Can Starbucks Find Room to Grow?

 
on January 24 2013 1:59 PM
Starbucks

Starbucks (NASDAQ:SBUX) is scheduled to announce its first quarter earnings after the market closes on Thursday, and analysts are expecting the company to report strong results thanks to an eventful six months. In the second half of 2012, Starbucks introduced its Verismo single-cup brewing system, acquired Atlanta-based Teavana for $620 million, and saw its stock price rise more than 10 percent. With these new advantages, the coffee company is planning to make aggressive expansion its mission this year.

Forbes estimated that the company will add 1,300 new stores in 2013, a significant increase compared to the 1,057 locations the company added in the previous 12 months. India and China will be at the forefront of the growth, with approximately 600 new store estimated to open in the China/Asia Pacific region.

Starbucks’ efforts to capture market share in India began on October 19, when the Seattle-based coffee retailer opened its first cafe in the country with its partner, the Indian conglomerate Tata. Since then, the company has continued its foray into the country, announcing Thursday that it will open two more locations at the Indira Gandhi International Airport.

“We look forward to extending the unique Starbucks Experience and meeting the increasing demand for high quality coffee within travel channels in India,” Avani Saglani Davda, the chief executive officer of the joint venture, told The Economic Times. “With the entry into this segment, Starbucks will offer a differentiated breakfast menu that is carefully selected to cater to travelers, while providing an inviting and relaxed atmosphere to enjoy the legendary Starbucks Experience while in transit.”

Expansion in the Americas is also expected to be significant, with 600 new stores planned for the region as well. However, growth in the western hemisphere will be different. While Starbucks is looking to gain a foothold in India, where the coffee market is relatively small compared to the population, the company is focusing on its other brands in the United States, where it already has more than 11,000 stores. Not all of the new locations will be traditional Starbucks coffee shops, Teavana and Evolution juice bars will be part of the new additions.

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