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People like to drink Starbucks coffee outside of Starbucks, and it’s paying off for Nestlé

Adam Rasmi

The world’s largest food company, Nestlé, is buzzing.

The Swiss packaged food giant posted first-quarter earnings today, revealing that sales rose by 4.3%, beating analyst expectations. Coffee played a big role in the results—specifically, Starbucks coffee.

Nestlé owns the Nespresso brand of capsule-based coffee makers. Last year, it announced that it would pay Starbucks $7.1 billion to license its brand for packaged products outside of the coffee chain’s outlets, like Nespresso pods and branded beans sold at grocery stores. Nestlé launched a new range of 24 Starbucks-branded products in February.

Nestlé’s forward-looking guidance expects continued sales growth throughout 2019, thanks to coffee as well as strong-performing product lines like pet-care products. As consumers increasingly opt instead for more local and fresh foods, Nestlé has sought new avenues of growth away from its core packaged food brands.

A federal council in Switzerland last week recommended that the government no longer stockpile its emergency supply of coffee. “The Federal Office for National Economic Supply has concluded coffee… is not essential for life,” it said. Nestlé shareholders might beg to differ.

 

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