Cairo, Starbucks, Nestle discussed on Marketplace All-in-One


In new york i'm lizzie o'leary in cairo's doll it is monday the seventh of may good to have you with us and we are going to start with a venti deal between starbucks and nestle the swiss food conglomerate there 'grande deal whatever a very big deal nestle is paying more than seven billion dollars for the rights to distribute starbucks coffee nestle won't get any stores or ment just the distribution rights and a few hundred starbucks employee's marketplace's revenge sure starts us off this is the biggest coffee company in the world but it doesn't do so well in the us where it has only three percent of the market they fell behind the times erik gordon is a professor at the university of michigan's ross school business this cafe is coffee that mike my parents happen to like and probably my parents parents but most young people either have never heard of it or if they've heard of it they turn up their nose so if you can't beat them by the rights to distribute him nestle will retail starbucks coffee it'll sell starbucks pods for its espresso machines it'll get into the middle to high end coffee market it's always wanted but what does starbucks get out of the deal versing that they get out of this is a cool seven billion dollars robert solomon is professor of international management and my use stern school starbucks has said it'll use some of that money to buy its own stock to pump up prices for shareholders starbucks will also get access to the supermarket shelves of the world to reach markets that the otherwise would not be able to distribute to in market in nestle has distribution channels and more than one hundred ninety countries so that'll be helpful as starbucks tries to expand in china there are risks of course first off starbucks is literally handing over the most important thing it has its brand while we worry about brand damage what are they gonna do the brand coin oaks partner at occ strategy consultants that sounds like it's going to be very pretty tightly controlled for its part nestle's betting a lot more than the licensing fees on this deal says nyu's rob.

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