Starbucks reveals five-year growth strategy

Starbucks
Starbucks has seven-point plan for five years
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Coffee giant Starbucks yesterday outlined a major seven-stage plan for the brand, including growing the number of stores from 22,000 to 30,000 worldwide, with a particular focus on China and on tea. 

Over the next five years, Starbucks will aim to achieve a portfolio of 30,000 sites around the world, having just this week opened its 5,000th store in the China/Asia Pacific (CAP) region. Over the next five years Starbucks’ presence in the region is set to grow three times in size and the coffee chain’s store footprint will double to 10,000 across its 15 markets.

John Culver, group president China/Asia Pacific and channel development, said: “Over half of Starbucks’ new store growth globally over the next five years will come from the CAP region, led by Japan and China. Japan was Starbucks’ first market outside North America, entered in 1996.

"Today approaching 1,100 stores in Japan and will soon assume full ownership of the market. China is Starbucks’ fastest-growing global market. In the next few weeks we’ll open the 1,600th store and will have 3,400 stores there in the next five years. Shanghai has more Starbucks’ stores than any other city in the world in which we operate.

“We are seeing tremendous anticipation for Starbucks’ first international Roastery as we look for potential sites in Japan and China.”

Hot drinks

While famous for its coffee, which remains a focus for the company, tea is higher on the agenda for growth. It is the second-most consumed drink after water and has a global category size of $125bn (£84bn). Starbucks envisages building its Teavana brand, including Teavana Shaken Iced Tea, Teavana Oprah Chai and Teavana hot brewed teas, which are currently served in just seven of the 66 countries in which the company has presence.

Annie Young-Scrivner, president, Teavana, said “a large portion” of the category value resides in Asia, so all stores in China and Japan will next year be converted to the brand.

Regarding coffee, this year Starbucks will achieve verified ethical sourcing for 99% of its coffee.

Other plans

Starbucks plans to grow its digital engagement following the success of its gift cards, which it claimed one in seven American adults received over Christmas. Its ‘My Starbucks Rewards’ loyalty programme is also growing well, with more than 10 million active members and nearly 50% year-on-year growth to $1.5bn in 2014.

Creating new reasons to visit stores is another area of growth, including drive-thrus. The first Express format of take-away-only stores will open next quarter in New York, with four more by the year-end.

Bet Guajardo, senior vice-president of global strategy, said: “Starbucks has become one of the world’s most beloved and trusted brands, and we can tell you what creates our brand strength. In a survey of all the people who consider purchasing at Starbucks because of brand appeal, they do so because: 47% love the Starbucks brand because of the connection between partners and customers; 27% say they love the way Starbucks treats its people; and 26% love the coffee.”

Read the full report from the 2015 annual meeting of shareholders here.

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