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
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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version on businesswire.com: https://www.businesswire.com/news/home/20180506005074/en/
Starbucks:Investor RelationsTom Shaw,
206-318-7118investorrelations@starbucks.comorMedia:Jaime
Riley, 206-318-7100press@starbucks.com
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