In House - The FindLaw Corporate Counsel Blog

Can Your Company Buy or Sell Popularity?

When companies reach a certain size, being hip, trendy, or popular often can seem out of reach. Corporate governance and cool just cannot mutually exist, as a GC or in house, you know it's your job to be the bad guy and say "no." 

Despite generating revenue and profits hand over fist, major companies often seek to buyout small companies that are hip or trending in order to absorb the company's consumer base and growing brand. However, when a major corporation buys out a trending small to midsize business, the loyal consumers can often be left feeling betrayed. Like when musical artists sign with a major label, trendy, popular small businesses can often face backlash for "selling out."

Major Corporations Target High-End Coffee

Recent news over Nestle Corp. acquiring an iconic San Francisco Bay Area coffee brand, Blue Bottle Coffee, is a perfect example of a company trying to buy popularity. Nestle already owns several coffee brands, including one which was recently rebranded into the high end coffee category, Nespresso. However, Nespresso lacks the sort of cache that the formerly independent, trendy, local cafe garnered from grassroots style support.

It seems that Nestle may be looking to disrupt the stranglehold that Starbucks has over the cafe business. Blue Bottle, thanks to Nestle's deep pockets, is planning on opening over 50 new cafes in the next year alone. Starbucks has acknowledged that the biggest threat to their business comes from these independent trendy coffee shops.

Selling Goodwill or Out?

Nestle certainly hopes that for the half billion they may be spending that the Blue Bottle coffee devotees don't merely remain devotees, but perhaps become disciples, preaching the good graces of the specialty java. However, that would be unusual.

Frequently, when small companies get purchased by major corporations, the consumers that made it trendy lose interest. With corporate governance comes corporate policies which can turn off many of the hip consumers that just won't shut up on social media about how much they love their locally owned and operated pet-grooming-internet-cat-cafe-laundromat-micro-brewery (so long as there is outdoor seating). However, on the flip side, it could make the brand available to many who have never heard of it.

When a company is selling or buying an image or brand, it is important to consider how the consumers that helped support that image will receive the change of corporate overlords. But, if the brand has the ability to scale, leaving behind the early adopters in favor of the newly available mass market can make perfect business sense.

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