Nestlé Pays $7.15 Billion to Sell Starbucks Coffee Grounds and K-Cups


This will have it taking care of selling the chain's at-home and on-the-go coffee products. Starbucks maintains the rights to sell the products in its stores.

Swiss food giant Nestle is paying Starbucks $7.15 billion ($9.5 billion) in cash for the rights to sell its coffee beans directly to consumers through supermarkets and other food shops around the world.

The Starbucks brand will also be represented on Nestle's single-serve capsule systems.

Coffee is a growth area for big food and drinks companies, which are trying to offset falling sales as demand for smaller-brand labels grows. The company had originally slated the opening of its first Italian branch for early previous year but the project began to run behind schedule and as delays mounted Starbucks chose to take on Italy's coffee drinkers with a landmark opening.

Nestle said it expects the deal to sell Starbucks bagged coffee and drinks adding to earnings by 2019. It did not alter share buyback plans. The Nestle name will not appear on Starbucks products. Starbucks, meanwhile, will use the cash to accelerate share buy-backs.

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Nestle CEO Mark Schneider says it's a great day for coffee lovers.

"This is all about growth", Schneider told analysts.

The deal on Monday for a business with $2 billion in sales reinforces Nestle's position as the world's biggest coffee company tries to fortify its place atop a fast-changing market. JAB Holding Co, which is owned by Peimann Family has invested more than $30 billion in creating its coffee empire.

That's the threshold US oil prices crashed through Monday for the first time since late 2014, foreshadowing costlier gasoline and consumer goods. It had been losing ground in the United States confectionery sector as rivals moved towards healthier products.

As part of the deal, about 500 Starbucks employees will join Nestle but operations will remain in Seattle.