Nestlé will pay Starbucks $7.15bn (£5.28bn) to sell coffee with the global chain’s brand, it has been announced.
The owner of Nescafé and Nespresso is paying the US coffee chain for the rights to sell Starbucks products in supermarkets and restaurants around the world.
It is the first time that Nestlé has joined forces with a major coffee rival.
Starbucks’s out-of-shop sales – including roast and ground coffee, and capsules for coffee-making machines – generate $2bn in annual revenue.
The proceeds from the deal will be used to accelerate share buybacks, Starbucks has said. The firm expects to have returned $20bn to shareholders by the end of its 2020 fiscal year.
Mark Schneider, chief executive officer of Nestlé, said in a statement: “With Starbucks, Nescafé and Nespresso, we bring together three iconic brands in the world of coffee.
“This is a great day for coffee lovers around the world.”
Around 500 Starbucks employees will join Nestlé as part of the deal, and operations will continue to be located in Seattle. The agreement is expected to close by the end of 2018.
Nestlé will use the Starbucks brand in its Nespresso and Dolce Gusto capsule systems next year.
Kevin Johnson, CEO of Starbucks, said: “This global coffee alliance will bring the Starbucks experience to the homes of millions more around the world through the reach and reputation of Nestlé.
“This historic deal is part of our ongoing efforts to focus and evolve our business to meet changing consumer needs, and we are proud to work alongside a company that is committed to our shared values.”
