Today, as we sipped our much-needed Monday morning coffees, two java giants were busy finalizing a massive deal. Starbucks and Nestlé announced the formation of what is being called a "global coffee alliance." According to press releases from both companies, Nestlé has agreed to pay Starbucks $7.15 billion in cash in order to be able to sell Starbucks products.
Nestlé will be granted the perpetual right to market, sell, and distribute Starbucks, Seattle’s Best Coffee, Starbucks Reserve, Teavana, Starbucks VIA, and Torrefazione Italia packaged coffee and tea. Additionally, Nestlé will also begin selling Starbucks coffee for its single-serve capsule systems including Nespresso, which is a very good thing for Starbucks-craving users of the machines.
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According to Bloomberg, this deal is the third largest in Nestlé's history. While $7.15 billion is quite a large chunk of change, Nestlé apparently expects the agreement to add earnings for the company by next year. For Starbucks, the alliance will facilitate the spread of its products globally. Kevin Johnson, president and CEO of Starbucks, said in a statement: "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."
The two companies have also emphasized their shared values, as both say they are committed to ethical and sustainable coffee sourcing. According to Nestlé CEO Mark Schneider, "Both companies have true passion for outstanding coffee and are proud to be recognized as global leaders for their responsible and sustainable coffee sourcing. This is a great day for coffee lovers around the world."
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