Nestlé and Starbucks enter into global coffee alliance

Nestlé will obtain the rights to market, sell, and distribute Starbucks products

Nestlé and Starbucks enter into global coffee alliance

Nestlé headquarters in Vevey, Switzerland | Image: Flickr/Nestlé

Nestlé and Starbucks have announced a tie-up agreement, which will see the two companies market each other's products.

The deal gives Nestlé perpetual rights to market Starbucks consumer and foodservice products globally, outside of the company's coffee shops.

Nestlé will obtain the rights to market, sell, and distribute Starbucks packaged coffee and tea.

Starbucks says it will retain a "significant stake as licensor and supplier" of roast and ground and other products going forward.

The Starbucks brand will also be represented on Nestlé's single-serve capsule systems.

The two companies say they will work closely together on innovation and go-to-market strategies.

Starbucks will receive an up-front cash payment of US$7.15bn (€5.99bn), while approximately 500 Starbucks employees will join Nestlé to drive performance of the existing business and global expansion.

However the transaction does not include the transfer of any fixed assets.

Nestlé is behind the Nespresso coffee brand | Image: nestle-nespresso.com

Kevin Johnson, president and CEO of Starbucks 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 Nestlé.

"This historic deal is part of our ongoing efforts to focus and evolve our business to meet the changing consumer needs, and we are proud to work alongside a company that is committed to our shared values."

Nestlé CEO Mark Schneider added: "This transaction is a significant step for our coffee business, Nestlé’s largest high-growth category.

"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 by the end of 2018.