Nestle and Starbucks said on Tuesday they had wrapped up their licensing deal for the Swiss food giant to market the U.S. coffee maker’s packaged coffees and teas around the world.
The $7.15 billion deal gives Nestle the rights to sell Starbucks products such as Starbucks, Seattle’s Best Coffee and Teavana outside of the company’s coffee shops. As a result, about 500 Starbucks employees will shift to Nestle. Nestle has already begun hiring employees in the U.S. and Europe, mainly in Seattle and London.
This is Nestle’s third-biggest transaction in its 152-year history. With Starbucks’ 28,000 outlets around the globe and its massive popularity in the U.S., Nestle’s Chief Executive Officer, Mark Schneider, is hoping to capitalize on the coffee brand’s name recognition. Nestle has faced its own issues, struggling for years with its own products like Nespresso and Dolce Gusto.
Nestle’s sales reached their weakest point in more than two decades last year. Starbucks shares rose less than 1 percent in New York trading.
“Nestle needed a big brand, and they needed one fast,” said Alain Oberhuber, an analyst at MainFirst Bank in Zurich. “Starbucks is the only strong brand in roast-and-ground. It’s a rather defensive move — a bit late — but nevertheless, a strategically absolutely vital step.”
By: Maytinee Kramer
