Sector News

Nestle set to sell first Starbucks coffee under $7.15 billion deal

February 14, 2019
Food & Drink

Nestle will sell Starbucks-branded coffee at grocery stores and online in Europe, Asia and Latin America from this month as it seeks to increase its lead over rivals such as JAB.

After last year’s $7.15 billion cash deal for exclusive rights to sell the U.S. chain’s coffees and teas, Nestle will start selling Starbucks labeled coffee beans, roast and ground coffee and single-serve capsules for its Nespresso and Nescafe Dolce Gusto coffee makers.

These will be available at grocery stores and online in 14 markets, including Belgium, Brazil, Chile, China, Mexico, the Netherlands, South Korea, Spain and Britain, with more markets following later this year, the world’s biggest food group said on Wednesday.

Asked whether the launch of Starbucks Nespresso capsules would help Nespresso return to double-digit growth, Patrice Bula, executive vice president and head of strategic business units, marketing, sales and Nespresso, told a media briefing: “Yes, I hope so, yes. We have huge ambitions.”

He said he was also confident of accelerating Nestle’s strong U.S. coffee business that was boosted by the Starbucks deal and saw strong potential in markets like India and China.

“It is a landmark for us, a new growth platform, a moment where we can accelerate in the premium segment,” he said.

Starbucks, the world’s biggest coffee chain, has been selling its coffee for use at home — including a variety of roasts in whole beans, instant or ground versions as well as coffee pods for its Verismo brewers and JAB’s Keurig K-Cup system — across North America and in some international markets for years.

Nestle is building on this existing product range and taking it to new markets under the deal struck last May which allows Starbucks to focus on its cafes and Nestle, with its retail expertise, to bring Starbucks coffee to supermarket shelves around the world.

David Rennie, head of coffee, said Nestle could still consider strategic acquisitions in the coffee sector.

“Never say never, but we believe we have three iconic brands today and will focus on developing these.”

Under last year’s deal Starbucks, which is expanding in China and finally ventured into coffee-obsessed Italy in September, will have its out-of-home business managed by Nestle, while continuing to sell its ready-to-drink products directly.

Nestle is due to publish full-year results on Thursday.

By Silke Koltrowitz

Source: Reuters

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