Nestlé and Starbucks Extend Coffee Partnership to New Markets

Nestlé and Starbucks Extend Coffee Partnership to New Markets

© Samule Sun | Unsplash

Nestlé and Starbucks Extend Coffee Partnership to New Markets

Nestlé and Starbucks Extend Coffee Partnership to New Markets

© Samule Sun | Unsplash

The global coffee alliance since 2018
The two famous consumer brands started forming their global coffee alliance in 2018 with Nestlé having the exclusive rights to market Starbucks coffees and teas in global markets. The purchase included Starbucks®, Seattle’s Best Coffee®, Starbucks Reserve®, Teavana™, Starbucks VIA® and Torrefazione Italia® and the distribution deal cost Nestlé $7.15 billion for the exclusive right to market, sell and distribute Starbucks products. 

As part of the deal, Nestlé’ used its stronger distribution system to expand Starbucks’ presence globally. At the same time, Nestlé could diversify its product categories and had better leverage to compete with tough rivals such as JAB Holdings. Mark Schneider, CEO of Nestlé, admitted, “we were late in the U.S. coffee market and this deal allows us to catch up.”

Extending the partnership 
To tackle the tough competition in the coffee industry, Nestlé and Starbucks plan to boost distribution channels, using both traditional and online platforms. More innovative products under the new licencing agreement will be announced but the initial focus is to promote Starbucks’ most popular products in the new markets. David Rennie, head of Nestlé coffee brands, added: “With our expansion plans into RTD coffee, Nestlé will continue to build on its global leadership in coffee and will benefit from new growth opportunities in a segment that is developing rapidly and attracting new and younger consumers.”

Both companies have introduced different products such as whole bean, roast and ground coffee, refrigerated coffee creamers, cold brews, as well as Starbucks capsules for Nespresso and Nescafé Dolce Gusto systems. 

During the second quarter of Starbucks' 2021 fiscal year, the coffee giant generated nearly seven billion dollars in revenue while the Switzerland-based company announced sales of $23 billion for the first quarter of 2021. 

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