Starbucks Opens First Colombia Location, Competing With Nestle, Juan Valdez With Locally-Sourced Beans

Espresso
Starbucks already buys more than 400 million beans from Colombia and supports local growers. But on July 16 it opened its very first retail location in Bogota. Wikimedia Commons

Starbucks Corporation (NASDAQ:SBUX) is finally taking on Juan Valdez.

Though the Seattle-based café giant has more than 700 stores around Latin America, it opened its first one in Colombia on Wednesday, with plans for big expansion in the next five years.

Starbucks’ main competitor will be the iconic Juan Valdez chain, which already has 200 locations in the country known for its high-quality java. The new three-floor café in Bogotá will serve only locally grown coffee, a first for the U.S. company, which already sources more than 400 million pounds of its beans from Colombia.

“It’s a continuation in Starbucks’ highly successful international growth,” Wedbush restaurant analyst Nick Setyan said.

Given Starbucks' partnership with Mexican food service company Alsea SAB de CV (BMV:ALSEA) and Colombian food processing conglomerate Grupo Nutresa SA (BVC:NUTRESA), Setyan said, “there is no reason for me to doubt that they will reach their 50-unit [store] target over the next five years.”  

Both Starbucks and Juan Valdez have spent millions supporting Colombian coffee farmers and their families, in a region the United Nations designated as a World Heritage Site in 2011.

Colombia’s economy grew 6.4 percent in the first quarter of this year, and Starbucks isn’t the only global company making a move there.

Starbucks will also be competing with Nespresso for coffee supremacy.

The market is a “big opportunity,” Monica Acosta, a local marketing executive for Nestlé (SIX:NESN), which owns Nespresso, told CTV News.

“The economic momentum, the increase in both the number of Colombians traveling abroad and foreigners coming to Colombia -- all that means that Colombia is more exposed than ever to globally known brands,” she said.

“There’s room in the market for us both,” said Alejandra Londono, head of international sales at Juan Valdez, to the Associated Press.

Despite the competition, locals seem open-minded.

“I like Juan Valdez, but it doesn’t mean I’ll never go to Starbucks just because I want to support our own,” Bogotá architect Marcela Gomez told the Associated Press.

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