Starbucks’ (SBUX) stock is up about 1% on April 21 on news that food and beverage companies Keurig Dr Pepper (KDP) and Nestlé (NSRGY) have agreed to continue distributing the coffee maker’s products.
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In a news release, Keurig Dr Pepper and Nestlé USA said they will expand an existing partnership that includes manufacturing and distribution of Starbucks-branded coffee products in America and neighboring Canada.
The new agreement builds on a deal first struck in 2020 to produce and sell Starbucks-branded packaged coffee (K-Cup pods) in the U.S. and Canada. The companies plan to boost distribution within the Keurig brewing system, the machines for single-serve coffee that are present in households and businesses.
Starbucks’ Growth Strategy
Nestlé acquired the rights in 2018 to market and distribute Starbucks products globally outside of the chain’s coffee shops. Today, Nestlé handles the distribution of Starbucks coffee to grocery stores and other retail outlets across North America.
Financial terms of the renewed agreements with Keurig Dr Pepper and Nestlé were not disclosed. However, the extended partnership comes as Starbucks undertakes a multiyear revitalization strategy aimed at improving the company’s financial results and share price after several down years.
Is SBUX Stock a Buy?
Starbucks’ stock has a consensus Moderate Buy rating among 28 Wall Street analysts. That rating is based on 14 Buy, 12 Hold, and two Sell recommendations issued in the last three months. The average SBUX price target of $102.13 implies 5% upside from current levels.
