SWITZERLAND – Coffee giant Starbucks plans to divest its Seattle’s Best Coffee brand to Swiss multinational food and drink processing conglomerate corporation, Nestlé.
The transaction, whose terms are to be kept secret by the two giants, is subject to respective Board and customary regulatory approvals. The two companies expect to close the transaction by end of this year.
Nestlé’s noted that this transaction is part of its focus on driving sustained profitable growth in the coffee category and strengthens the Global Coffee Alliance by allowing both companies to focus on their core strengths.
The Global Coffee Alliance formed by the two companies in 2018, aims to accelerate and grow the global reach of Starbucks brands in Consumer-Packaged Goods (CPG) and Foodservice.
With a shared commitment to ethical and sustainable sourcing of coffee, Starbucks said this alliance will transform, expand and elevate both the at-home and away-from-home coffee and related categories around the world.
Since allying, Nestlé and Starbucks have brought a wide range of premium coffee products to new markets at a fast pace – including whole bean coffee, roast, and ground coffee as well as Starbucks capsules for Nespresso and Nescafé Dolce Gusto proprietary systems.
Today, Nestlé distributes Starbucks consumer products and food service beverages across more than 80 markets outside Starbucks retail stores under the Global Coffee Alliance. The total global sales of Starbucks products distributed by Nestlé in 2021 reached CHF 3.1 billion (US$3.11bn).
Meanwhile, Seattle’s Best Coffee’s approachable line of whole bean, roast, and ground packaged coffee, and K-Cup pods are available in a variety of roasts and flavor profiles across both food service and grocery channels.
The addition of Seattle’s Best Coffee to Starbucks packaged coffees distributed by Nestlé under the alliance adds depth to Nestlé’s North America coffee portfolio by further expanding the company’s position in the category.
In the third quarter results forNestlé, the North america unit had growth in the beverages category, including Starbucks at-home products, Coffee-mate and Nescafé, which was close to a double-digit rate.
The organic growth was 11.2%, with pricing of 11.1%, Real internal growth (RIG) was 0.1%, with a high base of comparison in 2021 and supply chain constraints.
Total reported sales in North America increased by 11.2% to CHF 19.1 billion (US$19.13bn), after a positive foreign exchange impact of 4.8%.
As part of the alliance, Nestlé has the rights to also 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.
In this perpetual global license agreement, Starbucks leads in sourcing, roasting, and Starbucks global brand management for the alliance, while the two companies work closely together on innovation and go-to-market strategies to bring the best coffee to customers around the world.
Through the Global Coffee Alliance, Nestlé and Starbucks said they will continue to work together in formulating strategies that will amplify the reach and expand the unique experience of the Starbucks brand locally and globally.
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