Nestlé and Starbucks today closed a $7 billion deal that gives Nestlé the rights to market, sell, and distribute the coffee brands packaged coffee and tea around the world.
The licensing arrangement includes the rights to market everything from whole bean coffee to portioned coffee pods for each brand owned by Starbucks.
The partnership brings together iconic brands owned by both companies. Nestlé’s biggest brands include Nescafé, Nespresso and Dolce Gusto. Starbucks’ brands include Starbucks (ground and whole bean coffee, K-Cups, and Via Instant) Seattle’s Best Coffee, Starbucks Reserve, Teavana, and Torrefazione Italia.
“This partnership demonstrates our growth agenda in action, giving Nestlé an unparalleled position in the coffee business with a full suite of innovative brands,” Nestlé CEO Mark Schneider said in a statement.
The deal does not include the chain’s ready-to-drink bottled beverages. PepsiCo still distributes those drinks, which have grown into a more than $2 billion retail business.
Starbucks CEO Kevin Johnson said the Nestle deal opens the door for the restaurant chain — which has more than 25,000 locations worldwide — to reach a global scale in the retail sector as well.
“This global coffee alliance with Nestlé is a significant strategic milestone for the growth of Starbucks,” Johnson said in a statement. “Bringing together the world’s leading coffee retailer, the world’s largest food and beverage company, and the world’s largest and fast-growing installed base of at-home and single-serve coffee machines helps us amplify the Starbucks brand around the world while delivering long-term value creation for our shareholders.”
As part of the deal, roughly 500 Starbucks employees in the U.S. and Europe will shift over to Nestle, Starbucks said. Most will be based in Seattle or London.
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