Coffee lovers are waking up to smell a freshly brewed K-Cup now that Nestle has entered into a $7.2 billion alliance to take over Starbucks’ packaged coffee business.
A look at the Nestle-Starbucks deal
You probably know Nestle as the world-renowned Swiss chocolatier that has morphed over time into the world’s largest food and beverage company.
The announcement of Nestle’s partnership with Seattle java giant Starbucks has a few immediate impacts for consumers.
Nestle will take over Starbucks packaged coffee business
Nestle will have right to sell packaged coffee products in supermarkets, restaurants and elsewhere under the Starbucks brand, as well as ancillary brands like Seattle’s Best Coffee, Starbucks Reserve, Starbucks VIA, Teavana and Torrefazione Italia.
With 28,000 stores worldwide, the Starbucks name has the kind of cachet that resonates with consumers the world over.
When will this take place?
The deal is expected to close “this summer or early fall,” according to the press release following the approval of regulators.
Not included in the deal will be ready-to-drink coffee, tea and juice products.
Nespresso and Nescafe will remain status quo, too
Calling coffee Nestle’s “largest high-growth category,” Nestle CEO Mark Schneider says consumers will still be able to buy its struggling coffee brands like Nespresso and Nescafe.
“With Starbucks, Nescafé and Nespresso we bring together three iconic brands in the world of coffee. We are delighted to have Starbucks as our partner.”
Don’t worry, your Starbucks K-Cups won’t be going away!
One of Nestle’s biggest competitors on the coffee front is JAB Holding Company, which owns brewing hardware maker Keurig, Caribou Coffee, Peet’s Coffee & Tea and other beverage brands.
Incidentally, that makes JAB a competitor to Starbucks as well! But in a case of strange bedfellows, Starbucks also has a partnership with JAB for the much-coveted K-Cups.
For now, Starbucks will stay in the K-Cup pod business with JAB’s Keurig. Bloomberg reports Starbucks and Keurig are in active talks to extend their existing relationship.
Certain Starbucks employees will now work for Nestle
According to that same Bloomberg report, “Nestle will take over about 500 Starbucks employees who will remain based in Seattle.”