Starbucks targets full control of China stores
0 
|
|
|
The Seattle-case coffee retailing giant Starbucks aims to take full control of its stores in China. |
The US coffee retailer Starbucks has bought more than 100 regular stores in southern China from its partner Maxim's Caterers, as part of the café giant's plan to take full control of all its stores in China, the company said in a press releaseThursday.
Maxim's Caterers, a partner of Starbucks based in Hong Kong, previously owned 30 percent of those retail outlets located in Guangdong, Hainan, Sichuan, Shaanxi, Hubei and Chongqing Municipality.
"Entire ownership of our stores in Central, South and Western China is part of our broader strategy to build the country as our second home market outside the US," John Culver, president of Starbucks Coffee International, said in a statement.
According to the deal, Maxim's will have 100 percent ownership of stores in Hong Kong and Macao. Starbucks, however, didn't disclose how much Starbucks spent on the deal.
"This means that Uni-President Enterprises Corp, Taiwan's largest food group, is now the only joint venture partner of Shanghai Uni-President Starbucks Coffee, owning approximately 200 stores in Shanghai, Jiangsu and Zhejiang along the eastern coastline," said Li Jing, Starbuck's public manager in Greater China.
Li added that she was not aware that executives had any further plans to purchase the Shanghai joint venture.
Starbucks' deal with Maxim's is part of a plan to expand into eight to 10 new Chinese cities each year, adding to a total of 1,500 stores in 90 cities by 2015, more than tripling its current 450 stores across 35 Chinese cities.
Though exact sales of Starbucks' China are not available, the company said its growth in China's mainland averaged 30 percent annually over the past five years.
Huang Mao, a beverage analyst with Guosen Securities, said the acquisition would strengthen Starbucks' business in China's second-tier cities, especially in less developed western regions.
"The key to fighting key rivals here, such as McDonald's, Costa Coffee, Pacific Coffee, Taiwanese chains and a growing number of local coffee shops that are more experienced in cultivating domestic consumers, is to occupy niche markets and expand the product line. Starbucks has already taken the initiative to develop its Via instant coffee," he said.
Though Starbucks' shares have risen around 60 percent since 2010 after a two-year streamling that included cutting costs and closing almost 1,000 cafes worldwide, Huang revealed fuel and dairy costs will add to the growing number of risks the firm faces in China.
Starbucks reported an increase of 20 percent in net income to $261.6 million in its fiscal second quarter ending April 3.
Go to Forum >>0 Comments