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Starbucks deal with Nestlé opens doors internationally after some near-term pain

Starbucks Corp.’s deal with Nestlé SA is expected to be a drag on revenue in the near term, but analysts think it’s a good idea in the long run.

Nestlé NESN, -0.98% will pay Starbucks SBUX, +0.38% $7.15 billion up front as part of the deal and Starbucks will “retain a significant stake as a licensor and supplier of roast and ground and other products going forward,” the company said in the release. Additional revenue will come from product sales and royalties, executives said on the conference call following the announcement.

A Nestlé release valued the annual sales for the businesses involved at $2 billion.

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