Keurig Dr Pepper $DPS and Nestlé USA have extended a partnership covering the manufacturing and distribution of Starbucks $SBUX-branded K-Cup pods in the U.S. and Canada, the companies said Monday.
Monday's announcement marks an extension of a 2020 agreement between the two companies. Distribution of Starbucks-branded pods through the Keurig single-serve brewing system — found in homes and workplaces throughout North America — is set to grow under the new terms. Retail distribution falls to Nestlé, which in August 2018 secured a global licensing arrangement giving it the authority to sell Starbucks products in grocery and other retail channels beyond the company's own cafes. Starbucks remains responsible for sourcing and roasting the arabica beans used in the pods. Neither company shared details about the financial terms of the arrangement.
Starbucks has been working to return to sales growth after a prolonged slump. The chain reported a 6% rise in revenue in its most recent quarter, with global same-store sales growing 4%, driven by higher ticket sizes and increased traffic in North America and internationally. CEO Brian Niccol has attributed the gains to the company's "Back to Starbucks" strategy, which has included changes such as baristas writing customers' names on cups, free refills on some in-store orders, and a pared-down menu aimed at faster service.
Same-store sales had declined for six consecutive quarters before the recent recovery. The company has also reduced its corporate workforce and closed hundreds of locations as part of the broader turnaround effort.
A separate deal — Keurig Dr Pepper's Reuters-reported $18 billion bid to acquire JDE Peet's — was unveiled by the company last year.