Your favorite items in the coffee aisle might be under new ownership. Switzerland based company Nestle is paying over $7 billion to boost its coffee sales.
The company is purchasing the rights to market and sell Starbucks products worldwide. The deal will see Nestle pay Starbucks $7.15 billion up front and in all cash.
The purchase includes a variety of different brands and products. However, not all Starbucks products are involved.
Nestle To Take Over Starbucks Products In Stores
Nestle gains the rights to bags of Starbucks coffee beans and instant coffee. Also, the company will take over several brands owned by Starbucks. Those brands include Teavana, Seattle’s Best Coffee, and Torrefazione Italia.
Nestle also will be allowed to put the Starbucks name on single-serving cups they produce. However, they are not alone in that distinction, as Starbucks produces cups of their own for Keurig.
One item staying put, though, is the Frappuccino. Sales of the bottled version of the signature Starbucks drink will remain within the corporation. The agreement also leaves out several other bottled products, such as iced coffees and cold brews.
Nestle implied last year that it would be shifting focus to areas including coffee sales. The Starbucks purchase is not the company’s first try at expanding either. The company also purchased a significant stake in Blue Bottle, a top-shelf coffee producer.
Nestle currently sells morning beverage products Nescafe and Nespresso. Those lines, however, are nowhere near as successful in the United States as Starbucks. Reportedly, Starbucks brings in over $2 billion in yearly sales. If that keeps up, the company will have its money back in a matter of years.
Additionally, there are plans to expand the availability of the newly acquired products. Nestle will, reportedly, bring the brand to stores outside of the United States and Canada. This plan could build the current revenue significantly. Specifics of the expansion are not available, however.
The purchase is subject to approval by regulatory boards. Most expect it will pass by the end of the year.