Starbucks and Nestlé Form Global Coffee Alliance

Starbucks and Nestlé Form Global Coffee Alliance

Nestlé to Bring Starbucks Packaged Coffee into Regional Markets Globally; Starbucks Brand Portfolio to Be Represented on Nestlé’s Single Serve Capsule Systems, including Nespresso and Nescafé Dolce Gusto

Starbucks Corporation announced it will form a global coffee alliance with Nestlé to accelerate and grow the global reach of the company‘s brands in Consumer Packaged Goods (CPG) and Foodservice.

With a shared commitment to ethical and sustainable sourcing of coffee, this alliance will transform, expand and elevate both the at-home and away-from-home coffee and related categories around the world.

As part of the alliance, Nestlé will obtain the rights to market, sell, and distribute Starbucks, Seattle’s Best Coffee, Starbucks Reserve, Teavana, Starbucks VIA, and Torrefazione Italia packaged coffee and tea in all global at-home and away-from-home channels.

Nestlé will pay the company US$7.15 billion/£5.3 billion in closing consideration, and it—with a focus on long-term shareholder value creation—will retain a significant stake as licensor and supplier of roast and ground and other products going forward.

Additionally, the company’s brand portfolio will be represented on Nestlé’s single-serve capsule systems.

“This global coffee alliance will bring the brand experience to the homes of millions more around the world through the reach and reputation of Nestlé.

“This historic deal is part of our ongoing efforts to focus and evolve our business to meet changing consumer needs, and we are proud to work alongside a company that is committed to our shared values,” said Kevin Johnson, President and Chief Executive Officer, Starbucks.

“This transaction is a significant step for our coffee business, Nestlé’s largest high-growth category. With Starbucks, Nescafé and Nespresso we bring together three iconic brands in the world of coffee.

“We are delighted to have the company as our partner. Both companies have a true passion for outstanding coffee and are proud to be recogniSed as global leaders for their responsible and sustainable coffee sourcing. This is a great day for coffee lovers around the world,” said Mark Schneider, CEO, Nestlé.

This global alliance combines the strength and affinity of the company’s brand with the global reach of Nestlé and its iconic coffee brands, creating new growth opportunities in the established North American markets and unlocking expansion in international markets.

In the United States, it also enhances Nestlé’s retail and Foodservice presence in coffee, complementing its position in instant coffee and super-premium single serve with Starbucks’ strong presence in K-cup pods.

As part of this perpetual global license agreement, the company will lead in sourcing, roasting, and global brand management for the alliance, whilst the two companies will work closely together on innovation and go-to-market strategies to bring the best coffee to customers around the world.

The agreement is subject to customary regulatory approval and is expected to close this summer or early autumn. The agreement excludes ready-to-drink coffee, tea and juice products.

The company will host a 30-minute investor conference call led by Kevin Johnson at 5am PDT on Monday7 May, to provide further details.

The conference call will be broadcast live over the Internet and can be accessed here. A replay of the webcast will be available on the company’s website until the end of Wednesday 6 June, 2018.