Starbucks, PepsiCo to bring R.-T.-D. coffee beverages to Latin America

by Eric Schroeder
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Products to be distributed include Starbucks Frappuccino chilled coffee drinks, Starbucks Double Shot Espresso and Cream, and Starbucks Refreshers beverages in Latin America.

SEATTLE — Starbucks and PepsiCo, Inc. are joining forces for the marketing, sale and distribution of Starbucks ready-to-drink (R.-T.-D.) coffee and energy beverages in Latin America. Products to be distributed include Starbucks Frappuccino chilled coffee drinks, Starbucks Double Shot Espresso and Cream, and Starbucks Refreshers beverages in Latin America.

The partnership will look to capitalize on what has been a booming R.-T.-D. coffee and energy beverage category in Latin America. According to Euromonitor, the category exceeds $4 billion in sales and is projected to grow by 22% over the next five years.

Under terms of the agreement, Starbucks will provide coffee expertise and PepsiCo will sell and distribute Starbucks R.-T.-D. coffee and energy beverages leveraging its expansive network and experience across the region. Together, both companies will continue to market, innovate and further develop the brand in Latin America.

The partnership initially will serve select markets in the Caribbean, Chile, Colombia, Costa Rica, Guatemala, Mexico, Panama, Peru, Puerto Rico, and Uruguay, but over time the companies plan to expand distribution of Starbucks R.-T.-D. coffee beverages to other markets in Latin America.

Michael Conway, president of global channel development at Starbucks.

“Our expansion throughout Latin America in 2016 enables us to deliver high-quality Starbucks coffee in a convenient ready-to-drink format to our customers where they live, work and play,” said Michael Conway, president of global channel development at Starbucks. “PepsiCo’s sales expertise and distribution network makes them the ideal company to work with to unlock the Latin American ready-to-drink market and accelerate local demand for Starbucks.”

Laxman Narasimhan, chief executive officer of PepsiCo Latin America, said the companies’ North American coffee partnership has been “one of the most successful joint ventures in the beverage industry.”

“With this new agreement, we bring more than 20 years of partnership success to a region where coffee is part of the culture,” Mr. Narasimhan said. “Together, our highly talented and passionate teams will expand upon the vision set decades ago to create a new blueprint for continued growth in Latin America.”

Starbucks’ relationship with PepsiCo dates back more than 20 years when the two companies formed the North American Coffee Partnership (N.A.C.P.), a joint venture that built the R.-T.-D. coffee category in the United States. The N.A.C.P. now has approximately 97% market share in R.-T.-D. coffee, and has grown to more than $1.5 billion in retail sales, according to Chicago-based Information Resources, Inc.

The N.A.C.P. began with the launch of Starbucks Frappuccino chilled coffee drinks, but now includes a diverse portfolio of coffee and energy beverages: Starbucks Frappuccino, Starbucks Double Shot, Iced Coffee, Iced Espresso Classics, and Starbucks Refreshers.

Starbucks launched its retail operations in Latin America in 2002, and now operates more than 870 stores in 14 markets in the region. Latin America is an important growing region for Starbucks coffee as it supplies more than half of the approximately 400 million lbs of arabica coffee that Starbucks purchases every year. PepsiCo and its predecessors have been operating in Latin America for more than 100 years, and its beverage operations and franchises span across all countries within the region and in select markets throughout the Caribbean Islands.
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