Starbucks and Nestlé form $7.15B ‘Global Coffee Alliance’

On Monday Starbucks announced it will form a global coffee alliance with Nestlé.

As part of the alliance, Nestlé will obtain the rights to market, sell, and distribute Starbucks, Seattle’s Best Coffee, Starbucks Reserve, Teavana, Starbucks VIA and Torrefazione Italia packaged coffee and tea.

Nestlé will pay Starbucks $7.15 billion and Starbucks will retain a stake as licensor and supplier. Additionally, the Starbucks brand portfolio will be represented on Nestlé’s single-serve capsule systems. The agreement excludes ready-to-drink coffee, tea and juice products.

“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 changing consumer needs, and we are proud to work alongside a company that is committed to our shared values.”

“This transaction is a significant step for our coffee business, Nestlé’s largest high-growth category,” said Mark Schneider, CEO, 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 recognized as global leaders for their responsible and sustainable coffee sourcing. This is a great day for coffee lovers around the world.”

The agreement is subject to customary regulatory approval and is expected to close this summer or early fall.