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Nestlé enters agreement for global license of Starbucks’ consumer products
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Tuesday, 22 May, 2018, 08 : 00 AM [IST]
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Seattle
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Nestlé announced that it has entered an agreement granting the company perpetual rights to market Starbucks consumer and foodservice products globally, outside of the company’s coffee shops. This transaction provides Nestlé with a strong platform for continued growth in North America with leadership positions in the premium roast and ground and portioned coffee businesses.
It also allows Nestlé to capture exciting new growth opportunities in the rest of the world with Starbucks’ premium products. As a complete provider of coffee solutions, Nestlé will accelerate growth in out-of-home channels. The two companies will work closely together on innovation and go-to-market strategies to bring the best coffee to customers around the world.
“This global coffee alliance will bring the Starbucks experience to the homes of millions more around the world through the reach and reputation of Nestlé,” said Kevin Johnson, president and chief executive officer, Starbucks.
“This historic deal is part of our ongoing efforts to focus and evolve our business to meet the changing consumer needs, and we are proud to work alongside a company that is committed to our shared values,” he added.
“This transaction is a significant step for our coffee business, Nestlé’s largest high-growth category,” said Mark Schneider, chief executive officer, Nestlé.
“With Starbucks, Nescafé and Nespresso, we bring together three iconic brands in the world of coffee. We are delighted to have Starbucks as our partner. Both companies have 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,” he added.
As a part of this transaction, Starbucks will receive an upfront cash payment of $7.15 billion for a business which generated annual sales of $2 billion. The transaction does not include the transfer of any fixed assets, which facilitates a smooth and efficient integration.
Nestlé expects this business to contribute positively to its earnings per share and organic growth targets as from 2019. The company’s ongoing share-buyback programme will remain unchanged.
Approximately 500 Starbucks employees will join the Nestlé family to drive the performance of the existing business and global expansion. Operations will continue to be located in Seattle.
The agreement is subject to customary regulatory approval and is expected to close by the end of 2018. The agreement excludes ready-to-drink products and all sales of any products within Starbucks coffee shops.
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