The transaction will allow Starbucks to continue to focus on its premium coffee segment in both at-home and away-from-home channels as part of its 'Reinvention' plan which includes opening 2,000 drive-thru and pick-up-only stores.
"Starbucks sees significant opportunity for further growth through portfolio expansion, innovation and leveraging Starbucks partnership expertise," said Starbucks CEO Howard Schultz.
Starbucks reaffirms focus on premium coffee and away-from-home channels
Starbucks acquired Seattle's Best for $72m in 2003 to grow its specialty coffee portfolio. In 2018, Nestlé and Starbucks formed the Global Coffee Alliance to expand and elevate the at-home and away-from-home coffee and related categories.
As part of the alliance, Nestlé obtained the rights to market, sell, and distribute Seattle's Best and other Starbucks-owned brands with Starbucks remaining as the official owner of the brand.
Since forming the Global Coffee Alliance in 2018, Nestlé and Starbucks have introduced a wide range of premium coffee products to new markets 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 foodservice beverages across more than 80 markets outside Starbucks retail stores under the Global Coffee Alliance.
“We continue to deepen our partnership with Nestlé to deliver the best of the Starbucks Experience to our customers in channels outside of our retail stores,” said Michael Conway, group president, Starbucks International and Channel Development.
“We’re confident that Nestlé will continue to grow the Seattle’s Best Coffee brand as we focus on our strategy to elevate the premium coffee experience for consumers through the Starbucks brand.”
Nestlé: 'We will continue to build our leadership in coffee'
Nestlé and Starbucks both said that they will continue to work closely together to develop new, innovative products and go-to-market strategies to expand the reach and expand the coffee-drinking experience of the Starbucks brand locally and globally.
“Our partnership with Starbucks has confirmed Nestlé’s leading position in the dynamic and growing global coffee market,” said David Rennie, head of Nestlé coffee brands.
“With the well-known Seattle’s Best Coffee brand, we will continue to build our leadership in coffee by offering consumers more choice for their everyday coffee.”
According to Nestlé's H1 2022 results, sales of its coffee portfolio which includes Blue Bottle, Nescafé, Starbucks, Nespresso brands, grew 6.9% in comparison to H1 2021 and 10.7% on a two-year basis.
The transaction is expected to close by the end of 2022 subject to respective Board and customary regulatory approvals. Both companies have agreed to keep the terms of this transaction confidential.