Nestle announces to pay $7.15 billion to sell Starbucks products

Nestle announces to pay $7.15 billion to sell Starbucks products

The Swiss company gets the rights to sell packaged coffee products in supermarkets, restaurants and catering operations under the flagship Starbucks brand and others including Seattle's Best Coffee, Starbucks VIA and Torrefazione Italia.

The Swiss food giant, which has its US headquarters in Glendale, is banking on Starbucks' brand recognition promoted by 28,000 outlets globally, to fill the gap created by its own flagging java products, namely Nespresso and Dolce Gusto.

Some 500 Starbucks employees will join Nestle to drive performance of the existing business and global expansion. It now plans to buy back $20 billion worth of SBUX shares through 2020. This is the first time that a big multinational FMCG company such as Nestle has partnered with a leading Coffee rival. Nestle saw the deal adding to earnings by next year.

Nestle has been adjusting its portfolio of products, through sales and acquisitions.

Nestle has announced that it will pay Starbucks $7.1bn (£5.2bn) to sell the company's coffee into homes.

The Nestlé name will not appear on Starbucks products, with a source saying: "We do not want the consumer to perceive that Starbucks is now part of a bigger family".




In a statement, the CEO of Nestle Mr. Mark Schneider said that Nespresso, Nescafe and Starbucks are 3 iconic brands in the world of coffee.

"This is all about growth", Schneider told analysts.

Nestle expects this business to contribute to its profit in 2019.

That's the threshold US oil prices crashed through Monday for the first time since late 2014, foreshadowing costlier gasoline and consumer goods.

Shares in Nestle rose about 1.6 percent in Switzerland, while Starbucks shares slipped 0.4 to close at $57.45 in USA trading.

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