Starbucks strikes again, more firmly into the minds of the Chinese core.
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Starbucks’ bigger China plans
By Zhang Haizhou and Linda Deng in Seattle
Source – China Daily, published March 22, 2012
Lindsey Pringle, assistant manager a Starbucks Store in downtown Seattle, shows a Chinese customer Ethiopian coffee beans. Deng Yu / China Daily
The first Western coffeehouse chain to enter this tea-drinking nation may soon be stocking China’s grocery stores with their ready-to-brew packages of coffee.
The Seattle-based coffee giant has big plans for China. It is not only considering opening hundreds of new cafes across the country in the coming years, it is hammering out an idea to sell a varietal of coffee from Yunnan province under its brand to grocery stores and open a “community store”, in which the chain donates a portion of the store’s sales proceeds to help a local community organization.
John Culver, president of Starbucks China and the Asia-Pacific, said the company is “looking at the possibilities” of selling both packages of their ground coffee and bottled drinks in Chinese grocery stores.
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“We see an opportunity to create a single variety on coffee that comes from Yunnan and build on that Yunnan coffee story and tell the story to the world. That’s very exciting,” Culver said.
Last year, Starbucks signed a deal to form a venture partnership with the Ai Ni Group to purchase and export arabica Yunnan coffee beans as well as operate dry mills in the province.
The chain, which boasts more than 18,000 outlets around the world, had a 2012 company record for revenue of $13.3 billion, CEO Howard Schultz said on Wednesday. He said the company had achieved “stunning success” in China.
“It’s no doubt that one day China will become our second-largest market after the US and it’s possible that, over many years, potentially the largest one,” he said at the company’s annual meeting of shareholders.
Starbucks has more than 800 stores in 58 cities on the Chinese mainland and projects to have more than 1,500 stores in 70 cities by 2015. It opened its first Chinese mainland store in Beijing in 1999 and the Chinese mainland now ranks as the fourth-largest market in Starbucks’ global network. It had nearly 12,000 outlets in the United States, 1,175 in Canada and 975 in Japan by the end of 2012.
The company’s Asia-Pacific revenue increased to $721 million in the 2012 fiscal year, from $552 million the year before.
It has more than 3,400 stores in 13 countries and regions in the Asia-Pacific.
The company’s ambitions for the Chinese mainland come at a time when the nation’s coffee market is growing rapidly with several coffeehouse chains vying for market share.
The number of cafes in China doubled from 15,898 in 2007 to 31,783 in 2012, according the UK-based research company Mintel Group Ltd.
Costa Coffee, the British multinational coffeehouse company, said it will have 500 cafes in the country by 2016 and Hong Kong-based chain Pacific Coffee Co said it will also expand to the mainland. Local companies, such as Sculpting in Time, are also expanding, though at a more modest rate.
Indeed, earlier this year the Chinese version of Bloomberg Businessweek said Starbucks, despite its near 61-percent market share in China, is now “encircled”. Schultz, however, remains optimistic.
“In our 42 years of history, our focus has been on our customers and doing anything what we can to exceed our expectations, not on the competition,” he said before Wednesday’s shareholder meeting. “I’m very optimistic about the Chinese economy and the future of China.”
Blair Taylor, the company’s chief community officer, had few details about Starbucks’ plans to open a community store in China, but said it could be “in the near term”.
“We are tying to see to make that happen some time, if we can, in this fiscal year. If not, it’ll be the next fiscal year,” said Taylor, who added that a location has not been chosen for the store.
The company now has three community stores in total and all are in historically poor neighborhoods in the US.
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(China Daily 03/22/2013 page1)