On October 18, Starbucks (Nasdaq: SBUX) announced an agreement to sell the Seattle’s Best Coffee brand to food and beverage giant Nestlé (OTC: NSRGY).
The companies described the transaction as another outcome of their "Global Coffee Alliance" cooperation agreement begun in 2018. As a part of that arrangement, Nestlé paid $7.15 billion for the rights to package, distribute, and sell several Starbucks tea and coffee brands, including Seattle’s Best Coffee, on a global scale. Nestlé was also able to add the Starbucks brand portfolio to its single-serve capsule systems.
Since that deal was struck, the two companies have continued to cooperate. Nestlé has taken Starbucks brands into more than 80 markets beyond the company’s retail stores. Starbucks earns revenue from licensing.
Seattle’s Best Coffee is not the first brand Starbucks as sold this year. In May, the coffee company also sold its cold-pressed juice brand Evolution Fresh to beverage company Bolthouse Farms. The company stressed its focus on growth of the core Starbucks business in that announcement. A similar theme emerged in the Seattle’s Best Coffee deal.
“We’re confident that Nestlé will continue to grow the Seattle’s Best Coffee brand as we focus on our strategy to elevate the premium coffee experience for consumers through the Starbucks brand,” Michael Conway, group president, Starbucks International, said in the news release announcing the deal.
While Starbucks is concentrating on its core brand, Nestlé is building out its coffee offerings. “With the well-known Seattle’s Best Coffee brand, we will continue to build our leadership in coffee by offering consumers more choice for their everyday coffee,” said David Rennie, head of Nestlé Coffee Brands.
Nestlé's coffee sales have been strong. It reported sales high single-digit coffee sales growth in its nine-month sales report, noting positive results from sales of Starbucks products. For the nine-month period, Nestlé had total sales of 69.1 billion Swiss francs, about $69.3, up 9.2% over 2021. Starbucks reported $8.2 billion in consolidated net revenues in the third quarter of 2022, up 9%.
Starbucks acquired Seattle Coffee Co., the parent company of Seattle’s Best Coffee and Torrefazione Italia, for $72 million back in 2003. The terms of the 2022 Seattle’s Best Coffee transaction were not disclosed. The deal is expected to close by the end of this year.