Starbucks and PepsiCo expand joint venture

by Staff
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SEATTLE — Starbucks Coffee Co. and PepsiCo International announced they have expanded their partnership, known as the North American Coffee Partnership, beyond North America.

The joint venture between the two companies first launched bottled Frappuccino in 1996 and has made numerous ready-to-drink (R.-T.-D.) coffee beverages available to North American consumers. The companies now plan to make this partnership international, and China will be the first country to benefit from the expanded relationship. Starbucks currently has more than 540 stores in China.

The partnership will allow for the companies to bring Starbucks products to consumers via PepsiCo’s distribution channels, which include grocery and convenience stores.

"We are very excited about building on the success of the North American Coffee Partnership between PepsiCo and Starbucks, which essentially created the ready-to-drink coffee market in the U.S. and Canada," said Michael White, chief executive officer of PepsiCo International and vice-chairman of PepsiCo. "As we look ahead, we see opportunities to bring outstanding Starbucks ready-to-drink coffee products to consumers in many more countries."

Starbucks already sells R.-T.-D. coffee beverages in South Korea, Japan and Taiwan through other companies, and the news of the expanded partnership with PepsiCo will not change these relationships.

"With our coffee expertise and PepsiCo’s extensive sales and distribution network, this joint venture will allow us to provide an authentic Starbucks coffee experience to millions more consumers around the world anytime and anywhere they want it," said Gerry Lopez, president of Starbucks Global Consumer Products Group. "This could include countries that may not currently have Starbucks stores."

In 2006, the N.A.C.P. represented 93% of total volume sales and 93% of off-trade value sales in the R.-T-.D. coffee market, according to Euromonitor International.

"The category is dominated by the partnership of Pepsi and Starbucks," said Gary Hemphill, managing director of Beverage Marketing Corp., New York. "So as they go, so goes the category. Their portfolio of products accounts for about 90% of the category."

Starbucks and PepsiCo offer the Frappuccino, DoubleShot espresso, Ice Coffee and other beverages through the partnership.

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