Nestle, the world's largest food company, has started selling Starbucks-branded coffee in mainland China. With this, the food giant is seeking to tap growth in the Chinese market, where coffee consumption per capita remains low compared to global standards.
Last year, Nestle paid $7.15 billion for exclusive rights to sell the US chain's coffees and teas globally. The company began selling Starbucks-labelled products in Europe, Asia and Latin America in February.
Nestle will begin selling 21 Starbucks-branded capsule and instant coffee products on Chinese e-commerce platforms such as Alibaba's Tmall and JD's website, as well as to offices and hotels in tier-1 cities.
Rashid Aleem Qureshi, Chief Executive Officer for the Greater China region, Nestle, said, "We believe China is the most exciting market in general but especially for coffee because per capita cup consumption is quite low as compared to Asia. Right now the overall soluble coffee in China is growing between 3-5% (a year) and we believe that by bringing this exciting new business opportunity we should be able to grow faster than that."
Belinda Wong, CEO of Starbucks China, added, "Nestle deal would open two new avenues to sell its products in China, where it has been investing heavily in its store network and delivery amid tougher competition from local startups."