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Starbucks outlines aggressive growth, 1,500 new U.S. units

Chair, president and CEO Howard Schultz revealed the coffeehouse chain’s plans for the next five years

Starbucks plans to open 1,500 new coffeehouse locations in the U.S. and renovate thousands more over the next five years, company officials said at an investor conference in New York Wednesday.

Starbucks Corp. chair, president and chief executive Howard Schultz said the Seattle-based company has “never been healthier,” and is well positioned to execute an ambitious global agenda. Plans include spreading consumer packaged goods around the world, continued rapid expansion in China, and building recently acquired brands Evolution Fresh juice and La Boulange baked goods.

Starbucks also reiterated plans to “do for tea what it did for coffee” with its earlier deal to acquire the 300-unit Teavana tea chain, despite questions raised by investors about whether Teavana’s products were truly organic.

After reporting strong fourth-quarter and year-end results last month, Schultz said growth would accelerate, with 1,300 new coffeehouse locations planned in 2013, including about 600 in the Americas, mostly in the U.S., and another 600 in the China and Asia Pacific region. This year, the 18,066-unit chain netted 1,063 new stores around the world. Schultz said the company was well on its way to reaching 20,000 units by 2014.

Schultz offered a big-picture look at Starbucks’ plans at Wednesday’s conference.

• In the Americas region, which includes the U.S., Canada and Latin America, Starbucks plans to open 3,000 new locations over the next five years, about half of which will be in the U.S.

Leveraging newly acquired brands, La Boulange bakery goods will be served in more than 2,500 U.S. Starbucks locations by the end of next year, and Evolution Fresh juices will be available in more than 5,000 coffeehouse locations.

• In China and Asia Pacific, soon to be the second-largest market after the U.S., the company expects to reach 4,000 locations by the end of next year, including 1,000 in mainland China, 1,000 in Japan, 500 in Korea and its first unit in Vietnam. Last month, Starbucks opened its 100th unit in Beijing.

• Starbucks’ consumer packaged goods business, which it calls Channel Development, has become the second-largest operating segment, growing revenue by 50 percent to $1.3 billion in fiscal 2012. The company expects to double its international footprint with packaged goods, building to more than 100,000 points of distribution in 20 countries, and to eventually rival the coffeehouse business in size and profitability.

• In what is said to be a first in cross-channel loyalty development, U.S. customers next year will be able to earn My Starbucks Reward points toward free food or drinks for buying Starbucks-branded packaged goods, such as the bagged coffee or bottled drinks, in grocery and other retail stores. Currently, rewards are earned from purchases in Starbucks stores only.

• Starbucks said its loyalty cards are used in about 25 percent of U.S. transactions. The company projects that mobile payments will account for about 10 percent of transactions in the U.S. by the end of the next fiscal year.

Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout

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