Starbucks Adds More Stores in China and Asian-Pacific Area
John Culver, head of China and Asia Pacific business at Starbucks, told The Wall Street Journal that Starbucks Corporation would increase its presence in China from the current 500 stores to over 1,500 until 2015. He reports that the coffee chain’s revenue for China and the Asian-Pacific region increased 38% while its operating income grew 26% for the first quarter. Customers were not deterred even when it increased its prices to offset higher costs, Culver said. The Chinese are embracing coffee drinking, and socializing at coffee shops is gaining popularity. Starbucks also added more stores in Japan, South Korea, Indonesia and Thailand. It is eyeing two new markets this year – India and Vietnam. ”We see our opportunity for positive momentum … and to continue to grow the business effectively,” he continued.
Starbucks Corp. plans to triple the size of its work force and network of shops in China over the next three years, a top executive at the Seattle-based coffee chain said Sunday.
The company currently has about 10,000 employees for more than 500 stores in China, said John Culver, head of China and Asia Pacific business at Starbucks.
He said the company would accelerate growth in China, a country with thousands of years of tea culture, to capture the growing taste for coffee.
“We will continue to accelerate the new store buildup and so go from 500 stores today to over 1,500 by 2015,” he said in an interview on the sidelines of the Boao Forum for Asia, an international meeting of business and political leaders in the southern Chinese island province of Hainan.
To facilitate the strategy, “we will more than triple the size of our employee base,” he said.
China, where coffee shops have become a fixture on city street corners, is one of Starbucks’s great success stories. The concept of drinking coffee and socializing at coffee shops is becoming increasingly popular in the region.
Starbucks doesn’t break out its sales for China alone, but revenue for China and the Asian-Pacific region for its fiscal first quarter ended Jan. 1 climbed 38% to $166.9 million, while operating income grew 26% to $57.8 million.
Starbucks recently raised coffee-drink prices in China to offset higher costs. While the increases add to prices that are already higher than what similar coffee drinkers pay in the U.S., they haven’t deterred customers.
China’s coffee market, including fresh brews and instant varieties, is booming. Sales rose to 6.25 billion yuan ($992 million) in 2011, up 20% from a year earlier and a 92% increase from 2006, according to market-research firm Euromonitor International.
And despite the rapid expansion, there is still room to grow. …
Photo by Derek 2008