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JAB vs. Starbucks coffee war continues with illycaffè deal

JAB will make illy-branded capsules for Nespresso machines

JAB Holding Co. is taking a bite out of Starbucks’ recent $7 billion licensing deal with Nestle.

The German-based company, which owns Keurig Green Mountain and a slew of other coffee-centric brands, has entered into a licensing agreement with Italian coffee giant illycaffè to make a line of illy-branded aluminum capsules.

JAB Holding’s JDE division in the U.S. will produce and distribute the new capsules, designed for Nespresso machines. Nespresso is owned by Nestlé.

In a deal cut with Starbucks earlier this year, Nestlé gained the rights to market, sell, and distribute the chain’s coffee and tea around the world. Nestlé’s brands include Nescafé, Nespresso and Dolce Gusto.

The Illy-branded pods for Nespresso will land in retail stores in the first half of 2019. They will go head-to-head with Starbucks-branded coffee distributed by Nestlé.

Representatives for illycaffè, based in Trieste, Italy, said the new capsules would work on any appliance that takes aluminum capsules including Nespresso, Delonghi and Breville espresso machines.

In a previous interview, retail strategist Bob Phibbs said JAB is clearly forming a consortium of brands that are circling McDonald’s, and Starbucks with their alternative coffee and bakery offerings.

Illycaffè CEO Massimiliano Pogliani said JAB is the right partner for this new business strategy.

“Making the illy-experience more and more accessible to consumers globally is fundamental for our strategy and it is the reason why we decided to enter such a broad market standard through a licensing agreement,” he said in a statement. “Millions of coffee lovers will be able to greatly benefit from their freedom of choice. And this is very exciting.”

 Contact Nancy Luna at [email protected]

Follow her on Twitter @FastFoodMaven

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