Nestlé is growing its coffee business. The company has just inked a $7.15 billion deal with Starbucks to market some of its products globally—well, outside of Starbucks’ coffee shops.
The deal is pending regulatory approval. Should it make it past regulators—the companies expect the deal to close by the end of 2018—the brands will work together to figure out the best strategies for Nestlé to bring Starbucks’ products—think packaged coffee beans and coffee pods—to market globally. The deal excludes ready-to-drink products.
“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,” said Kevin Johnson, president and CEO of Starbucks, in a statement. “This historic deal is part of our ongoing efforts to focus and evolve our business to meet the changing consumer needs, and we are proud to work alongside a company that is committed to our shared values.”
The deal gives Starbucks a global distribution model for a business that generates $2 billion in annual sales, according to the release, and Nestlé another premium coffee brand. Roughly 500 Starbucks employees will join Nestlé to help with the global expansion; they will continue to be based in Seattle.
“This transaction is a significant step for our coffee business, Nestlé’s largest high-growth category,” said Mark Schneider, Nestlé CEO, in a statement. “With Starbucks, Nescafé and Nespresso we bring together three iconic brands in the world of coffee.”