Nestle and Starbucks Products Hit the Shelves

Remember that fantastic deal Starbucks managed to secure with Nestle? Nestle paid Starbucks $7.15bn in cash for exclusive rights to sell Starbucks labelled coffee beans and pods. Starbucks will still receive a percentage of the sales. The power of a strong brand!



Last night while scrolling through my Bloomberg app I came across this article titled Nestle's First Starbucks Products to Go on Sale in Tie-Up. Apparently these branded products will hit the shelves in the next few days. The first markets will be the U.K, Spain, Belgium and Brazil. Nestle made the deal because their Nespresso business was slowing. There were a lot of cheaper knock-offs stealing market share. Not even Goerge Clooney could save them! Their solution was to slap the best coffee brand in the world onto their pods.

Starbucks already makes its own capsules and will continue to do so in North America, but in Europe this will all be done by Nestle.

We have always thought coffee was a good investment theme. We also believed Starbuck's brand strength would keep it ahead of the rest. The share is up 40% since June last year after going nowhere for two years. It pays to be patient.