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Tuesday, September 16, 2008

Starbucks and Unilever team up over ice cream

Starbucks is putting the marketing power of Unilever behind its coffee-flavored ice cream.

Starbucks Corp. and Unilever said Monday that they have an exclusive licensing agreement to market and distribute Starbucks ice cream in the U.S. and Canada.

The ice cream market in both countries is worth about $17 billion, Unilever estimates.

Unilever already markets brands including Ben & Jerry's, Breyers, Good Humor, Klondike and Popsicle. Its annual revenue from ice cream is more than $6 billion.

Starbucks ice cream is not new -- it first arrived in 1996. It's made with Arabica coffee and sold in grocery stores. It's now sold in seven flavors, not counting the ice cream bars. Starbucks says the Unilever deal may spark new flavors.

The ice cream is not sold in Starbucks cafes, and the company does not plan to sell it any time soon -- most stores do not have freezers, spokesman Alan Hilowitz said.

Dreyer's Grand Ice Cream Inc. had been marketing Starbucks ice cream previously.

Unilever sells all kinds of products around the globe. It was formed in 1930 when British soap maker Lever Brothers merged with Dutch margarine company Margarine Unie.

Starbucks and Unilever are not strangers. Unilever and PepsiCo have a joint venture called the Pepsi/Lipton Tea Partnership. Starbucks works with that partnership to distribute Starbucks' ready-to-drink Tazo teas.

"Really, I think both of these (the ice cream and Tazo tea partnerships) really show that our consumer products group is a very important part of our business," Hilowitz said. "It's successful -- it's growing. We're continuing to do things and innovate and bring products to our customers outside of retail stores."

Starbucks would not disclose the value of the deal.

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