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Richard Bell

Nestle forms $7.15bn ‘global coffee alliance’ with Starbucks

Nestle is set to pay Starbucks $7.15bn (c.£5.2bn) in a new licensing arrangement.

The eight-figure deal will give the the world’s biggest food and drinks company the right to market Starbucks coffee at retail outlets outside chain’s own cafes.

Starbucks-branded products such as coffee beans and ground or instant coffee will now be more widely available, as Switzerland-headquartered Nestle uses its international distribution network to market Starbucks products globally.

Nestle confirmed that as part of the deal, 500 Starbucks employees are transferring to its business but will continue to be based at the coffee company’s longtime HQ in Seattle.

According to the BBC, the deal is part of new Nestle boss Mark Schneider’s strategy of boosting profits through expansion.

Starbucks chief exec Kevin Johnson, who calling the arrangement a “brand amplifier”, said: “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.”

Nestle paid around $425m last year for a 68% stake in California-based Blue Bottle Coffee, which sells coffee online and boasts shops in the US and Japan.

In April, the firm completed the sale of its US sweets and chocolate business to Nutella maker Ferrero Group for around £1.9bn.

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