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Nestle and Starbucks strike deal to create 'global coffee alliance'

Swiss food giant Nestle is paying Starbucks $7.15bn (?5.28bn) in cash for the rights to sell its coffee beans directly to consumers through supermarkets and other food shops around the world.
Nestle is already big in coffee - it owns the Nescafe and Nespresso brands - and the company said this agreement would boost its market position in North America, while giving it more opportunities to sell premium range coffee to consumers overseas.
For Starbucks, the deal will increase its global presence as the company's coffee beans and grounded blends will be sold through Nestle's substantial channels in food retail, such as supermarkets and corner shops.
“This global coffee alliance will bring the Starbucks experience to the homes of millions more around the world,” said Kevin Johnson, chief executive of Starbucks.
Nestle and Starbucks strike deal to create 'global coffee alliance'

Nespresso is one if Nestle's best-selling brands
Nestle reported sales of ?66bn last year, with coffee one of its fastest-growing categories. The food giant, whose brands include Purina pet food, KitKat and Haagen-Dazs ice cream, is focusing on coffee as a main growth area and has already made some acquisitions in the sector, including buying a stake in California's Blue Bottle Coffee last September.
"This is a great day for coffee lovers around the world,” said Mark Schneider, chief executive of Nestle
Nestle and Starbucks strike deal to create 'global coffee alliance'

Starbucks coffee beans, coming to a supermarket near you
The Starbucks business covered by the deal currently generates around $2bn (?1.48bn) in annual sales and includes coffee beans and ground coffee that Nestle will be selling outside of Starbucks' coffee shops.
Nestle expects this business to contribute to its profit in 2019. 
Starbucks, meanwhile, will use the cash to accelerate share buybacks. The Seattle-based company said it now expected to return some $20bn (?14.7bn) to shareholders through buybacks and dividends by 2020.
Around 500 Starbucks staff will join Nestle, but operations will continue to be located in Seattle.
The deal, which needs approval from regulators, is expected to complete by the end of the year.
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