Alliance to leverage the complementary strengths, scale and
sophistication of two of the world’s most recognized and
respected consumer brands
Nestlé to bring Starbucks packaged coffee into regional markets
globally; Starbucks brand portfolio to be represented on Nestlé’s single
serve capsule systems, including Nespresso and Nescafé Dolce Gusto
Alliance targets making coffee the world’s first truly sustainable
agricultural product
SEATTLE--(BUSINESS WIRE)--
Starbucks Corporation (NASDAQ: SBUX) today announced it will form a
global coffee alliance with Nestlé S.A. to accelerate and grow the
global reach of Starbucks brands in Consumer Packaged Goods (CPG) and
Foodservice. With a shared commitment to ethical and sustainable
sourcing of coffee, this alliance will transform, expand and elevate
both the at-home and away-from-home coffee and related categories around
the world.
As part of the alliance, Nestlé will obtain the rights to market, sell,
and distribute Starbucks®, Seattle’s Best Coffee®, Starbucks Reserve®,
Teavana™, Starbucks VIA® and Torrefazione Italia® packaged coffee and
tea in all global at-home and away-from-home channels. Nestlé will
pay Starbucks $7.15 billion in closing consideration, and Starbucks –
with a focus on long-term shareholder value creation – will retain a
significant stake as licensor and supplier of roast and ground and other
products going forward. Additionally, the Starbucks brand portfolio will
be represented on Nestlé’s single-serve capsule systems.
“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 chief executive officer,
Starbucks. “This historic deal is part of our ongoing efforts to focus
and evolve our business to meet changing consumer needs, and we are
proud to work alongside a company that is committed to our shared
values.”
“This transaction is a significant step for our coffee business,
Nestlé’s largest high-growth category,” said Mark Schneider, CEO,
Nestlé. “With Starbucks, Nescafé and Nespresso we bring together three
iconic brands in the world of coffee. We are delighted to have Starbucks
as our partner. 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.”
This global alliance combines the strength and affinity of the Starbucks
brand with the global reach of Nestlé and its iconic coffee brands,
creating new growth opportunities in the established North American
markets and unlocking expansion in international markets. In the United
States, it also enhances Nestlé’s retail and Foodservice presence in
coffee, complementing its position in instant coffee and super-premium
single serve with Starbucks strong presence in K-cup® pods. As part of
this perpetual global license agreement, Starbucks will lead in
sourcing, roasting and Starbucks global brand management for the
alliance, while the two companies will work closely together on
innovation and go-to-market strategies to bring the best coffee to
customers around the world.
The agreement is subject to customary regulatory approval and is
expected to close this summer or early fall. The agreement excludes
ready-to-drink coffee, tea and juice products.
Starbucks intends to use the after-tax proceeds from this up-front
payment primarily to accelerate share buybacks and now expects to return
approximately $20 billion in cash to shareholders in the form of share
buybacks and dividends through fiscal year 2020. Additionally, the
transaction is expected to be earnings per share (EPS) accretive by the
end of fiscal year 2021 or sooner, with no change to the company’s
currently stated long-term financial targets.
Starbucks will host a 30-minute investor conference call led by Kevin
Johnson at 5 a.m. PDT on Monday, May 7, to provide further details. The
conference call will be broadcast live over the Internet and can be
accessed at http://investor.starbucks.com.
A replay of the webcast will be available on the company's website until
end of day Wednesday, June 6, 2018.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to ethically
sourcing and roasting high-quality arabica coffee. Today, with
more than 28,000 stores around the globe, the company is the premier
roaster and retailer of specialty coffee in the world. Through our
unwavering commitment to excellence and our guiding principles, we bring
the unique Starbucks Experience to life for every customer through every
cup. To share in the experience, please visit us in our stores or online
at www.starbucks.com and
www.news.starbucks.com.
Forward-Looking Statements
Certain statements contained herein are "forward-looking” statements
within the meaning of the applicable securities laws and regulations.
Generally, these statements can be identified by the use of words such
as “anticipate,” “expect,” "believe," "could," "estimate," "feel,"
"forecast," "intend," "may," “plan," "potential," “project,” “should,"
“will," “would,” and similar expressions intended to identify
forward-looking statements, although not all forward-looking statements
contain these identifying words. These statements are based on
information available to Starbucks as of the date hereof, and Starbucks
actual results or performance could differ materially from those stated
or implied, due to risks and uncertainties associated with its business.
These risks and uncertainties include, but are not limited to,
fluctuations in the U.S. and international economies and currencies, our
ability to preserve, grow and leverage our brands, potential negative
effects of incidents involving food or beverage-borne illnesses,
tampering, adulteration, contamination or mislabeling, potential
negative effects of material breaches of our information technology
systems to the extent we experience a material breach, material failures
of our information technology systems, costs associated with, and the
successful execution of, the company’s initiatives and plans, the
acceptance of the company’s products by our customers, the impact of
competition, the failure of the parties to consummate the transactions
due to commercial, regulatory or other reasons, as well as general
economic and industry factors such as coffee, dairy and other raw
materials pricing and availability, successful execution of internal
performance and expansion plans, fluctuations in U.S. and other
international economies and currencies, the impact of initiatives by
competitors, the effect of legal proceedings, and other risks detailed
in the Company's filings with the Securities and Exchange Commission,
including the "Risk Factors" section of the Company's Annual Report on
Form 10-K for the fiscal year ended October 1, 2017. The Company assumes
no obligation to update any of these forward-looking statements.
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Source: Starbucks Corporation