Starbucks is a multinational corporation that was started in the year 1971. It is inevitable to mention Starbucks without mentioning Nestle. Does Nestle own Starbucks?
No, Nestle does not own Starbucks. It is a Starbucks partner that has the right to distribute Starbucks-packed coffee and ready-to drink beverages. I always thought that nestle owned Starbucks until I heard of their three-year deal that was signed in 2018. Well, it was a partnership not an acquisition. Nestle is licensed to sell and distribute all Starbucks products globally. Nestle, like Starbucks, is a multinational corporation based in Switzerland that deals with foods and beverages. If you thought that Nestle owned Starbucks like I did, then this post is for you. I am going to break down all the information that you need regarding nestle and Starbucks affiliation, so please keep reading.
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Is Starbucks a Nestle Company?
No, it’s not. Starbucks and Nestles only entered a business deal but Nestle did not purchase Starbucks. The partnership was aimed at reaching the Latin America, Oceania, and Asian markets with ready-to-drink coffee beverages. In a press statement, Nestle said that its partnership with Starbucks is proof of its top position in the coffee market.
Nestle plays a vital role in the distribution of Starbucks’ signature coffee drinks globally. You might wonder why two giants would need each other’s help when they are already market leaders. Well, it’s very simple. Each giant has its strongholds and a greater command in a certain region than the other. For example, nestle is prevalent in Asia, Oceania, and Latin America. This means that it will easily penetrate these markets to make Starbucks a global brand. Nestles has not acquired Starbucks and there are no plans underway for any acquisition.
Why did Nestle Partner with Starbucks?
The partnership was aimed at expanding the Starbucks products to a global brand. The plan was to roll out Starbucks‘ most popular drinks such as Frappuccino beverages and Starbucks Double shot. The distribution channels would be online and physical distribution. If you are an avid coffee drinker, you must have come across a nestle product at some point in your life. This shows that Nestle is a leader in the beverage market.
As of 2021, Starbucks had over 33,000 stores worldwide. The Starbucks and nestle partnership aimed at reaching the markets outside the Starbucks stores. Nestle was the perfect march as it has penetrated the markets that Starbucks hasn’t. Some of the Starbucks products are not made by nestle, this means that the coffee distributor will sell these products without conflict of interest. The partnership has reported tremendous success and continues to innovate more products and strategies.
Nestle and Starbucks’ $7B Distribution Deal and How it turned out
The Nestle and Starbucks deal was signed in 2018 after Nestle agreed to pay Starbucks 7.15 billion dollars for the right to distribute its products outside the Starbucks stores globally. Starbucks is a coffee giant with strong command in the coffee market, but nestle has a stronger distribution network. For both companies to gain, nestle needed to purchase the Starbucks rights of distribution as it would do if it were purchasing a business. This means that Nestle purchased a 2 billion-dollar business from Starbucks.
The deal has since given a Starbucks experience to many who are outside the Starbucks store zones. It has seen great success despite the many pessimistic reviews by business analysts. In 2021, the coffee duo extended its partnership and said that they would continue to work together to distribute ready-to-drink coffees as well as Frappuccino and Starbucks Double shot. This is an indicator of the immense success of this partnership. The two coffee giants will continue to expand the Starbucks brand. In 2020, the Nestle sales of Starbucks products reached a stunning 2.7 billion dollars.
All major companies in the world are known to have made acquisitions or at least entered into long-term partnerships to expand their brands. Similarly, Starbucks and Nestle entered into a partnership to push the Starbucks brand to global markets. The plan was to take advantage of the strong distribution channel of nestles. The two companies continue to work together as they recently announced an extension of their partnership to cover Latin America, Oceania, and South East Asia. Nestle has gained from the increased revenue and penetration in the American market.
How are Starbucks and Nestle benefiting from their Alliance?
The alliance has seen the Starbucks brand expand to markets that are not covered by its retail stores. Nestle on the other hand gains exclusive rights to sell Starbucks products and increase its revenue.
How long was Nestle and Starbucks’ partnership?
The partnership was a three-year plan that has recently been extended to another two years.
Kai Jordan worked as a Certified Nutrition Specialist and now a food critic whose main objective is to provide consumers with as much information as they need to make the right choices concerning foods and drinks. Jordan is passionate about helping the public reach their health-related goals but also keen on reviewing foods and drinks offered by some of the famous restaurants the likes of Starbucks.
Kai has therefore created well-researched and comprehensive excerpts regarding the services and products offered by the giant restaurant chain. And which can be retrieved from Starbmag.com, apart from talking writing, and dealing with food Kai loves also to Kayak. You can read more about me on the about us page.