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Saturday, July 26, 2025

Starbucks back on expansion path in Americas, China

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20121206

NEW YORK-Star­bucks Corp plans to in­crease the num­ber of its cafes in the Amer­i­c­as by more than 20 per cent by open­ing more than 3,000 new shops there in the next five years as it looks to re­ly on tea and juice as much as cof­fee, it said on Wednes­day.

The world's largest cof­fee chain is al­so fin­ished with ac­qui­si­tions for the time be­ing, af­ter buy­ing juice sell­er Evo­lu­tion Fresh for $30 mil­lion and Bay Bread LLC's La Boulange Bak­ery for US$100 mil­lion over the last 13 months. Star­bucks al­so has an agree­ment to pur­chase tea store chain Tea­vana Hold­ings Inc for US$620 mil­lion.

"We're pret­ty full up at this time in terms of our re­sources and ca­pa­bil­i­ties," Chief ex­ec­u­tive of­fi­cer Howard Schultz said at Star­bucks' in­vestor con­fer­ence in New York on Wednes­day. "At this mo­ment in time, we have enough to han­dle."

Food long has been a weak link at Star­bucks, which plans to roll out sweet and sa­vory La Boulange pas­tries and oth­er good­ies at 2,500 of its com­pa­ny-op­er­at­ed US shops by the end of next year. Star­bucks al­so ex­pects to have Evo­lu­tion Fresh juices in more than 5,000 US stores by the end of 2013. The com­pa­ny is al­so ex­pand­ing and ex­per­i­ment­ing with new re­tail con­cepts.

It has opened four Evo­lu­tion Fresh juice stores and one Tazo tea shop in the Unit­ed States, and it plans to add "tea bars" to ex­ist­ing Tea­vana stores. The goal at Tea­vana is to repli­cate the suc­cess the com­pa­ny had adding cof­fee drinks at its ear­ly Star­bucks stores, which sold whole bean cof­fee.

"There is al­ways a risk when you take on all these brands," Bern­stein Re­search an­a­lyst Sara Sen­a­tore said, but she added that Star­bucks had mit­i­gat­ed that risk by mak­ing deals that fit with its long-term growth plans, which fo­cus on in­creas­ing its reach be­yond cof­fee and the four walls of its cafes.

Schultz ad­mit­ted that Star­bucks' growth in 2007 and 2008-the years be­fore its busi­ness plunged with the fi­nan­cial cri­sis-was "undis­ci­plined." The com­pa­ny is not re­turn­ing to that pri­or strat­e­gy of "growth for growth's sake," he said. Star­bucks' con­sumer pack­aged goods busi­ness, which sells such items as whole bean cof­fee and bot­tled drinks through gro­cery stores and oth­er re­tail­ers, could one day be as large as the cafe chain, Schultz said.

In­vest­ment Tech­nol­o­gy Group an­a­lyst Steve West said he was en­cour­aged that the com­pa­ny is build­ing a "tiered strat­e­gy" for those pack­aged goods. Based on the com­pa­ny's moves thus far, it ap­pears that Star­bucks cof­fee and Tea­vana teas are in the core/pre­mi­um cat­e­gories, while Seat­tle's Best Cof­fee and po­ten­tial­ly Tazo tea are more main­stream brands.


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