Starbucks has an Agreement with PepsiCo: What Does it Mean for Both Companies?
In the world of business, partnerships and agreements between two entities can create dynamic opportunities for growth and expansion. One such partnership that has been making waves over the years is the one between Starbucks and PepsiCo.
In 1994, Starbucks signed a licensing agreement with PepsiCo that allowed the latter to distribute Starbucks bottled coffee drinks. This agreement was significant because it paved the way for Starbucks to enter into the ready-to-drink coffee market, which was then dominated by Coca-Cola`s Nestea and Nestle`s Frappuccino. The partnership also allowed Starbucks to reach a wider audience beyond its brick-and-mortar stores.
Fast forward to today, and the partnership between Starbucks and PepsiCo has only grown stronger. PepsiCo continues to be Starbucks` distributor for its bottled drinks, but the two companies have also expanded their collaboration to include other products such as Starbucks Refreshers, Teavana bottled teas, and even a line of Starbucks-branded K-Cup pods for Keurig coffee makers.
So, what does this partnership mean for both Starbucks and PepsiCo?
For Starbucks, the partnership has allowed the company to increase its market reach and sales volume without having to invest heavily in new manufacturing and distribution facilities. This has helped Starbucks remain competitive in the ready-to-drink coffee market, which has continued to grow in recent years.
For PepsiCo, the partnership has provided the company with an opportunity to tap into the lucrative coffee market, which is expected to reach $102.6 billion by 2023. The partnership has also allowed PepsiCo to diversify its product portfolio beyond traditional soft drinks and snacks.
However, the partnership has not been without its challenges. In 2014, Starbucks announced that it would not be renewing its agreement with PepsiCo for the distribution of its bottled drinks in grocery stores and other retail outlets. Instead, the company entered into a new partnership with rival Coca-Cola for the distribution of its products. While this move was seen as a significant blow to PepsiCo, the company has continued to collaborate with Starbucks on other product lines.
In conclusion, the partnership between Starbucks and PepsiCo has been a significant one that has benefited both companies in different ways. As the ready-to-drink coffee market continues to grow, it will be interesting to see how this partnership evolves and what new opportunities it will bring for both Starbucks and PepsiCo.