Business

Nestle Will Pay $7.15 Billion To Starbucks For Global Coffee Alliance

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| May 7 , 2018 , 14:41 IST

Swiss food giant Nestle on Monday announced its deal with Starbucks under which the company 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 in all global at-home and away-from-home channels.

Nestle will make an upfront cash payment of 7.15 billion dollars to Starbucks in closing consideration for a business that generates 2 billion dollars annual sales. Around 500 Starbucks employees will join Nestle in order to drive the new operations. The deal does not have any transfer of fixed asset and the company hopes the deal to be closed by the end of 2018.

In a press release, Nestle said, “This transaction provides Nestlé with a strong platform for continued growth in North America with leadership positions in the premium roast and ground and portioned coffee businesses. It also allows Nestlé to capture exciting new growth opportunities in the rest of the world with Starbucks premium products. As a complete provider of coffee solutions, Nestlé will accelerate growth in out-of-home channels. The two companies will work closely together on innovation and go-to-market strategies to bring the best coffee to customers around the world.”

Starbucks President and CEO Kevin Johnson 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.”

Also Read: Starbucks To Close More Than 8,000 Stores In US On May 29, To Give Racial Bias Education To Employees

“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."