Starbucks has taken full control of more than half of its Chinese branches, part of the caf giant's plan to triple its mainland stores as affluent consumers' thirst for coffee keeps growing, the company said on Thursday.
The world's largest caf operator acquired more than 100 regular chain stores in the provinces of Guangdong, Hainan, Sichuan, Shaanxi, Hubei and Chongqing Municipality, formerly 30 percent owned by its partner Maxim's Caterers, it said Wednesday evening after signing an agreement with Maxim's.
"Entire ownership of our stores in Central, South and Western China is part of our broader strategy to build the country as our second home market outside the US," John Culver, president of Starbucks Coffee International said in a statement.
Under the deal, Maxim's has assumed 100 percent ownership of stores in Hong Kong and Macao, said Li Jing, Starbuck's public manager in Greater China. Li refused to disclose how much Starbucks spent on the deal.
"This means that Uni-President Enterprises Corp, Taiwan's largest food group, is now the only joint venture partner of Shanghai Uni-President Starbucks Coffee, owning approximately 200 stores in Shanghai, Jiangsu and Zhejiang along the eastern coastline," Li said.
Li added that she was not aware that executives had any further plans to purchase the Shanghai joint venture.
Starbucks' deal with Maxim's is part of a plan to expand into eight to 10 new Chinese cities each year, securing a total of 1,500 stores in 90 cities by 2015, about three times the current figure of 450 stores across 35 cities at the moment.
Though no figures on Starbucks' China sales are available, the company said it had maintained annual growth of more than 30 percent on the mainland over the past five years.
Huang Mao, a beverage analyst with Guosen Securities, said the acquisition would strengthen Starbucks' business in China's second-tier cities, especially in less developed western regions.
"The key to fighting key rivals here, such as McDonald's, Costa Coffee, Pacific Coffee, Taiwanese chains and a growing number of local coffee shops that are more experienced in cultivating domestic consumers, is to occupy niche markets and expand the product line. Starbucks has already taken the initiative to develop its Via instant coffee," he told the Global Times.
Though Starbucks' shares have risen around 60 percent since 2010 after a two-year restructuring that involved slashing costs and shutting almost 1,000 cafes worldwide, Huang told the Global Times rising fuel and dairy costs will add to the growing number of risks the firm faces in China.
Starbucks earlier unveiled a net income increase of 20 percent to $261.6 million in its fiscal second quarter ending April 3, or 34 cents per share.
