Starbucks and Nestlé have agreed upon a US$7 billion deal that will allow Nestlé to market, sell and distribute Starbucks branded coffee and tea around the world. The licensing agreement covers the range from whole bean coffee to portioned coffee pods.

“This partnership demonstrates our growth agenda in action, giving Nestlé an unparalleled position in the coffee business with a full suite of innovative brands,” said Nestlé CEO Mark Schneider.

The deal will not extend to Starbucks’ $2 billion ready-to-drink market, which will still be distributed by PepsiCo.

“This global coffee alliance with Nestlé is a significant strategic milestone for the growth of Starbucks,” said Starbucks CEO Kevin Johnson. “Bringing together the world’s leading coffee retailer, the world’s largest food and beverage company, and the world’s largest and fast-growing installed base of at-home and single-serve coffee machines helps us amplify the Starbucks brand around the world while delivering long-term value creation for our shareholders.”

The deal will affect around 500 Starbucks workers, mainly in Seattle and London, who will not shift to Nestlé.