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Originally published Monday, July 11, 2011 at 1:26 PM

Starbucks reshuffles execs, promotes head of Seattle's Best Coffee

Michelle Gass is taking over Starbucks' operations in Europe and the Middle East.

Seattle Times business reporter

Starbucks International

Back in the days of Starbucks' fastest expansion, when it was growing by seven stores a day, its international operation was relatively small. In 2007, the chain had nearly 11,000 U.S. cafes but just 4,300 international locations. Now, the international segment is growing faster than the U.S. business. Here's a snapshot:

Locations: Almost 6,000 — 2,700 in Asia; 1,700 in Europe and the Middle East; and 1,500 in Canada and Latin America

Sales: $2.3 billion for the fiscal year ended October 2010, out of $10.7 billion for the whole company

Operating income: $225 million, out of $1.4 billion for the whole company

Most stores: Canada (1,083), Japan (914) and U.K. (717)

Getting ready to open in: India (2012) and Vietnam (2013)

Still no cafe in: Italy

Source: Starbucks

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After growing rapidly in the U.S. for most of its history, Starbucks has turned its attention to international growth — and Monday added an executive to help lead that expansion.

Michelle Gass, who had been in charge of the Seattle's Best Coffee chain and brand for Starbucks, will run Starbucks' stores in Europe and the Middle East.

The executives who had led Starbucks' U.S. and international businesses are shifting as a result. Cliff Burrows, who was in charge of the U.S., adds Canada and Central and South America to his portfolio.

John Culver, who had run the entire international operation, will now lead the Asian-Pacific region, including Starbucks' much-anticipated first store in India next year and its debut in Vietnam in 2013.

In a telephone interview, Chairman and CEO Howard Schultz said the changes were made to "take three of our top people and put them against our biggest opportunity," which is international growth, including the sale of coffee and drinks in grocery and convenience stores all over the world.

"We're doubling down on our commitment and belief that the international business is going to be much more significant in the future," Schultz said.

Starbucks has almost 17,000 cafes. Nearly 6,000 are outside the U.S. — 2,700 in Asia, 1,700 in Europe and the Middle East, and 1,500 in Canada and Latin America.

Back in the days of Starbucks' fastest expansion, when it was growing by seven stores a day, its international operation was relatively small. In 2007, the chain had nearly 11,000 U.S. cafes but just 4,300 international locations.

Now, the foreign segment is growing faster than the U.S. business. In the most recent quarter, Starbucks closed 228 U.S. cafes but added 82 shops overseas.

Revenue for the international business rose 20 percent during the fiscal year ended Oct. 3, to $2.3 billion. The U.S. business grew 7 percent but still dwarfs the international side with revenues of $7.6 billion.

Starbucks will not change the way it reports those numbers — U.S. and international as separate categories — this fiscal year, a spokesman said. During its fiscal year-end earnings announcement in November, it will give details about how it will report sales going forward.

Starbucks' grocery sales — everything from coffee beans to bottled Frappuccino to ice cream — are part of another division, led by Jeff Hansberry, that will now include Seattle's Best Coffee.

Before Gass took the helm at Seattle's Best almost two years ago, it had lived for years in Starbucks' shadow with just 550 cafes, most of them in Borders bookstores.

Shortly before Gass became president of Seattle's Best, it partnered with the Subway fast-food chain — a milestone for Starbucks, which had sold coffee in some McDonald's stores in the Northwest but otherwise eschewed fast-food locations.

The company even turned down McDonald's when it was looking for a coffee partner for its McCafé concept several years ago.

Gass accelerated the changes at Seattle's Best, leading the creation of a new logo and forming partnerships with Burger King and others. Now, the coffee is sold in almost 50,000 locations in the U.S. and Canada.

Before running Seattle's Best, Gass served in a two-person "Office of the CEO" with Schultz when he first returned to head the company in 2008.

She has been with Starbucks since 1996, when she started as the Frappuccino marketing manager. Gass is credited with helping popularize that drink, which now tops $2 billion a year in sales — about 20 percent of Starbucks' total annual revenues.

She will be based in Amsterdam.

In the past couple years, Starbucks has frequently talked about "billion-dollar brands" like Frappuccino. Schultz has said he hopes its instant coffee and Seattle's Best Coffee will reach a billion dollars in annual sales.

Part of Starbucks' executive shuffle Monday included adding the Tazo tea business to Chief Marketing Officer Annie Young-Scrivner's plate.

Tazo is another billion-dollar brand, it turns out. It generated $1.3 billion in revenue last year, the company said.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com

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