Starbucks inks 21-year Arla Foods licensing deal for RTD coffee

08 Jun 2018 --- Starbucks has signed up to a long-term 21-year agreement giving Arla Foods license to continue to manufacture, distribute and markets the corporation’s premium milk-based ready-to-drink (RTD) coffee beverages for the EMEA region.

Following on from a seven-year successful business partnership, Starbucks is seriously extending its strategic agreement with the farmer-owned dairy cooperative. 

Duncan Moir, Vice President Channel Development and Foodservice, Starbucks EMEA, says, that through the relationship with Arla Foods, the ready-to-drink business has grown by an average of 40 percent per year across Europe, the Middle East and Africa. 

“This new licensing agreement signals our commitment to continue to work together to grow the business within the ready-to-drink sector, and we are proud to be working alongside Arla Foods,” he says. 

In 2010, Starbucks chose Arla Foods as its license partner to manufacture, distribute and market its milk-based ready-to-drink coffee beverages for supermarkets and convenience stores across the EMEA region. Arla expects to continue to extend its reach further to meet consumer needs.

By this year, Arla has launched Starbucks beverages in 38 countries across EMEA and expects to sell more than 110 million units per year. 

The products are produced at Arla Foods’ sites in Esbjerg, Denmark and are made from milk from Arla Foods’ 11,200 farmer-owners and 100 percent arabica, ethically-sourced coffee from Starbucks Coffee Company.

“We are proud to take another step in our partnership with Starbucks, bringing great tasting Starbucks ready-to-drink coffee beverages to consumers across Europe and the Middle East while adding value to our farmers’ milk,” adds Hanne Søndergaard, Executive Vice President and CMO at Arla Foods.

“The partnership combines Arla’s extensive experience in manufacturing dairy beverages and our widespread distribution network with Starbucks unique coffee expertise.”

“Consumers in the EMEA region have welcomed the great taste and premium nature of the beverages, and we remain committed to working closely with Starbucks on developing and growing the category in the future.”

Opportunities within milk-based beverages is an important focus area in Arla’s Good Growth 2020 strategy and the company aims to be a leading provider of milk-based drinks in Northern Europe, The Middle East, Asia and Northern Africa in 2020.

“The new strategic licensing agreement makes the Starbucks partnership a vital part of delivering on this target and we believe that innovation is the key to future success. Our recent launches of new Starbucks Double Shot products are a great example of our joint commitment to innovation and consumers,” Søndergaard adds. 

This licensing agreement closely follows Nestlé and Starbucks forming a “global coffee alliance” in US$7.15bn distribution deal that was struck last month. 

The world’s largest food and beverage company agreed to the global license of Starbucks consumer and foodservice products allowing it to market them outside of the company’s coffee shops.

This “historic deal” comes at a time when Starbucks has been struggling with declining footfall in the US despite a series of promotions and is dealing with rebuilding its image following the controversial arrest of two black men in a Philadelphia store and the consequent protests and demonstrations accusing the US giant of racial profiling.

According to Nestlé this transaction will give the company a strong platform for continued growth in North America with leadership positions in the premium roast and ground and portioned coffee businesses.

“This historic deal is part of our ongoing efforts to focus and evolve our business to meet changing consumer needs, and we are proud to work alongside a company that is committed to our shared values,” Kevin Johnson, president and chief executive officer, Starbucks, said at the time of the announcement.