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Nestle to Start Selling Starbucks Coffee Products in China

Nestle to Start Selling Starbucks Coffee Products in China

(Bloomberg) -- Nestle 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.

The 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 is facing growing competition from local challengers like Luckin Coffee Inc.

The 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.

The 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 50% market share, while Nestle leads the local ready-to-drink coffee market. China is becoming increasingly important for coffee retailers due to its low per-capita consumption of the beverage and rising middle-class affluence.

“This is only the beginning - the addressable market for coffee in China is large and growing,” said Belinda Wong, CEO of Starbucks China, in the statement.

To contact the reporter on this story: Bhuma Shrivastava in Mumbai at bshrivastav1@bloomberg.net

To contact the editors responsible for this story: Rachel Chang at wchang98@bloomberg.net, Anne Riley Moffat

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