Nestle Strikes Deal to Sell Starbucks Coffee

Nestle will pay Starbucks $7.15 billion to market, sell and distribute coffee.

May 14, 2018

LOS ANGELES – Nestle, the world’s largest food and beverage company, paid $7.15 billion in cash to sell Starbucks packaged coffees and teas around the world. It’s a move that will tie the influential coffee brand to Nestle’s global distribution model and will boost Starbucks’ $2 billion packaged goods distribution business.

“This global coffee alliance will bring the Starbucks experience to the homes of millions more around the world through the reach and reputation of Nestle,” said Starbucks Chief Executive Kevin Johnson, calling the arrangement a brand amplifier.

The licensing agreement includes packaged Starbucks coffee, Teavana tea and Starbucks-branded capsules for Nestle’s Nespresso and Dulce Gusto single-serve brewers, which will be available through grocery stores and retailers around the world, including China.

Seattle-based Starbucks will receive revenue from product sales and royalties. The company plans to focus on its efforts in the U.S. and will “use proceeds to increase planned stock buybacks to $20 billion from $15 billion through fiscal 2020.” Starbucks said the deal would add to earnings per share by 2021.

Nestle will take on nearly 500 Starbucks employees, but will not buy any industrial assets. The company said the partnership will add to its earnings by 2019.

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