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Sunday, August 5, 2012 - Page updated at 07:30 p.m.
Starbucks maps future of Venti-sized global expansion
By Melissa Allison
Seattle Times business reporter
Starbucks is on an international tear.
After building itself into the world's largest coffee-shop chain through decades of high-octane growth in the United States, the Seattle-based company now pins much of its future expansion on other countries.
There's plenty of room. Starbucks' domestic-international breakdown is lopsided, with nearly 11,000 stores in the U.S. and fewer than 7,000 in other countries.
The chain started to even the balance several years ago after U.S. sales slowed and the company stepped on the gas internationally. Last month Starbucks said it plans to open 1,200 stores in the next fiscal year, which begins in October — about three shops a day. Fewer than half of those will be in the United States.
About 500 of the new stores will open in Asia — more than half in China, where the coffee colossus has operated for more than 13 years. Starbucks also plans to open a farmer-support center in China's Yunnan region this year.
"We're in the early stages of growth in Asia," said John Culver, president of Starbucks' China and Asia Pacific region. "It represents the fastest and largest retail growth opportunity in the company's foreseeable future."
Here's a look at Starbucks' footprint around the world:
Australians love coffee and coffee shops. A chain called Gloria's Jeans Coffees has hundreds of locations down under. But Starbucks started pulling out several years ago, and now has only 22 locations in Australia, down from 84 in 2008. Officials said they focus on Brisbane, Melbourne and Sydney, where growth has been profitable.
The world's largest coffee-producing country has only 45 Starbucks stores, but it is one of several countries targeted for major growth. "Brazil is a market that we think can have 1,000 stores, at least, and we are sitting with less than 100," CEO Howard Schultz said last year.
In Brazil, Starbucks sells a chocolate sweet called brigadeiro, as well as brigadeiro-flavored Frappuccinos and the Brasil Blend, a coffee with medium body, soft acidity and chocolate notes. Maybe after it becomes immersed in Brazil, Starbucks will export cafezinho, tiny cups of strong, sweet coffee Brazilians traditionally order.
Starbucks' first international store opened in Vancouver, B.C., in March 1987, just months before Schultz and investors bought a small chain called Starbucks from its founders. The brand remains popular in Canada, where its 1,161 stores make that country Starbucks' largest international market. China is on course to overtake that position soon.
The chain plans to more than double locations in China to 1,500 by mid-2015. Long a worldwide status symbol, Starbucks inspires some customers in China to carry their coffee cups with the mermaid intentionally facing out.
Schultz met last spring with the parents of some of Starbucks' 10,000 employees in Beijing and Shanghai to share the company's values with family members and discuss its long-term commitment to employees' development — an effort to include families in decision-making, just as many Chinese workers do.
Cherry blossom lattes, black sesame green tea Frappuccinos and iced dumplings are seasonal offerings on Starbucks' menu in China.
Egypt, Morocco, Rwanda
Although Starbucks buys coffee from Africa, it has few cafes on the continent — 21 in Egypt and three in Morocco. Rwandan President Paul Kagame, whose country has grown some of Starbucks' most prized coffee beans, told a Starbucks shareholders' meeting in 2007 that he'd like a Starbucks store in his country. A couple of years later, Starbucks opened a farmer-support center there, and last year added one in Tanzania.
Starbucks has never turned a profit in France, one reason the chain's business in Europe lags the rest of the world. It has tailored food and coffee to French tastes — including a smoother espresso roast — but popularity and profits have yet to follow at its 74 French cafes.
After five years of delays, Starbucks finally will open in India this fall, in partnership with Tata, a conglomerate that markets everything from coffee to cars. The first stores are planned in Mumbai and New Delhi.
The idea of coffee as an affordable luxury has already caught on in India, whose population of 1.2 billion people is just behind China's 1.3 billion. A popular coffee shop chain called Café Coffee Day operates more than 1,000 stores.
In 1996, Japan became Starbucks' first market outside North America — and the first time high-end coffee was tested in a mostly tea-drinking culture.
The concept caught on, and in 2013 Starbucks will open its 1,000th store in Japan. "We define coffeehouse culture in Japan," Culver said.
The market also exports some of its innovations — notably, Hojicha lattes, which are sold throughout Asia. Next up? How about white chocolate pudding Frappuccinos, a hit in Japan last spring?
The first stores opened in 2007 after years of legal wrangling with a Moscow lawyer who claimed rights to its trademark. Starbucks now has 56 stores in Russia, far fewer than many
Another significant market for Starbucks, it has 442 cafes, with plans to reach 700 in the next five years. Space can be tight in Seoul, so Starbucks got creative when a five-story retail spot became available and now is the world's tallest Starbucks.
Sometimes the smallest markets come up with big hits. Starbucks' Taiwan business, which has just 271 coffee shops, developed the green tea lattes and Frappuccinos that are now popular around the world.
Also part of the overall European overhaul, Starbucks' 752 stores in the U.K. recently added an extra shot of espresso to their 12-ounce lattes.
In the U.S. and other markets, one shot is standard. The Brits apparently have a bigger caffeine jones.
Melissa Allison: 206-464-3312 or email@example.com. On Twitter @AllisonSeattle.
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