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Starbucks hopes new espresso maker will give it a shot

Starbucks is introducing a new automated espresso machine and getting back to grinding beans in its stores as the coffee retailer seeks to re-energize its slumping business.

Facing thousands of shareholders eager to hear the company's plans, Starbucks Corp chairman and chief executive Howard Schultz on Wednesday announced the arrival of the Mastrena, a new machine designed to leave a smaller margin for error in pulling shots and steaming milk.

While likely to disappoint some longing for the return of old-school manual machines, the Mastrena is about 18cm shorter than machines in stores now, making it easier for baristas to interact with customers.

"It's not just a piece of equipment," Schultz said of machine made by Thermoplan, the same Swiss company that makes Starbucks' current machines. "It's an unbelievable tool that will provide us with the highest-quality, consistent shot of espresso that will be second to none."

In an interview before the company's annual shareholders' meeting, executives said the company will also quit using flavor-locked bags of pre-ground coffee next month. Instead, it will grind beans in most of its US stores to bring back the aroma that has been missing since it started using sealed grounds years ago.

Michelle Gass, Starbucks' senior vice president of global strategy, said she expects the change will improve sales, which have been slipping amid a softening economy and growing competition from cheaper rivals.

Starbucks' stock has been falling steadily for more than a year, losing more than half its value since late 2006, when it was trading at close to US$40 a share. Its shares were down US0.53, or 3 percent, at US$17.71, in afternoon trading on Wednesday.

Most retailers have taken a serious hit amid a downturn in the housing market, rising gasoline and food prices, and a widening credit crunch.

But Schultz, who returned as CEO in January after Starbucks forced out his predecessor, Jim Donald, has argued that Starbucks' bigger problem was that it spent the last few years focusing too much on growth and not enough on coffee and customers.

Schultz also announced Starbucks has bought a small Seattle company that makes a machine that brews coffee much like a French press. The Clover, made by The Coffee Equipment Company, is already in use in some Seattle and Boston stores and will appear in others soon, though the company did not disclose details on when and where.

Starbucks will soon introduce a new "everyday" drip coffee -- a signature brew called Pike Place Roast that baristas will serve up daily in all its stores -- rather offering new blends from day to day.

"As we talked to customers over the last year, what we heard was that the morning occasion was very, very habitual and they want a taste they can count on," Gass said.

Customers will have two other choices for drip coffee: one other caffeinated variety and one decaf.

Schultz said more changes are in store, including an entry into the fast-growing energy-drink market later this year, although details were not announced on Wednesday.
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