Nestlé, Starbucks sign $7.15bn retail licensing deal

Leading Food and beverage companies Nestlé and Starbucks have announced that they have signed a new deal, giving Nestlé exclusive rights to sell Starbucks' packaged goods outside of Starbucks stores around the world, bolstering the Swiss company's portfolio.

The deal provides Nestlé with an enhanced platform for growth across the US and North America due to the strong position it will now have within the country's tea and coffee business.

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“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.

It is estimated that Starbucks retail sales outside of its own stores generate roughly $2bn in annual revenues – revenues that Nestlé expects to use to contribute to its growth targets for 2019 onwards.

“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 CEO, Starbucks.

It is estimated that roughly 500 Starbucks employees will join Nestlé as a result of the deal, with the central operations of the business unit set to remain in Seattle.

The agreement, subject to regulatory approval, is expected to close before the year's end.