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Nestle to Start Selling Starbucks Coffee Products in China
Published on: 2019-08-16
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010Nestle SA plans to introduce its first-ever range of Starbucks Corp.-branded products in China as part of a global tie-up that will help bolster the Swiss company’s proprietary Nespresso capsules in one of its fastest-growing markets.

011The two companies will sell 21 products from the Starbucks At Home line, including whole bean and ground packaged coffees as well Starbucks capsules created using the Nespresso and Nescafe Dolce Gusto systems, they said in a statement Thursday. The line, available on e-commerce platforms and in grocery stores, will help Starbucks diversify its presence in China beyond cafes at a time when it faces growing competition from local challengers like Luckin Coffee Inc.

012The product range is part of a global alliance announced last year under which Nestle paid $7.15 billion for the right to market Starbucks products as it sought ways to rejuvenate its Nespresso capsule business — once its biggest growth motor — and fend off copycats. It also means an additional income source for Starbucks in China, a traditionally tea-drinking nation that’s become the second-biggest contributor to its revenue.

013The Seattle-based coffee giant has plans to more than triple its revenue in China by opening a new store every 15 hours through 2022. Starbucks dominates China’s cafe segment with more than a 50% market share, while Nestle leads the local ready-to-drink coffee market. China is becoming increasingly important for coffee retailers because of its low per-capita consumption of the beverage and rising middle-class affluence.

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