Breaking: Nestlé Further Acquires Starbucks Coffee Business

Nestlé acquires Starbucks' Seattle's Best Coffee brand

Yesterday Nestlé, the world's largest packaged food manufacturer, announced that it will acquire Starbucks' Seattle's Best Coffee brand. The move is part of Nestlé's effort to drive continued profitable growth in the coffee category and strengthens the global coffee alliance by allowing both companies to focus on their core strengths. Market commentary suggests the acquisition will further strengthen Nestlé's position in the North American coffee market. The transaction is expected to close by the end of 2022, and both companies have agreed to keep the terms confidential.

Seattle's Best Coffee is a coffee retailer and wholesaler based in Seattle, Washington, in the United States. Starbucks was also founded in Seattle. In 2003, Starbucks used an acquisition to make Seattle's Best Coffee its chain coffee product subsidiary. As an independently operated brand, Seattle's Best Coffee has retail stores and grocery stores in 20 U.S. states and the District of Columbia.

Seattle's Best Coffee sells packaged coffee beans, ground coffee and K-Cup pod coffee products, primarily supplying a range of flavored products for foodservice and grocery store channels.

Strengthening the Nestlé-Starbucks partnership

As early as May 2018, Nestlé had acquired part of Starbucks' retail business, paying Starbucks $7.15 billion in cash. After the acquisition, Nestlé gained fuller market dominance and the right to directly sell Starbucks packaged coffee products to consumers in supermarkets and other food stores worldwide.

Beyond the Starbucks packaged coffee that Nestlé distributes under the global coffee alliance, Nestlé's well-loved brands in the United States include Nescafé, Nespresso and Blue Bottle. The addition of Seattle's Best Coffee will further enrich Nestlé's coffee portfolio in North America and expand the company's business.

"We will continue to deepen our partnership with Nestlé, providing customers with the best Starbucks experience through channels outside of retail stores," said Michael Conway, President of Starbucks International and Channel Development Group, who expressed confidence that Nestlé will continue to develop the Seattle's Best Coffee brand.

Since then, Nestlé and Starbucks have continued to work closely together. The two companies have launched a series of premium coffee products into new markets at a very fast pace, including Nespresso and Dolce Gusto capsule products.

Today, Nestlé distributes Starbucks consumer products and foodservice beverages in more than 80 markets outside of Starbucks stores globally. In 2021, the total global sales of Starbucks products distributed by Nestlé reached 3.1 billion Swiss francs.

"The partnership between Nestlé and Starbucks confirms Nestlé's leadership position in the dynamic and growing global coffee market. With the Seattle's Best Coffee brand, Nestlé will continue to build our leadership in coffee by providing consumers with more everyday coffee choices," said David Rennie, Head of Nestlé Coffee Brands.

According to the first three quarters financial report released on Nestlé's official website, total group sales for the first 9 months were 69.1 billion Swiss francs (approximately 4.99 trillion RMB), with growth reaching 9.3%.

Nestlé's expanding portfolio

This year Nestlé has continuously adjusted its product portfolio, completing multiple acquisitions. In April 2022, Nestlé Health Science completed the acquisition of a majority stake in Orgain, the leader in plant-based nutrition.

Founded in 2009, Orgain is recognized as America's fastest-growing organic protein company, with more than 30,000 distribution points and the highest-rated plant protein powder on Amazon. The transaction is expected to slightly increase Nestlé's organic growth rate while slightly diluting the group's underlying trading operating profit margin for 2022.

In September, Nestlé Health Science also completed the acquisitions of the Brazilian company Puravida and the New Zealand company The Better Health Company.

Future sustainability plans

It is understood that Seattle's Best Coffee's business is currently limited to the United States. On October 9, Nestlé Coffee also announced its 2030 Plan, working with coffee growers to help them transition to regenerative agriculture. By 2030, the brand will invest more than 1 billion Swiss francs in the Nestlé Coffee Plan to expand its sustainability efforts.

Image source: Internet

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