Starbucks Corp. has finalized its licensing agreement with the world’s largest packaged food company.
Under the agreement, which was announced in May, Nestlé will pay Starbucks $7.15 billion for the “perpetual” rights to market, sell, and distribute Starbucks packaged coffee and tea brands, including Starbucks, Seattle’s Best Coffee, TeavanaTM/MC, Starbucks VIA Instant, Torrefazione Italia coffee and Starbucks-branded K-Cup pods. (The deal excludes ready-to-drink products and all sales of any products within Starbucks stores.)
Approximately 500 Starbucks employees in the United States and Europe will join Nestlé, with the majority based in Seattle and London. The international expansion of the business will be led from Nestlé’s global headquarters in Vevey, Switzerland.
“This global coffee alliance with Nestlé is a significant strategic milestone for the growth of Starbucks,” said Kevin Johnson, president and CEO of Starbucks. “Bringing together the world’s leading coffee retailer, the world’s largest food and beverage company, and the world’s largest and fast-growing installed base of at-home and single-serve coffee machines helps us amplify the Starbucks brand around the world while delivering long-term value creation for our shareholders.”
The agreement significantly enhances Nestlé’s coffee portfolio in the North American premium roast and ground and portioned coffee business. It also unlocks global expansion in grocery and foodservice for the Starbucks brand. The two companies said they will work closely together on the existing Starbucks range of roast and ground coffee, whole beans as well as instant and portioned coffee.
“With Starbucks, Nescafé and Nespresso we bring together the world’s most iconic coffee brands,” said Mark Schneider, Nestlé CEO. “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.”