Nestle and Starbucks announced on Tuesday the completion of a USD$7 billion coffee deal which gives the Swiss food juggernaut the rights to market the US coffee maker's packaged goods outside of its cafes to the whole world.
According to Fox Business, the deal made between the two giant companies grants Nestle the perpetual rights to sell Starbucks packed drinks including brands like Seattle's Best Coffee, Teavana TM/MC, Starbucks VIA Instant, Torrefazione Italia coffee and Starbucks-branded K-cup pods. However, the contract excludes Nestle from marketing ready-to-drink and other related products sold within Starbucks store, anywhere in the world.
The Switzerland-based food firm has its own popular coffee line, the Nescafe. The Nestle brand itself offers a wide range of beverage products from packed coffee lattes to coffee vending machines.
In a statement quoted over at Fox, Nestle CEO Mark Schneider said that the Starbucks-Nestle agreement will further bring the "most iconic coffee brands" to the world. Moreover, this gives Nestle an "unparalleled position in the coffee business" now that its "suite of innovative brands" grows with the inclusion of Starbucks' offerings.
In the same vein, Starbucks chief Kevin Johnson said that the company's deal with Nestle will further "amplify" the image of the two-tailed mermaid given the fact that the food manufacturer has a wider loyal consumer base in a global scale.
Starbucks, in its own rights, boasts a massive number of outlets scattered around the world which is now close to reaching 30,000.
With the marketing prowess of Nestle, Starbucks products will soon become even more accessible by average consumers, especially those who are living in areas that don't have a Starbucks outlet. This opens the door for the North American company's global expansion in the grocery and food service sector.
Meanwhile, this multi-billion coffee deal will result in the transfer of around 500 Starbucks employees to Nestle, a Reuters report said.
As further explained over at Bloomberg, Nestle will source its new employees from the Starbucks firms in the US and Europe, the majority of which will come from Seattle and London, respectively.
News Food Magazine, meanwhile, clarified that the center of operations in this merger account will remain in Seattle.
The media outlet went on to specify that Nestle is expecting the deal to contribute "positively" to the company's earnings per share as well as influence the "organic growth targets" from next year.
Starbucks currently holds 15 percent of the market share in the retail coffee segment in the US with Nestle following behind at 3 percent.
