A Starbucks coffee shop in Lucerne, Switzerland
Keystone
The Swiss food giant Nestlé is set to pay Starbucks $7.1 billion (CHF7.1 billion) to market the American firm’s products outside Starbucks’ coffee shops.
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Under the alliance deal, announced on Monday, Starbucks and Nestlé have agreed to work together on marketing strategies and innovation.
“This transaction is a significant step for our coffee business, Nestlé’s largest high-growth category,” Nestlé chief executive officer (CEO) Mark Schneider said in a statement on MondayExternal link.
“With Starbucks, Nescafé and Nespresso we bring together three iconic brands in the world of coffee.”
Nestlé says the deal should provide it with a platform for “continued growth in North America with leadership positions in the premium roast and ground and portioned coffee businesses”.
Starbucks’ out-of-shop sales generate $2 billion in annual revenues. Coffee and creamers generate CHF17 billion revenues for Nestlé, roughly a fifth of its turnover.
Starbucks plans to use the money from the new deal to accelerate share buybacks and now expects to return approximately $20 billion in cash to shareholders in the form of share buybacks and dividends through fiscal year 2020, it said in a statementExternal link.
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