Starbucks and Nestlé enter into global licensing agreement

Kevin Johnson, Starbucks CEO, speaks at the Starbucks Annual Meeting of Shareholders in March
Kevin Johnson, Starbucks CEO, speaks at the Starbucks Annual Meeting of Shareholders in March

Starbucks, one of the world's biggest coffee brands with more than 27,000 stores around the world, has entered into a major deal with food and beverage giant Nestlé, to market Starbucks-branded products in homes and other areas around the world.

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10 May 2018 | 0

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Nestlé has signed an agreement with coffee giant Starbucks that grants perpetual rights to market Starbucks consumer and foodservice products globally. It will allow Nestlé to explore new growth opportunities by marketing premium branded coffee products to customers all over the world, while also accellerating out-of-home channels.

Kevin Johnson, president and CEO of Starbucks, called the agreement “historic”.

“This global coffee alliance will bring the Starbucks experience to the homes of millions around the world,” he said, “through the reach and reputation of Nestlé. We are proud to work alongside a company that is committed to our shared values.”

As part of the transaction, Starbucks will receive an up-front cash payment of $7.15 billion, while approximately 500 Starbucks employees will join the Nestlé business to drive performance and expansion. Nestlé expects the deal to improve its organic growth targets as from 2019.

It is thought that one of the main drivers of the deal is the introduction of Starbucks-branded single-use pods for the immensely popular Nespresso coffee machines.

“This transaction is a significant step for our coffee business – Nestlé’s largest high-growth category – and a great day for coffee lovers all over the world” said Mark Schneider, CEO, Nestlé. “With Starbucks, Nescafé and Nespresso we bring together three iconic brands in the world of coffee, and we are delighted to have Starbucks as our partner.

The agreement is subject to customary regulatory approval and is expected to close by the end of 2018.

 

 

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