Research
Interview Synopsis

Starbucks & Nestlé alliance – US market update & growth outlook

  • Multi Asset
  • Consumer
  • North America

Starbucks Corp and Nestlé formed a global coffee alliance in 2018 to bolster their respective consumer packaged goods (CPG) and foodservice offerings. Third Bridge Forum spoke to a former VP at Starbucks for an update on the alliance and to gauge how the industry has been impacted by COVID-19.

Click on the hyperlink below to access the full Forum transcript.

COVID-19 boosts Starbucks’ retail coffee sales

The Interview started with an outline of Starbucks’ evolution in US retail and moved on to pre-pandemic trends and other demand dynamics that have spurred growth across the in-home coffee category. 

The expert then talked about how the pandemic and lockdown has impacted consumer behaviour. Sales were up 16% YoY in Q2, reflecting “some of the smart things [Starbucks are] doing but in large part that is all about COVID,” the expert said. 

The impacts of coffee shops reopening, higher unemployment levels and lower consumer confidence were also discussed in a 12-18-month time frame. While the CPG channel will continue to enjoy a lift “with a lot of staying power”, the coffee shop experience is expected to remain dulled. However, quick service restaurants (QSRs) “will come back”. 

Another area of focus was whether any secular changes due to coronavirus might impact the industry. Secular changes are indeed “here to stay” and the speciality or perceived premium brands stand to benefit the most.

The Interview also covered the strategic rationale for the Nestlé-Starbucks alliance. “At the highest level, Starbucks knew that it did not have the wherewithal to sell in the CPG globally in the time frame that it wanted to,” the expert said. “I think it was an outstanding bit of business for both companies.”

To access all the human insights in Third Bridge Forum’s Starbucks & Nestlé Alliance – US Market Update & Growth Outlook, click here to view the full transcript

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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