Great now I have to #boycottStarbucks. Shame on Starbucks.
— Kellz (@Kellyanne_G) May 7, 2018
Faced with multiple mergers and acquisitions in the drinks industry, Starbucks and Nestle are working on a deal to hopefully increase the rate of growth and international reach for both of the companies. Yet, while they may be in similar industries selling similar products, this merger might not be the best of ideas. Over the past couple of years, Starbucks’ rate of growth has been decreasing and reached 0% last year. Starbucks determined that it needs to gain more consumers. This agreement may help Starbucks increase its reach by leveraging Nestle’s international supply chain. Nestle, on the other hand, has been plagued with a multitude of controversies–i.e. water bottling in California, use of palm oil and use of child labor–and is desperately trying to get out of the downward spiral. Selling the Starbucks brand for Nestle means selling a brand that is currently untainted by controversy. However, this is where the problem might lie: this partnership may cause spillover of the negative views toward the Nestle brand and will thus be unlikely to gain Starbucks any new customers.
In fact, all of the comments on social media in relation to this topic have been rather negative. Most of them bring up the controversies circling Nestle and promise to expand the Nestle boycott to Starbucks. Given the very minimal coverage of the topic and the relatively small number of comments, both companies might be hoping that this partnership goes unnoticed by the consumers. After all, the product or packaging won’t change. This is simply a matter of distribution. If this does go unnoticed by the masses, Nestle will have finally found a way to expand into the United States while Starbucks will gain increased exposure in international markets, and primarily the European market. If consumers do notice though and take action, Starbucks will suffer from a worsened brand image while Nestle will have lost the $7.15 billion that it spent on the deal.
Have you heard of this potential partnership? Does this partnership affect your buying decisions in any way?