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Nestlé to launch first Starbucks products following $7.15bn partnership

Food and beverage giant will begin retailing Starbucks-branded coffee and single-serve capsules across European, Asian and Latin American markets

Nespresso capsules on display. Nestlé has 'huge ambitions' for the premium at-home coffee segment. Photo: Rob Pegoraro

Nestlé has announced the first group of products developed under its ‘global coffee alliance’ with Starbucks will be available to consumers in February 2018. Following six months of development, the products, including ground, whole bean coffee and single serve capsules for Nespresso and Nescafe Dolce Gusto coffee makers, will be sold in 14 global markets including Belgium, Brazil, Chile, China, Mexico, the Netherlands, South Korea, Spain and the UK.

“We have huge ambitions,” said Patrice Bula, Executive Vice President and Head of Strategic Business Units, Marketing, Sales and Nespresso at a media briefing. "It is a landmark for us, a new growth platform, a moment where we can accelerate in the premium segment," he added.

Announced in May 2018, the ‘global coffee alliance’ granted Nestlé perpetual rights to market Starbucks’ consumer packaged goods and foodservice coffee and tea products around the world for an up-front payment of $7.15bn. The deal will allow Starbucks to focus on growing and developing its global brand portfolio, while Nestle will benefit from a significant strategic foothold in an increasingly consolidated retail coffee market.

The partnership is an important part of Nestlé’s strategy to counter the growing influence of other large players in the at-home coffee segment. In June 2018, JAB Holdings, which has built a formidable coffee empire, completed a $18.7bn merger of its Keurig Green Mountain-Dr Pepper business. The merger created the third-largest beverage company in the US and enables JAB to market Keurig coffee products through Dr Pepper’s extensive US distribution network.

Starbucks has sold its branded at-home coffee products in the US for several years, including coffee pods for its Verismo brewers and JAB's Keurig K-Cup system. In June 2018, the Seattle-based coffee chain signed a 21-year partnership with Arla Foods, allowing the latter to manufacture, distribute and market Starbucks premium milk-based ready-to-drink (RTD) coffee beverages for the EMEA region.


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