Nestlé Pays $7.15 Billion To Sell Starbucks Coffee

SOLON, OH — The city's second-largest employer, Nestlé, just made a really big purchase. The company is paying $7.15 billion for the right to sell Starbucks coffee in stores.

The deal won't impact coffee sales within Starbucks stores, just the sale of Starbucks products outside of franchise locations. The deal isn't expected to close until 2018. Some 500 Starbucks employees will be transferred to Nestlé.

"This global coffee alliance will bring the Starbucks experience to the homes of millions more around the world through the reach and reputation of Nestlé,” said Kevin Johnson, president and CEO, Starbucks, in a press release. "This historic deal is part of our ongoing efforts to focus and evolve our business to meet the changing consumer needs, and we are proud to work alongside a company that is committed to our shared values.”

Starbucks will get an upfront cash payment of $7.15 billion. The company's coffee sales generated about $2 billion in sales annually. There will be no transfer of fixed assets, according to Nestlé.

“This transaction is a significant step for our coffee business, Nestlé’s largest high-growth category,” said Mark Schneider, CEO, Nestlé. "With Starbucks, Nescafé and Nespresso we bring together three iconic brands in the world of coffee. We are delighted to have Starbucks as our partner. Both companies have true passion for outstanding coffee and are proud to be recognized as global leaders for their responsible and sustainable coffee sourcing. This is a great day for coffee lovers around the world."

Nestlé is Solon's second-largest employer, with approximately 2,300 employees, according to a December 2017 report from the city. Only Swagelok has more employees in Solon, with 2,500 staffers.

In February 2017, Nestlé brought its technical and production organization and all supply chain teams to its Solon, Ohio, campus. That meant the addition of 300 jobs to the city.

Photos from Nestlé