Nestle’s Blue Bottle Coffee Caffeinates D2C Subscription Model

Subscription boxes thrive when the product can become an essential part of consumers’ daily, weekly or monthly routines. No surprise then, given how many people start every day with a cup of coffee, and given that 83 percent of American adults identify themselves as at least “sporadic” coffee drinkers, that the beverage has become a staple of the subscription box space. In the last several years, a wide range of brands, ranging from major companies like Burger King and Panera Bread to newer digital-native coffee brands such as Driftaway Coffee and Trade, have embraced coffee subscriptions.

Now is a good time to be in the eCommerce coffee space. On Thursday (Apr. 22), coffee giant Nestlé announced that the beverage’s sales have soared in recent months, driven by strong online sales. For its part, Nestle subsidiary Blue Bottle Coffee, a premium roaster that has been in the direct-to-consumer (D2C) coffee subscription game for about 10 years, and the brand is creating a growing culture around its biweekly offerings — subscribers have doubled since the start of the pandemic.

“We think really hard about how to create value for our subscribers and think about, how can we elevate and expand the experience beyond just getting a cup of coffee at home every day for caffeine,” Aditi Jain, senior director of global eCommerce for Blue Bottle Coffee, told PYMNTS in an interview. She noted that subscribers say that they enjoy everything from smelling the coffee to reading the printed matter included in the box to the “meditative” pour-over experience. “…We feel that because we invest in our customers and really focusing on this unified experience, we see a huge opportunity, and we continue to see that grow.”

Creating A Coffee-Centric ‘Omni-World’

In addition to the D2C online store, Blue Bottle also operates brick-and-mortar cafés in 11 major markets globally, with locations across the United States, South Korea, Japan and Hong Kong. The company aims for seamless integration across physical and digital channels, integration helped by the mobile app, which features order-ahead capabilities and informational content about the brand.

“It’s all about, how do we create this unified experience across our cafes, mobile, online, to truly meet guests where they are — whether they are at home, or they are just in a cafe to pick up their order for mobile, or they really want to engage in a cafe and sit down and have a cup of coffee,” Jain explained. “So I think for us, it’s not either/or, it’s this unified experience and we’ve had a lot of success for that in the past year or so.”

The brand also offers virtual experiences that engage online consumers in their physical spaces, such as brewing master classes that are complementary for subscribers and products that bring in-café consumers to the brand’s digital channels, such as selling gift subscriptions in-store.

As Jain put it, “we are continuously thinking about ways we can connect customers across this omni-world.”

Creating A Connected Brand Experience

In today’s connected economy, leading brands use their products and services as entry points into an ecosystem of integrated experiences. For Blue Bottle, this means using the brand’s coffee offerings to welcome consumers into a cultural marketplace.

“Since Blue Bottle’s inception, James [Freeman, the company’s founder] was always promoting like artists, and he was a musician himself,” Jain explained. “…[We] think about where we can find synergies and really promote the artist community.”

To that effect, the brand has partnered with artists and creators both for in-café artworks and to develop special edition product lines. For instance, the company partnered with Human Made, a streetwear brand created by fashion designer Nigo and musician and entrepreneur Pharrell Williams, to create a capsule collection timed with the opening of Blue Bottle’s location in Shibuya, Tokyo. Blue Bottle has also partnered with the Poetry Society of America to pair limited-edition coffee blends with original poems.

Discussing these collaborations, Jain said, “We are a cultural brand who believes that we can create experiences through coffee and beyond.”

Given that the brand is offering consumers access to a lifestyle in addition to the product itself, the company does not consider itself to be in direct competition with most of the other major café chains and coffee subscription boxes.

“Blue bottle is niche — we have a niche audience,” Jain explained. “So for us it’s not just about a cup of coffee. It’s everything that goes around [the] cup of coffee, the whole café experience. For us, a café is a product in itself. It’s really hard to find a direct competitor, because very few brands have been able to scale specialty coffee in the way that Blue Bottle has done, not just in the U.S. but also globally.”

Attracting The Post-Pandemic Consumer

For most food and beverage brands with a significant brick-and-mortar presence, the past thirteen months have been difficult. However, for Blue Bottle, the pandemic created an opportunity to explore the faster-growing channels of its business.

“In some ways, I feel that COVID played in our favor, because it pushed us to engage with guests in a way that we hadn’t done before,” Jain reflected. “Like a traditional [café] at Blue Bottle, we had a bias towards high-touch, in-person elevated experiences.”

Throughout the pandemic, however, Blue Bottle took the opportunity to create web content that put forward a more “informal” brand identity, showcasing restaurants’ “not so perfect kitchen[s]” and focusing on creating an “authentic connection” with consumers.

Looking ahead, as Blue Bottle grows its digital channels, the brand plans to continue its initiatives to connect with customers, to “engage with them and really show that they’re special.” She noted that this is “almost like a switch”— where previously brands expected consumers to engage with them, now consumers expect brands to take the initiative to let them “know that brand care.”

Looking ahead, the company is expanding into Chicago, a decision made in part in response to the brand’s eCommerce success in the city. Jain noted, “Chicago is the third-largest market when it comes to at-home subscribers.”

In addition to this brick-and-mortar expansion, the company is also looking to continue to grow its online channels. In Jain’s view, “Blue Bottle is in a really good place right now, and I think we have a really good path to our digital growth.”

Ultimately, the growth strategy is centered on channel agnosticism, where the main value proposition is the brand itself.

“At the end of the day, the customers actually don’t really care about online or offline,” explained Jain. “When they approach an online channel, they’re interacting with Blue Bottle Coffee. Similarly, when they come to our café, they’re interacting with Blue Bottle Coffee in the end. So this idea of unified guest experience has been a huge unlock for us as a team, and we believe that this is a winning strategy, because it … meets guests where they are.”