Image: El Salvador Starbucks
Starbucks opened their first Central American out let in El Salvador in November.
updated 12/2/2010 12:38:26 PM ET 2010-12-02T17:38:26

Starbucks Corp. is looking beyond its cafes for growth in coming years.

The coffee giant outlined plans Wednesday at its investor conference to triple the number of its cafes in China, offer more products in grocery stores and open new kinds of stores to build on its recent recovery.

Starbucks has done well this year after being battered at the start of the recession. The company responded by limiting new store openings, cutting costs including some jobs and closing hundreds of underperforming stores. In recent quarters, traffic in its stores has risen, along with revenue and profitability.

"No one at Starbucks is doing a victory lap," Starbucks CEO Howard Schultz told investors at the meeting in New York, which was webcast. "We are still dealing with a very fragile economic situation. (But) we are as hungry and as motivated as any other time in our history to win."

Company leaders said they are not abandoning Starbucks' focus on retail but plan to use the strength from that core business to support new plans including ambitious international growth. Starbucks has increased its presence in Canada, Japan and emerging markets such as China, Brazil, India and Russia. The company said it hopes to have 1,500 stores on the mainland of China by 2015.

Starbucks said it also plans to improve its U.S. retail operations by adding mobile payment options and improving the way it serves customers during peak hours. The company is also looking at opening smaller cafes and being choosier about when and where it opens new stores.

Starbucks leaders said they will keep considering acquisitions — big and small — that could help the company develop more products to sell through other retailers.

Starbucks started this process with the launch of its Via instant coffee in its cafes. It has since rolled out Via in grocery stores, and it introduced a revamped line of Seattle's Best Coffee products in grocery stores this week.

"Starbucks has reached a critical juncture as we move from a high-unit-growth specialty retailer focused on coffee in our stores to a global consumer company with diversified growth platforms across multiple channels," Starbucks Chief Financial Officer Troy Alstead said. "We are intent on capturing a larger share of coffee consumption, reaching consumers wherever and whenever they want great coffee."

The company provided only limited updates Wednesday on its dispute with Kraft Foods Inc. The two companies entered arbitration after Starbucks announced it wanted to end a 12-year agreement under which Kraft distributes and promotes packaged Starbucks coffee in stores.

Starbucks said Wednesday that it has been dissatisfied with Kraft for a while and claimed Kraft has failed to effectively work with Starbucks and promote its product. Kraft has said the agreement has been mutually beneficial and that it has helped deliver major gains for Starbucks.

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The contract was set to expire in 2014.

Starbucks said it plans to expand its relationship with Acosta Inc. — which is based in Jacksonville, Florida, and distributes Via — to include distribution of Starbucks packaged coffee after March 1.

Starbucks says this relationship is different from the agreement with Kraft because Acosta will serve as a broker, providing in-store assistance to ensure products are presented in the best way possible, while Kraft also was responsible for marketing and sales. Starbucks plans to take back primary responsibility for marketing and selling its packaged coffee, a move the company said will help it provide vendors with "one voice" for its brand.

Shares of Starbucks rose $1.30, more than 4 percent, to $31.90 in early afternoon trading.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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