Sat, Aug 19, 2006 - Page 12 News List

Starbucks reveals aggressive expansion plan

MORE COFFEE EVERYONE?The nation's largest coffee chain is aiming to spread further around the nation by opening more stores and widening its product range

By Jackie Lin  /  STAFF REPORTER

President Starbucks Coffee Corp (統一星巴克), the firm in charge of Seattle-based Starbucks operations in Taiwan, plans to double the number of outlets to 350 within five years to strengthen its leadership in the fast-growing market, a company official said yesterday.

Revenues are also expected to jump from NT$2.63 billion (US$80.5 million) last year to NT$6 billion by 2011, said John Hsu (徐光宇), president of the nation's biggest coffee chain, during a press briefing held to launch its 171st store in the scenic hilltop community of Jiufen (九份), Taipei County.

"Taiwan is simply a good market," he said, referring to people's growing purchasing power.

Citing US statistics, which sees a high store density with one Starbucks for every 30,000 people, Hsu said his firm still has much room to grow as each Starbucks store in Taiwan now only serves 130,000 people.

boost market share

He aims to outrival smaller competitors to boost market share from the current 15 to 20 percent to a solid and stable 40 percent, as in the case of President Chain Store Corp (統一超商), which operates the world's third-largest 7-Eleven franchise, with more than 4,000 stores nationwide.

The main growth driver will come from business diversification by raising the retail portion of food, he said.

"Following eight-years of development, we've built up a firm brand image in Taiwan. Now it's time to meet consumers' expectations" of a wider product lineup, Hsu said.

Asked whether the strategy had been mapped out in response to the sharp rise in popularity of 85oC cafe (美食達人), a coffee, tea, cake and bread chain, he shrugged off the speculation, saying the move was to stabilize his chain's own growth and maintain its leadership.

good reputation

85oC cafe, established in 2003, has quickly expanded to 183 stores with a reputation for providing five-star products at a good price.

The chain is expected to grow to between 230 and 240 stores by the end of the year, hoping to rake in NT$2.5 billion in revenue, said marketing director Jacky Yang (楊欲奇).

Yang said the company creates at least five new bakery items per month to enrich its product mix, which has become its major selling point.

President Starbucks is planning to develop a wider range of cakes, bread and packaged food to match Taiwanese people's food and drink habits, from breakfast, lunch, teatime and dinner, according to Hsu.

"Coffee drinkers do not necessarily buy food, but most consumers buying food will definitely order coffee. The effect could be dramatic," he said.

Hsu's aggressive expansion strategy also applies across the Taiwan Strait. In its 50-50 joint venture with Starbucks in seven major cities in China's eastern provinces of Zhejiang and Jiangsu, President Starbucks plans to open 98 new shops by the end of the year and double the number in five years, he added.

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