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Coffee alliance Nestlé and Starbucks agree billion-dollar tie-up

A Starbucks coffee shop in Lucerne, Switzerland

A Starbucks coffee shop in Lucerne, Switzerland

(Keystone)

The Swiss food giant Nestlé is set to pay Starbucks $7.1 billion (CHF7.1 billion) to market the American firm’s products outside Starbucks’ coffee shops. 

Under the alliance deal, announced on Monday, Starbucks and Nestlé have agreed to work together on marketing strategies and innovation. 

“This transaction is a significant step for our coffee business, Nestlé’s largest high-growth category,” Nestlé chief executive officer (CEO) Mark Schneider said in a statement on Mondayexternal link

"With Starbucks, Nescafé and Nespresso we bring together three iconic brands in the world of coffee."

+ Read more about strategic shifts within Nestlé

Nestlé says the deal should provide it with a platform for “continued growth in North America with leadership positions in the premium roast and ground and portioned coffee businesses". 

Starbucks’ out-of-shop sales generate $2 billion in annual revenues. Coffee and creamers generate CHF17 billion revenues for Nestlé, roughly a fifth of its turnover. 

Starbucks plans to use the money from the new deal 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, it said in a statementexternal link

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SWI swissinfo.ch on Instagram

SWI swissinfo.ch on Instagram

SWI swissinfo.ch on Instagram

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