Nestle and Starbucks finalize $7.15bn licensing deal

Swiss Food and beverage giant Nestle SA and American Coffee chain Starbucks Corp on Tuesday announced the closing of a $7.15bn deal that grants Nestle the perpetual rights to sell Starbucks coffee products globally, outside of the company’s coffee shops.

Commenting on the deal, the CEO of Nestle SA, Mark Schneider, said: “This partnership demonstrates our growth agenda in action, giving Nestle an unparalleled position in the coffee business with full suite of innovative brands. With Starbucks, Nescafe and Nespresso, we bring together the world’s most iconic coffee brands”.

“The outstanding collaboration between the two teams resulted in a swift completion of this agreement which will pave the way to capture further growth opportunities,” he added.

The deal includes Starbucks branded coffee, Seattle Best Coffee, Teavana, Starbucks branded K-Cup pods, among others. What are not included are ready-to-drink (RTD) products and all products within Starbucks coffee shops.

For Nestle, the alliance significantly bolsters its portfolio in North American premium roast and ground portioned coffee business. Nestle’s current share of the U.S. coffee market stands at around 3%, though it has been boosting its presence in the premium segment with recent acquisitions.

And for Starbucks, the deal opens the door for global expansion in grocery and food service for the brand.

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