Breaking: Nestlé Further Acquires Starbucks Coffee Business

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Nestlé Acquires Starbucks' Seattle's Best Coffee Brand

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

Seattle's Best Coffee is a coffee retailer and wholesaler located in Seattle, Washington, USA. Previously, Starbucks was also founded in Seattle. In 2003, Starbucks also used acquisition to make it 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 providing various flavored products for food service and grocery store channels.

Strengthening the Nestlé-Starbucks Partnership

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

In addition to the Starbucks packaged coffee distributed by Nestlé under the global coffee alliance, Nestlé's beloved coffee brands in the United States include Nescafé, Nespresso, and Blue Bottle. The addition of Seattle's Best Coffee will further enrich Nestlé's coffee product portfolio in North America, thereby expanding 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, expressing confidence that Nestlé will continue to develop the Seattle's Best Coffee brand.

Since then, Nestlé and Starbucks have continued to work closely together. Nestlé and Starbucks 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 food service 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 by Nestlé's official website, the 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 over 30,000 distribution points and is 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 Brazilian company Puravida and New Zealand company The Better Health Company.

Future Sustainability Plans

It is understood that currently, Seattle's Best Coffee's business is limited to the United States. On October 9, Nestlé Coffee also announced the 2030 Plan, collaborating 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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