Nestlé to Acquire Seattle’s Best Coffee Brand from Starbucks
Nestlé has reached an agreement to fully acquire Seattle’s Best Coffee, a dry coffee brand owned by Starbucks, four years after the Swiss conglomerate obtained global marketing and distribution rights to the brand. Terms of the transaction were not disclosed.
The acquisition is expected to close by the end of the year following regulatory approval and approval by the Starbucks board of directors.
The deal stems from the 2018 formation of the Global Coffee Alliance, a partnership between Nestlé and Starbucks that granted the former sales, marketing and distribution rights to the Seattle’s Best, Starbucks, Starbucks Reserve, Starbucks VIA, Teavana and Torrefazione Italia packaged coffee and tea lines in all global at-home and on-premise channels, while Starbucks retained licensor rights and serves as the supplier. According to a press release at the time, Nestlé paid Starbucks $7.15 billion to create the alliance.
“We continue to deepen our partnership with Nestlé to deliver the best of the Starbucks Experience to our customers in channels outside of our retail stores,” said Michael Conway, group president, Starbucks International and Channel Development, in a press release this week. “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.”
“Our partnership with Starbucks has confirmed Nestlé’s leading position in the dynamic and growing global coffee market,” said David Rennie, Head of Nestlé Coffee Brands. “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.”
According to Starbucks, Nestlé now distributes its dry coffee portfolio outside of Starbucks retail stores in over 80 countries and has also released Starbucks-branded capsules for its Nespresso and Nescafé Dolce Gusto systems. Beyond the Seattle’s Best acquisition, both companies said they intend to continue to “closely work together to develop new, innovative products and go-to-market strategies.”
Founded in 1970, Seattle’s Best was acquired by Starbucks in 2003 for $72 million, providing the company with a well-distributed, lower-priced brand that it could use to open up new relationships with retailers and food service providers.
In the company’s Q1 2022 earnings call in April, Nestlé CEO Mark Schneider noted that despite nearly flat sales growth across its coffee portfolio, Starbucks out-of-home products grew double digits and at-home products were up high single digits. The sale now comes as Starbucks begins a $450 million “reinvention” program focused on optimizing its retail store business.
Starbucks previously sold its Tazo tea brand to Unilever in 2017.
Seattle’s Best joins Nescafé, Nespresso and Blue Bottle Coffee in Nestlé’s coffee portfolio. In June, the company sold ready-to-drink Chameleon Cold-Brew brand to SYSTM Foods, nearly five years after it originally acquired the company.
