Starbucks Coffee plans first two shops in Brazil by year's end

Date Posted: 10/7/2006

MEXICO CITY (MarketWatch) -- The Starbucks Coffee Co (SBUX) plans to open its first two shops in Brazil, Latin America's largest market, by the end of November and early December, the Mexican company Alsea SA de CV (ALSEA.MX) said Thursday.

Alsea opened Starbucks' first coffee shop in Latin America in the Mexican capital in September 2002, and Starbucks executives have frequently accredited its rapid growth and success in Mexico to the efficiency of Alsea as its local joint venture partner.

Alsea, which also operates as Mexico's main franchise partner for Domino's Pizza and Burger King, said the first two Starbucks coffee shops in Brazil are scheduled to be opened in the Morumbi shopping center in the South American giant's financial capital of Sao Paulo.

Both shops will be opened between the end of November and early December, Alsea said in a statement.

Alsea director general Alberto Torrado Martinez said in the statement that the launch of the Brazil venture is "a fundamental part of our expansion strategy into Latin America", indicating that Alsea is eying further licensing agreements with Starbucks for other countries on the continent.

Brazil is the second largest consumer of coffee after the United States in overall volume, with local consumption in Brazil growing at 2% a year, faster than average world growth of 1.5%, according to Brazilian statistics.

Total domestic demand in Brazil reached 15.5 million 60-kilogram bags in 2005, up from 14.9 million bags in 2004, according to the Brazilian Coffee Exporters Association, or ABIC.

When Alsea and Starbucks initially started business in Mexico it announced it planned to open between 18 and 20 shops during the first 12 to 18 months of business in Mexico, but Alsea officials have said the target was to have 300 shops in Mexico, of which 101 have been opened to date.

The move into Mexico marked not only the first Latin American destination for Starbucks, but it was also the first time Starbucks moved into a major coffee producing country. Mexico's is the world's sixth largest coffee grower while Brazil remains the largest producer in the world.

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