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Starbucks, Nestlé expand partnership to launch new coffee products in China

Starbucks Corp. and Nestlé SA are expanding their licensing partnership with the launch of Starbucks-branded products in China, according to an Aug. 8 announcement.

The companies closed the $7.15 billion deal in August 2018. They will roll out 21 new products consisting of whole bean, roast and ground packaged coffee, and Starbucks capsules that use Nestlé's Nespresso and Nescafé Dolce Gusto systems.

The products will be available across e-commerce channels, including Alibaba Group Holding Ltd.'s Tmall, JD.com Inc. and Suning.com Co. Ltd., the coffee giant said in a statement.

The Seattle-based company added that it will also introduce a business offering for food service providers in office and hospitality locations across several Chinese cities. The service will be gradually expanded to more cities over the next five years, Starbucks said.

The move enables Starbucks to diversify its offering for Chinese consumers beyond retail outlets, the company said in the statement.

China represents "a large and growing addressable market for coffee," Starbucks CEO and President Kevin Johnson said during a July 25 earnings call to discuss fiscal third-quarter results that beat analysts' expectations.

Johnson added that Starbucks will focus on premium coffee, customer personalization and in-store experience to differentiate itself from competitors in China, including home-grown brand Luckin Coffee Inc.