a monthly retail packaged coffee subscription or increasing engagement through digital marketing, Blue Bottle has become a stand-out performer in the field.
 
“Our data shows that our coffee subscription has a higher customer retention rate than Netflix,” Strovink says, adding that Blue Bottle’s digital business has more than doubled in size over the last three years.
 
While digital engagement has grown in importance during the pandemic, Strovink highlights that a focus on digital sales was already brewing before Covid-19.
 
“I don't believe our business has permanently changed because of Covid. There were broader opportunities that Blue Bottle was considering before the pandemic – Covid may have accelerated those plans, but it did not define those plans.”



 
A savvy investment 

Another important dynamic that has enabled Blue Bottle to both ambitiously scale and innovate during the pandemic has been its synergy with Nestlé, which took a majority stake in the company in 2017.
 
Since then, the Swiss food & beverage giant has taken a hands-off approach to its investment in Blue Bottle. However, as Strovink explains, behind the scenes Nestlé has been a powerful partner, providing Blue Bottle with vital expertise and resources.
 
“The way Nestlé has supported the values of Blue Bottle since 2017, most notably through the Covid crisis, deserves to be acknowledged. We are one of, if not the only, hospitality brand I can think of that didn't downsize or lay folks off while continuing to pay wages,” he says.
 
“We were able to put our people first and that has paid dividends to our culture of care and that is thanks to the long-term nature of how Nestlé makes investments.
 
“I'm not sure everybody in the ranks of Blue Bottle, let alone the Bay Area where the company was born and raised, was super-excited about the Nestlé partnership. But the record of support, management and collaboration stands on its own two feet – they have a sincere belief in the craft.”
 
Although Blue Bottle has successfully ventured into e-commerce and at-home coffee, its painstakingly curated coffee shops remain the beating heart of the brand’s allure.
 
Since opening its first international store in Japan in 2015, a cultural exchange with Asian markets has been a vital part of Blue Bottle’s development across store design and product innovation. In particular, Kissaten –a traditional Japanese café with a focus on artisan filter coffee – has proved influential for Blue Bottle’s own hyper-focused approach to hospitality.
 
“Japan has stimulated our expression on design, as well as coffee, and that has filtered through to our stores in the US,” says Strovink.
 
One of Blue Bottle’s newest and most striking stores is the result of a collaboration with Tokyo-based design practice Studio I IN. The 3,700 sq ft store in Tokyo’s Chayamachi District features an immersive blue aesthetic using vivid glass countertops, polished stainless steel, and striking concrete pillars.
 
Marking another significant milestone in Asia, in March 2022 Blue Bottle opened its first café in mainland China. Emblematic of the brand’s approach to incorporating local history into its stores, the two-storey ‘Yutong Café’ is located in the historic Shanghai Yutong Flour Mill dating back to 1926.
 
Indeed, China is a market where Strovink sees a long future for Blue Bottle. “Many brands take the quick monetisation route in China without understanding the culture. Blue Bottle is stepping into mainland China in the same way it did with Japan back in 2015 – with intention, curiosity and openness.”
 
Yet, while successful global expansion is one of Blue Bottle’s most noteworthy achievements, Strovink says chasing scale has never been the brand’s core objective.
 
“We are not chasing Starbucks and we don’t want to be just another café network,” he says.
 
“We have lines that form 500 deep for the opening of our cafés and I'm pretty sure that isn't just to get a cup of coffee. There's a unique point of view on the world that Blue Bottle brings.”
     
A sustainable future 

Perhaps one of Blue Bottle’s most ambitious projects to date is its pledge to become carbon neutral by 2024.
 
Having fully benchmarked its operations with the help of Nestlé’s Creating Shared Value council – an external advisory body designed to foster long-term sustainability – Strovink says Blue Bottle now truly understands what it will take to become operationally carbon neutral.

“This isn't just an offset; this is core operational play. Whether it’s our sourcing, roasting or our café network, we are assessing opportunities across the business to get us to carbon neutrality” he explains.
 
Changing consumer habits is a key pillar of Blue Bottle’s sustainability strategy, and another area where the brand is blazing a trail, particularly with plantbased alternatives to dairy and reducing waste.



Since late 2021 the business has trialed serving oat as the default beverage pairing at a growing number of stores in California. Blue Bottle reports the initiative has been broadly welcomed by customers at participating stores, with 75% of milkbased beverage orders continuing to call for plant-based alternatives after the initial trial period.
 
With dairy milk estimated to be a leading contributor to Blue Bottle’s café operations’ greenhouse gas emissions, it's an area that has the potential to make a huge difference for the company’s carbon neutrality goal.
 
The company is also pursuing a zero waste agenda for all of its US cafés by the end of 2023. Encouragingly, a trial run at Blue Bottle’s Jackson Square café in San Francisco saw 98% of waste diverted from landfill within the first month of the scheme’s implementation.
 
Sustainable coffee sourcing relationships have also been a central part of Blue Bottle’s commitment to farmers from the outset. Over the last 18 months the company has embarked on two significant partnerships to accurately track and ensure coffee quality, farm productivity and profitability.
 
In 2021 Blue Bottle partnered with Enveritas, a non-profit that works with coffee businesses to evaluate farm practices against environmental, social and economic sustainability standards, to verify conditions across 70% of its coffee supply. This is a number the company aims to grow year-on-year.
 
Enveritas is helping Blue Bottle introduce a new Green Coffee Supplier Code of Conduct. This is designed to ensure the company only works with supply chain partners that meet core requirements across labour and human rights, housing conditions, health and safety, product quality and safety, environmental sustainability, agricultural practices and business integrity.
 
At the same time, Blue Bottle joined World Coffee Research’s Checkoff Program, ensuring that half a penny for every pound of coffee it purchases through qualifying importers supports WCR’s research and development work.
 
“We're the envy of the specialty coffee world, not just because of our access to the best coffees across the 20-plus countries that we source from, but a proven ability to partner with farmers for improvement,” says Strovink.
 
Blue sky thinking
 
For Strovink, fostering an experienceled as opposed to a purely product-led model will be vital to Blue Bottle’s future success. The task is now to further integrate the brand’s physical and digital infrastructures into a seamlessly connected ecosystem.
“Our opportunity is to make sure that we continue to invest in experiences at our cafés and connect those through our people and our digital offerings,” he says.
        
More broadly, Strovink is optimistic that specialty coffee will continue to be a positive force for diversity, inclusion and discovery around the world, with Blue Bottle continuing to play a central role in shaping the next era of industry development.
 
“I'm a big believer in respecting our past as we move forward, and there's been a lot of magic that's been brewed within the brand,” says Strovink.
 
“I am absolutely committed to the idea that we will never dilute ourselves for a dollar and that takes fortitude, but also a real appreciation for what we've built and how we honour our culture.”
 
The global coffee market has witnessed profound developments since Blue Bottle opened its first store in 2002. As once niche principles, such as single origin coffee, roasting profiles and boutique store design have slowly elevated quality in the mainstream, the rising tide of specialty coffee has arguably lifted all boats in the industry.
 
As a key contributor to that ascension, Blue Bottle has not only shown that scaling boutique hospitality experiences to new international audiences is possible, but that the business of specialty coffee remains one of the smartest investments in town.

Source: 5THWAVE